Evaluating HRM’s contribution to Organisational Effectiveness Essay

Human Resource Management is a key component in the maintenance and utilization of an effective workforce. HRM includes myriad activities ranging from recruitment to training and as yet the development of compensation systems. HRM has evolved signifi housetly since the early 1900s. The need to deal with labor unions and the human relations suit has increased the need for competent human resource professionals (Dessler, 2002).3. Reasons for MeasuringHuman resource managers argon postulate to balance the requirements of management against those of the physical composition to ensure staffing requirements argon consistent with the everyplaceall organizational objectives. There is unceasingly a focus on results and measurement, the benefits from such analyses are numerous. Some of the key reasons for measuring HRM are (Phillips, 1996)1. To tell apart HRMs contribution to organizational effectiveness2. To determine whether HRM is accomplishing its objectives3. To identify the streng ths and weaknesses of HRM processes4. To calculate the return on coronation in an HRM program5. To determine if an HRM program or policy justifies investment of resources6. To establish a entropybase that can assist management in making decisions about HRM4. Indicators of HRMThe main impacts of HRM to the organisation can be gauged from the pursual key indicators (Frost et al, 2001)Figure 1 4 Quadrants of HRM Indicators5. Measuring HRMThe influences and impacts mentioned previously provide an indication of the relative success of HRM within the organisation. As is evident, there are a number of indicators and their measurements and applications are quite varied. Some of the more common ways of measuring HRM areSurveysThere are myriad proforma surveys that are available to HRM Managers to check out and measure the feedback from employees and customers. OPMs (Office of Personnel Management) Organizational Assessment Survey was created to assist organisations in the assessment an d cash advance of their mental process and has since become an persistence standard. The survey contributes to organizational performance amelioratement by1. assessing organizational strengths and weaknesses2. providing a basis for effective action-planning to determine training and organizational change strategies and3. establishing measures for benchmarking and evaluating change in organizational performance over time.(Fitz-Enz, 2000)Financial AnalysisCost- Benefit and ROI AnalysesReturn on Investment (ROI) is a cost-benefit analysis that offers HR managers a way to explain, in financial terms, how HR contributes to the back line. This helps in boosting HRs believability in management circles. To date, a major obstacle HR professionals have had in become profuse partners with senior agency management teams is proving its value to business discussions. Historically HR has not had the statistical data or business cost benefit analysis to prove its influence and impact on the organisation. However, use ROI to show that human resources management is an investment, rather than an expense, helps move HR further in the direction of becoming a strategic partner.Activity Based Costing (ABC)ABC is a process of estimating the be associated with for each one step of a process. It has been used to identify the be of HRM programs and processes. It is an accounting system that assigns costs to products based on the resources they consume. The costs of all activities are traced to the product for which they are performed. Overhead costs are also traced to a particular product rather than spread arbitrarily across all product lines (Albrecht, 2000). The breakdown of costs increases the visibility and transparency and proves how effectively resources are being used, which inturn can help improve strategic decision-making. Several organisations have successfully used ABC to reveal the true cost of HRM, any to inform the overall budgeting process or to help benchmar k HRM costs against other key industry players.BenchmarkingBenchmarking is a systematic process of measuring an organizations products, services, and class periods against those of a like organization that is a recognized leader in the studied area (Phillips et al, 2001). Organisations across industries and geographical boundaries are using this practice to discover ways of improving service and increasing business efficiency and profitability.Strategic Analysis fit Scorecard/Balanced MeasuresThe Balanced Scorecard is a strategic measurement approach that provides a method of aligning business activities with the organizations strategic plan and monitoring performance of strategic goals over time. A set of balanced measures is used, rather than focusing on the single, traditional bottom line. The original carte developed by Kaplan and Norton (2004) was divided into five perspectives (or measurement areas)1. Financial Demonstrates how our initiatives, activities, and actions contr ibute to the organizations bottom line, or how they provide value for the money spent. Cost and revenue are the main measures for this perspective. Labour costs expressed as a fraction of revenues is a common financial measure.2. Customer Tells us what we mustiness do to meet the needs of our internal and external customers. Time, quality, performance and cost are the main areas in which customers are interested. Good government is accountable to the customer.3. Internal Business Shows where we must excel internally to watch in accomplishing our mission. Cycle time, quality, employee skills, and productivity are examples of internal measures.4. Learning and growth Illustrates how the organization can keep open to improve and create value. This includes how we sustain the growth of our people. The ability to innovate, improve, and learn are key characteristics of this perspective.5. Human Resources Employee authorization Tracks how leadership and working environment enhance HR em ployees job performance.The Malcolm Baldrige Criteria for Performance ExcellenceThe Malcolm Baldrige Criteria are a framework based on a set of core values and concepts that any organization can use to improve overall performance. They integrate key business requirements into a results-oriented framework and glow validated, leading-edge management practices against which an organization can measure itself (Becker et al, 2001). Organizations are assessed, using a scored point system, on approach, deployment, and results. The Criteria are recognized nationally and internationally as a model for performance excellence and therefore represents a common language for communication among organizations for sharing best practices (Kaplan & Norton, 2004).6. ConclusionThe history of HRM has been characterized by a continues set about in justifying its impact and influence within an organization. The rise of unions along with the expansion of companies into foreign markets has made economic HRM critical. HRM has moved from the position of justifying its position in an organization to adding to the organizations profits by managing its most important addition its people (Dessler, 2002).7. BibliographyKaplan, R. S. & Norton, D. P. (2004) Strategy Maps Converting Intangible Assets into Tangible Outcomes, Harvard Business School Press.Becker, E. B., Huselid, M. A. & Ulrich, D. (2001), The HR Scorecard Linking People, Strategy and Performance, world-class Edition, Harvard Business School Press.Phillips, J. J., Stone, R. D. & Phillips, P. P. (2001) The Human Resources Scorecard, Butterworth-Heinemann.Albrecht, M. H. (2000) International HRM Managing Diversity in the Workplace, Blackwell Publishers.Fitz-Enz, J, (2000) The ROI of Human Capital Measuring the sparing Value of Employee Performance, American Management Association.Frost, P. J., Nord, W. R. & Krefting, L. A, (2001) HRM Reality, 2nd Edition, Pearson Education.Phillips, J. P. (1996), Accountability in Human Resour ce Management ameliorate Human Performance Series, Gulf Professional Publishing.Dessler, G. (2002) Human Resource Management, 9th ed., Prentice Hall.