MPORTANCE OF HUMAN RESOURCES MANAGEMENT IN PROMOTING EMPLOYEES PERFORMANCE

CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in two sub-headings:

• Conceptual Framework
• Theoretical Framework

2.2 CONCEPTUAL FRAMEWORK

HUMAN RESOURCE MANAGEMENT

According to several scholars like Barney (1991) and Wilson (1994) management of human resources is much more difficult than capital management or technology management. The definition of Human resource management (HRM) evolved in the later period of twentieth century. In the current day world, survival of an organization depends on the development of new capabilities; as a result organizations are facing critical challenges in all over the world. New challenges like globalization, investment in human capital, growth, change management etc. are emerging and organizations from all over the world needs to manage and find opportunities through these challenges. Among these challenges the management of human capital has gained added importance, as organizations are realizing the importance of people or human resource as assets of strategic importance. According to Hartel, Fujimoto, Strybosh and Fitzpatrick (2007) Human resource management does not merely deals with the rational administration but looks after the job satisfaction of the employees and also focus on, how to motivate them for better results, as a result it is making the best utilization of each individual human power for achieving the objectives of an organization. Human resource management is also an important fact considered by organizations from all over the world, because human resource is the resource that has the capability of converting the other source like capital, technology, methods, material, machine etc. into product or service. So the need of a sound Human Resource Management system is very much necessary, in today's world.Before the evolving of the definition of Human Resource Management the management process dealing with the similar kind of subject was known as personnel management. It emerged during the 1920s. It was concerned about a single department and its activities. The department it was concerned about was the human administration department, and its main function was recruitment and selection for the organization. The other functions carried out by this management were related to development, grievance handling, registration, appraisal, reward, retirement etc. But the negative fact about this system was that its formation was in the bureaucratic set up and it gave importance to the organization and its administration. By the late 1970s organizations from all over the world started facing increase in competitive pressures due to the factors like deregulation, fast growing technological change and globalization. So the need for a more efficient management system emerged and in response the Human Resource Management was developed. According to Khatri (1999) Human capital is one of the key factors that provide flexibility and adaptability to the organization. According to Rundle (1997) the people or the human resource are the adaptive mechanism not the organization or firm that determines the response of the organization towards the competitive environment. On current structural background Human Resource Management can be defined as systematic process by which human capital or human resource are recruited and managed in such a way that it helps the organization to achieve its objectives. Human Resource Management is concerned about not only the organization but also about the wellbeing of the human capital involved, so it gives consideration not only towards recruitment and selection but also towards the motivation factors, development and maintenance of human resources. Human Resource Management helps to select the right person, for the right job, at the right time and at right position in a changeable surrounding. According to Schuler & Jackson (1987); Schuler & Macmillan (1984); and Wright & Snell (1991); Human Resource Management comprises of the activities of an organization directed towards the management of the human resources and taking care of the facts that the resources are appointed at the right place and time for the right purpose for the fulfilment of the goals of the organization. The performance of an organization depends on the efficiency of the human resources involved with the organization. Therefore a systematic set up for recruitment, training and development, motivation, manpower planning, performance evaluation, industrial relation and remuneration management should be taken into consideration. Moreover Human Resource Management is also concerned about the development of skills, ability and knowledge in the acquired human resources, so that the tasks and responsibilities given by the organization are performed effectively and efficiently. The main concept of Human resource management comprises of four main functions - Acquisition, Development, Maintenance and Motivation of the human resource. These are the basic factors or key steps that help an organization to achieve its goals.

Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’. He suggests four aspects that constitute the meaningful version of HRM:

1. A particular constellation of beliefs and assumptions

2. A strategic thrust informing decisions about people management

3. The central involvement of line managers and

4. Reliance upon a set of ‘levers’ to shape the employment relationship

Employee performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. Or it is an integrated system, including organizational design, work planning, assessments and feedback designed to maximize performance at the individual, team, unit and organizational levels to motivate and to develop staff.

Performance management thus is a means of getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. It describes how the process exists for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It thus focuses people on doing the right things by clarifying their goals. It is owned and driven by line management.

Personality - as defined by Toplis et al (1991), personality is all-embracing in terms of the individual’s behaviour and the way it is organized and coordinated when he or she interacts with the environment.

Placement – It is a system of assessment and selection by which vacancies are filled by staff serving in an organization. Commonly refers to internal filling of vacancies as distinguished from external recruitment.

Recruitment – a system of attracting, assessing and selecting candidate’s external to the organization in order to fill vacancies. This process is distinct from the one whereby serving staff are selected to fill vacancies.

Compensation package - structures which are devised and managed to provide and maintain appropriate types and levels of pay, benefits and other forms of reward.

Competencies - Combination of skills, attributes and behaviours that are directly related to successful performance on the job.

Contractual arrangement -Types of contracts which are used to hire individuals for periods ranging from short-term to long-term, or to engage their services for the provision of a specific end product. The contracts may be time-based (fixed-term or without time limit) or linked to the completion of a specific event/task.

Guiding Principles of Performance Management

Egan (1995) proposes the following guiding principles for performance management:

It is well known that majority of employees want direction, freedom to get their work done, and encouragement not control. The performance management system should be a control system only by exception. The solution is to make it a collaborative development system, in two ways. First, the entire performance management process – coaching, counselling, feedback, tracking, recognition, and so forth – should encourage development. Ideally, team members grow and develop through these interactions. Second, when managers and team members ask what they need to be able to do to do bigger and better things, they move to strategic development.

Performance management is essentially about the management of expectations. It creates a shared understanding of what is required to improve performance and how this will be achieved by clarifying and agreeing what people are expected to do and how they are expected to behave. It uses these agreements as the basis for measurement and review, and the preparation of plans for performance improvement and development.

Function of HRM in organizations

HRM functions are concerned with the management and development of people in organizations. They are involved in the development and implementation of HR strategies and policies and? some or all of the following people management activities: organization development, human resource planning, talent management, knowledge management, recruitment and selection, learning and development, reward management, employee relations, health and safety, welfare, HR administration, fulfillment of statutory requirements, equal opportunity and diversity issues, and any other matters related to the employment relationship.

The role of the HR function is to enable the organization to achieve its objectives by taking initiatives and providing guidance and support on all matters relating to its employees. The basic aim is to ensure that the organization develops HR strategies, policies and practices that cater effectively for everything concerning the employment and development of people and the relationships that exist between management and the workforce. The HR function can play a major part in the creation of an environment that enables people to make the best use of their capacities and to realize their potential to the benefit of both the organization and themselves.

It further provides the advice and services that enable organizations to get things done through people. It is in the delivery business. Ulrich (1998) points out that: ‘The activities of HR appear to be and often are disconnected from the real work of the organization.’ He believes that HR ‘should not be defined by what it does but by what it delivers’.

According to According to digitalhrtech (2019), HRM has the followin importance that help move organization forward:

1. Learning and development

Enabling employees to develop the skills they need for the future is an essential responsibility for HR. This is also related to the first HR function we listed, in which HR bridges the gap between the workforce today and the workforce needed in the near future.

Traditionally, organizations have a set budget for learning and development. This budget is then distributed among its employees. In some countries, this fee is mandatory. In the UK, for example, companies with an annual pay bill of more than £3 million pay a mandatory rate of 0.5% designated for the professional education of their employees.

In other countries, like Belgium and the Netherlands, L&D falls under the employer’s responsibility to take care of its employees. In the third group of countries, like the US, this is almost unregulated territory.

Despite the differences in regulation, almost all employers understand the value of investing in the (future) skills of their employees. It’s the responsibility of the HR department to lead these efforts in the right direction.

2. Career planning

Another function of Human Resource Management is career planning, guidance, and development for employees, together also referred to as career pathing.

Showing employees how their ambition can align with the future of the company helps to engage and retain them. For the organization, there are the benefits of better succession planning, higher productivity, and a stronger employer brand.

3. Function/Performance evaluation

As a business and society changes, so too must an efficient HR function. Function evaluation is a technical aspect of HR. By evaluating the HR function, the department ensures that the company is successful at both a strategic level and with service delivery and support. The company needs to deliver the level of services required, whilst operating strategically.

Practically, function evaluation involves comparing various parts of the overall HR operation. This can include the quality, and availability of workers, job location, working times, the economic situation, job responsibilities, and how much value a job adds to your organization. The idea behind function evaluation is that similar jobs should be rewarded similarly.

4. Rewards

Rewarding employees for their work is a function that is impossible to miss. Compensation and benefits are integral to attracting the right kind of candidate for the role, and company. These will vary across different fields, countries, and cultures. In some countries, such as the USA, health insurance is often part of a job offer. However, in countries such as the UK, where a public health system provides most healthcare, to most people, this is not the case. Yet the total rewards framework shows that rewards are more than just money. They can also be relational and psychological outcomes.

Rewards include salary but also growth and career opportunities, status, recognition, a good organizational culture, and a satisfying work-life balance. For example, fantastic colleagues and meaningful work are also rewarding to employees. The monetary reward of the job consists of financial rewards and other (secondary) benefits.

5. Industrial relations

Another function of HR is maintaining and cultivating relationships with labor unions and other collectives, and their members.

Unionization is still prevalent in Europe and other parts of world, although it is declining overall. In 2018, 92% of employees in Iceland were a member of a union and 67% of employees in Denmark. However, in the UK and Estonia, only 23% and 4% of employees, respectively, were. In the USA trade union membership is low, with 10% of employees being members in 2018. Maintaining good relations with unions will help to spot and resolve potential conflicts quickly and will also be beneficial in more difficult economic times when layoffs or other actions are required.

7. Employee participation and communication

According to Dave Ulrich, one of the key roles of HR is to be a credible activist for the employees. Employees need to be informed and heard on different topics that are relevant to them. Communication relates to spreading information relevant to employees.

Being a People’s Advocate is one of five elements of the T-shaped HR professional, a new competency framework we developed for the future of the HR workforce. People Advocacy includes culture building, people practices, workplace champion, and communication expert.

8. Health and safety

HR plays an important role in creating and implementing health and safety regulations. Making these regulations part of the company culture is one of the main functions of HR.

A famous example is oil company Shell where it is forbidden to walk the stairs without holding the railing – also in the company’s HQ. This is part of Shell’s ‘Goal Zero’, which stands for zero accidents. Although holding the railing is much more important on an oil platform, safety is such a big part of the company culture that safety roles are applied everywhere.

9. Personal wellbeing

HR has a function in assisting and taking care of employees when they run into personal problems. Personal wellbeing is about supporting employees when things don’t go as planned. Problems in the workplace and outside can negatively impact employee performance, engagement, and productivity. This, in turn, harms a company’s bottom line.

Good personal well-being led by your HR department must work at the level of one-on-one communication with employees, and communication across teams, and companies. For example, a company may offer an employee assistance program by which anyone with mental health issues, can access counseling. On an organization-wide level, the company could hold a mental health awareness day.

10. Administrative responsibilities

The final function of HR is its administrative responsibility. These include personnel procedures and Human Resource Information Systems.

Personnel procedures involve the handling of promotions, relocations, discipline, performance improvement, illness, regulations, cultural and racial diversity, unwanted intimacies, bullying, and so on.

For each of these situations, policies and procedures need to be developed and followed to successfully comply with the requests, or overcome these challenges.

Human Resource Information Systems (HRIS) store employee data. These systems need to be purchased, implemented and managed so the data can be used for better decision-making.

EMPLOYEE PERFORMANCE

Employees are the force that drives a company forward. So it should come as no surprise that the daily performance of the workforce hugely influences the success or failure of a business.

To stay successful in today’s market, businesses must find ways to maintain and bring out the best performance from their employees. Not only does this help to hire, retain and develop the best talent, but by helping staff to grow within their roles and responsibilities, the company can build a pipeline of future leaders. All contributing to long-lasting success. Working to improve employee performance is an ongoing process that involves measurement, evaluation, and planning, but it's also a vital step to achieving company goals.

employee performance is how a member of staff fulfils the duties of their role, completes required tasks and behaves in the workplace. Measurements of performance include the quality, quantity and efficiency of work. When leaders monitor the performance of employees, they can paint a picture of how the business is running. This not only helps to highlight what companies could be doing in the present to improve their business, but this information also feeds into future growth plans.

However, placing a focus on employee performance doesn’t just benefit the business. It helps employees to reach their full potential, while also improving overall performance – which can have positive effects on morale and quality of work produced.

Lastly, but most importantly, when employees are under-performing, customers may be dissatisfied. As a result, the entire business may be affected by poor performance and struggle to reach goals.

MEASUREMENT OF PERFORMANCE

Every role is different so the metrics used to measure employee performance will ultimately depend on the type of business the company and employees operate in. But in general, the main ways to gauge performance are:

Quality of work

Standard of work produced is a key indicator of performance. Are employees putting in maximum effort to ensure high-quality results? Are performance objectives being met? Quality of work provides the basis to analyse all other elements of their performance.

Speed and efficiency

Looking at how much employees accomplish in an average week, month or quarter, how does this match up to your expectations? Are deadlines met, vastly improved on, or is time wasted? Are corners being cut to produce work quickly? Efficiency is the result of maximum output at least cost so this is vital to be aware of within your company.

Trust and consistency

Ask yourself if you trust your employees to do all their work to a high standard and deliver it on time. Do they work independently or do you feel that you often have to step in? Do they consistently display company values? Are they punctual and present to the expected standard? High-performing employees can be trusted with autonomy and continue to produce strong results without much supervision.

Keep these performance metrics in mind when conducting individual employee performance reviews. Here are some popular ways to evaluate employee performance:

360-degree feedback

As the name suggests, this method takes a look at feedback, opinions and assessments from a circle of people. This includes team members, supervisors and others, that the employee works within the company. By going beyond what the direct manager sees, you’re instead shown a well-rounded view of performance. Look for any similarities in the feedback from the different areas, as this will identify areas for further improvement.

Objective-based performance

With this method, managers and employees work together to develop performance goals and set clear deadlines for completion. When employees are involved in the process of creating their objectives, they can see how their individual goals contribute to larger company goals. This creates more understanding of what needs to be done and why it’s important.

This method also helps to increase engagement and motivation for the employee while making it very easy to define success and failure for the employer.

A twist on the SWOT

Many will already be familiar with a SWOT analysis, but for performance evaluation, it’s best to swap ‘weakness’ with ‘areas for development’. Think of ‘opportunities’ as future opportunities for the growth of your employees and their development within the company, too.

Starting with strengths allows managers, but also importantly, employees themselves to say what they feel they are good at – helping to indicate where employees might like to develop further. This method can also be a great way to find out if the employee feels that anything about the business is holding them back, or if they feel they are lacking important resources, for example. By mapping out these different areas of performance, both the manager and employee can work together to create a plan for development.

Ranked performance on scales

A traditional method is using numbered scales, such as 1 to 5 or 1 to 10, to rank an employee’s performance in specific areas. These scales are commonly used as they’re easy to understand for both employees and managers, allow for easy comparison between team members, take little administration and can be adapted to any business needs. Managers or HR can set the criteria to be ranked – often including behaviours, aptitude or projects completed.

Self-evaluation

In this method, the employee judges their own performance against questions set by the employer. This method is most useful when used alongside a verbal performance review. Although some employees may find it difficult to know where they stand, when you can spot the difference between what the employee thinks of their own performance, and what you think – you will find some interesting points to discuss in the meeting. This method also helps employees to understand what the performance review will look at, which can ease any anxieties.

HUMAN RESOURCES MANAGEMENT IMPROVE STAFF PERFORAMANCE AND PRODUCTIVITY

The human resource management improves employee performance through the following strategy

1. By investigating why the employee is not meeting expectation: The list of reasons why an employee isn’t performing as expected can be endless. If you don’t get to the bottom of these, it’s almost impossible to take the right steps to improve it. The HRM Start with an open and frank discussion and find out if the employee feels anything is affecting their ability to perform. It could be that they feel the business is holding them back from reaching their full potential, they could be lacking resources, don’t feel aligned with company goals or aren’t receiving the proper guidance or training. It’s also possible that factors affecting work may be unrelated to work itself. Personal reasons such as an employee may be going through a time of poor mental wellbeing or experiencing issues in their personal life can also impact performance.This conversation can provide a basis for HRM to give more effective support.

2. By Discussing both the high and low in terms of performance review: Performance reviews should not just be focused on what’s not going well – even though improvement is your end goal. Focusing just on areas for improvement could knock your employees’ confidence and could lead to resentment if they feel that their hard work in other areas is going unnoticed. The HRM ensuresemployees know what they’re doing well and point out any stand-out moments in performance since their last review, as well as the areas for development. When HRM recognise their hard work, employees will know that they’re a valued member of the team and will continue to put this effort into their work. Nevertheless, when you do discuss challenges and areas for development, you have to be clear about any problems. The easy road would be to ‘soften the blow’, but by not being clear on what the problem is exactly, you’ll make any problems worse in the long term and the relationship could become more hostile. The HR makes sure that the employee leaves the conversation with a clear understanding of their strengths, any areas for development and the steps that should be taken to get there.

3. By providing consistent feedback as employee progress:

The most efficient way to improve employee performance is to provide regular feedback. By frequently feeding back, you can help employees stay on track as they work to improve, rather than any issues being saved for a more formal review. By then, the effects of poor performance may have been detrimental to the team or business.

Frequent feedback helps employees to become more comfortable with receiving feedback in general. It can also stop any negative connotations that people associate with receiving feedback. That’s because frequent feedback is more likely to be a mix of positive and constructive comments, which can help to keep employees engaged and encouraged rather than disheartened.

It's important for performance improvement that employees know where they stand and how they’re progressing. They’ll then be more aware of how they’re doing and what steps need to be taken to improve further.

1. By Creating a positive workplace culture

A positive workplace culture helps to pave the way for higher engagement, greater motivation and better performance.Review elements such as how aligned employees are with the company vision and mission, the employee benefits offered and how the business operates – for example, the work environment and elements like flexibility or holiday policies. The workplace culture should give employees the stage to perform to the best of their abilities. A strong workplace culture allows employees to be focused and engaged without any negativities distracting them and with the support of a positive workplace to drive them forward.

The most simple way to find out if your workplace culture is right for your employees is to ask them! Use a confidential survey tool to ask your employees what they think about how your business operates. As this is a confidential platform, your employees will feel free to be honest about anything that they would like to see improved.

Not only can this help you to make changes to anything in the business that may be affecting performance, you can also show your employees that you value them by making changes based on their suggestions. This helps to make your people feel valued but also improve engagement levels.

5. By Prioritizing learning and development

Often, poor performance can be attributed to a skill or knowledge gap. By creating a focus on learning and development, employees are reminded of best practice, not to mention gaining new skills while taking valuable steps along their career path.

The HR work with employees to create individual L&D plans as, when you give employees a say in how and what they learn, they stay engaged and it helps to bring extra motivation.

6. By Setting measurable and realistic goals

To help drive performance improvement, an employee needs to know what’s being measured. This way they can monitor their own performance and, in turn, work to improve this. If goals are not measurable, employees are left guessing about whether they’re improving and they might feel that their results are subjective to their manager’s opinions.

Secondly, goals must also be realistic. Of course, you want to aim big, but anything that feels too unachievable could overwhelm employees and add to burnout. On the other hand, goals that are too easy will not provide any motivation. Be sure to find the right balance right.

The HR need to ensure that it’s clear when they expect these goals to be completed by. Set two dates, one to come back and see how things are progressing, and another for an expected completion date.

7. By Regularly recognizing great work and improvement

When you recognize and reward good work, you let employees know that their effort, hard work and improvement is noticed. One error that leaders often make is spending a lot of time focusing on under-performance and not focusing enough time on the great work that is going on every day.

By creating a process which allows for regular recognition of hard work, you keep high performers engaged and motivated, whilst also providing an example of what great work looks like for those who might be currently missing the mark. Our Recognition platform is a great way to make reward and recognition a part of your day-to-day routine and celebrate hard work and improvement.

8. By Maximizing job satisfaction

Often, employees only want to put in what they’re getting out of a role. If they feel they aren't getting paid enough, aren't getting the benefits that they could be getting elsewhere, or feel like their workplace is lacking in resources - they may not try as hard to perform. Take a look at rival employers to ensure you are offering the right benefits to keep your staff happy, engaged and productive.

2.2 THEORTICAL FRAMEWORK

The research adopts the two-factor theory of motivation by Herbeg

Two-factor Theory

The two-factor theory (also known as Herzberg's motivation-hygiene theory and dual-factor theory) states that there are certain factors in the workplace that cause job satisfaction while a separate set of factors cause dissatisfaction, all of which act independently of each other. It was developed by psychologist Frederick Herzberg.

Feelings, attitudes and their connection with industrial mental health are related to Abraham Maslow's theory of motivation. His findings have had a considerable theoretical, as well as a practical, influence on attitudes toward administration (Herzberg, Frederick; Mausner, Bernard; Snyderman, Barbara B. (1959). According to Herzberg, individuals are not content with the satisfaction of lower-order needs at work; for example, those needs associated with minimum salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of higher-level psychological needs having to do with achievement, recognition, responsibility, advancement, and the nature of the work itself. This appears to parallel Maslow's theory of a need hierarchy. However, Herzberg added a new dimension to this theory by proposing a two-factor model of motivation, based on the notion that the presence of one set of job characteristics or incentives leads to worker satisfaction at work, while another and separate set of job characteristics leads to dissatisfaction at work. Thus, satisfaction and dissatisfaction are not on a continuum with one increasing as the other diminishes, but are independent phenomena. This theory suggests that to improve job attitudes and productivity, administrators must recognize and attend to both sets of characteristics and not assume that an increase in satisfaction leads to decrease in dissatisfaction.

From analyzing these interviews, he found that job characteristics related to what an individual does that is, to the nature of the work one performs apparently have the capacity to gratify such needs as achievement, competency, status, personal worth, and self-realization, thus making him happy and satisfied. However, the absence of such gratifying job characteristics does not appear to lead to unhappiness and dissatisfaction. Instead, dissatisfaction results from unfavorable assessments of such job-related factors as company policies, supervision, technical problems, salary, interpersonal relations on the job, and working conditions. Thus, if management wishes to increase satisfaction on the job, it should be concerned with the nature of the work itself — the opportunities it presents for gaining status, assuming responsibility, and for achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it must focus on the workplace environment policies, procedures, supervision, and working conditions. If management is equally concerned with both, then human resources managers must give attention to both sets of job factors.