The Impact of Human Resource Management on Organizational Performance

1.0 Introduction

1.1 Background of Study

The management of people within the organization has become an increasingly recognized important focus for researchers and practitioner over the past 20 years. Organizations are becoming more aware of important role human resource play in the success of their organizations to achieve financial performance. As a result, organizations are becoming more employee-centric by focusing on enhancing employees’ engagement and organizational commitment

It is important for organization to adopt human resources management (HRM) system that optimizes workforce as it enables organization to achieve competitive advantage in today’s global market economy that provides wider access to technology, finance and other resources. Pfeffer (1994) stated that firms have increasingly recognized the potential for their people to be a source of competitive advantage. Creating competitive advantage through people requires careful attention to the practices that best leverage these assets. According to Nishii, (2008) scholars generally agree that appropriately designed, Human resources management practices can enhance organizational performance. Related theories suggesting and supporting assumption holds that the practices of Human Resources Management influences employees’ attitudes and behaviours.

Human Resource Management is an invisible asset in an organization. It creates value when embedded in the operational system that enhances organizational performance and ability to deal with turbulent environment. Effective HRM assists in developing human resources into high quality and efficient workforce thus enabling the organization to obtain a competitive advantage through their people. In contrast, inefficient workforce can increase labour cost and decrease organization productivity. However, in order to remain competitive, grow and diversify, an organization must ensure that its employees are qualified, placed in appropriate position, properly trained, managed effectively and committed to the firm’s success. The goal of HRM is to maximize employees contribution in order to achieve optimal productivity and effectiveness while simultaneously attaining individual objective (such as having a challenging job) and obtaining recognition) and societal objectives (such as legal compliance and demonstrating social responsibility).

Human resource dimensions or practices (training, recruitment, reward system performance appraisal etc) have considerable impact on the performance of organizations and these contribute to the affirmative link between human resource management and organizational performance (Osman, 2012).

Human resources are considered the most valuable assets of any organization but very few organizations are able to fully harness its potential. While human resources refer to individuals who make up the workforce of an organization, Human Resources Management is defined as a very critical and imperative function that operates within an organization. This function classified into recruitment, compensation, development related to the organization, safety, motivation of employee, benefit wellness, communication and training, performance management and all other activities that are associated with goal achievement of the organization (Ayesh, 2012).

Neo (2007) defines human resource management as composed of policies, practices and system that influence employees’ behavior, attitude and performance. Oladipo (2011) opines that having the right personnel at the right place and at the right time is utmost important to survival and success of any organization.

The Human Resource department is tasked with reviewing the organizations, HR practices and recommending policy changes, where necessary. As a part of review, academic qualifications of the staff were harmonized without further discrimination between Degree holders and Higher National Diploma, Certificate holder, training programs were organized for all categories of staff. Employee who lacked basic skills and qualifications could not be retained were laid off, whilst a rigorous recruitment process was instituted to attract skilled personnel for the various department.

1.3 Statement of Problems

Investigation revealed that organizations are expected to motivate their workers in order to increase their performance so as to be profitable. Some organizations take workers for granted by not providing adequate training and compensations for hard work as human elements in the achievement of the organizational goals.

This has in some cases affected the productivities of workers and in turn the profitability of such organizations. The study therefore finds out how workers can be managed to enhance their productivity and at the same time increases the profitability of the organizations.

1.4 Aim and Objectives of Study

The aim of the study is to examine the impact of HRM practices on employees’ performance in organizations. In achieving this aim, the following specific objectives were laid out as follows:

1. To establish the extent to which performance would affect the implementation of various HRM practice;
2. To find out the extent to which employees are being motivated in organizations;
3. To find out how HRM can affect the employees productivity and performance; and
4. To know the status of HRM practice a views in an organization.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• What is the impact of HRM practices on employees’ performance in organizations?
• How can HRM affect the employees’ productivity and performance?
• How are employees being motivated in organization?
• What is the status of HRM practices in organization?
• What is the extent to which performance would affect the implementation of various HRM practice?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant relationship between reward system and employees’ performance in the achievement of organizational goals
• H1: There is a significant relationship between reward system and employees’ performance in the achievement of organizational goals

1.7 Significance of Study

The findings of this research on the role of human resource management (HRM) and planning in profit-making organizations holds significant importance for several reasons:

1. Strategic Alignment: Effective HRM ensures that the organization's human capital is aligned with its strategic goals. Understanding how HR planning contributes to this alignment helps in achieving organizational objectives efficiently.
2. Talent Acquisition and Retention: HRM practices directly impact the recruitment, selection, and retention of employees. Researching this area helps identify best practices for attracting and retaining top talent, which is crucial for the success of profit-making organizations.
3. Employee Productivity and Engagement: Engaged and motivated employees tend to be more productive, leading to increased profitability. Investigating HRM's role in fostering employee engagement and productivity sheds light on methods to enhance workforce performance.
4. Cost Optimization: Effective HR planning can help in optimizing costs associated with recruitment, training, and employee turnover. Understanding how HR strategies impact the bottom line aids in developing cost-effective approaches to human resource management.
5. Adaptability and Innovation: In rapidly changing business environments, organizations need to be agile and innovative. HRM plays a vital role in developing a workforce that is adaptable and innovative. Researching this area helps in identifying strategies to nurture a culture of innovation and flexibility within the organization.
6. Legal and Ethical Compliance: HRM practices must comply with legal and ethical standards. Studying the role of HRM in ensuring compliance helps in mitigating legal risks and maintaining the organization's reputation.

Furthermore, studying the role of HRM in ensuring compliance helps in mitigating legal risks and maintaining the organization's reputation. It also provides valuable insights into how human capital can be effectively managed to achieve sustainable profitability and competitive advantage.

1.8 Scope of the Study

The scope of the research is focused on the Impact of Human Resource Management on Organizational Performance. Since no single research can validly cover all areas of the topic the researcher tends that thrust of this project will be limited within the scope of study of the impact of HRM on employees’ performance in Airtel Telecommunication.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

Human Resource Management (HRM):

HRM refers to the strategic and operational management of an organization's workforce, encompassing activities such as recruitment, selection, training, performance evaluation, and employee relations (Dessler, 2019). HRM aims to maximize employee productivity, engagement, and satisfaction while aligning human capital with organizational goals and objectives.

Strategic Planning:

Strategic planning involves the process of setting long-term goals, identifying resources, and developing strategies to achieve organizational objectives (Armstrong, 2017). It entails analyzing internal and external environments, anticipating future trends, and formulating action plans to maintain or enhance the organization's competitive position.

Profit-Making Organization:

A profit-making organization is a business entity whose primary objective is to generate financial returns for its shareholders or owners. These organizations operate in various sectors, including manufacturing, services, finance, and technology, with the goal of maximizing profits through revenue generation, cost management, and strategic investments.

Talent Acquisition:

Talent acquisition refers to the process of identifying, attracting, and hiring individuals with the skills, qualifications, and attributes necessary to fulfill organizational roles and responsibilities (Boudreau & Ramstad, 2006). It encompasses activities such as job posting, candidate sourcing, interviewing, and on boarding.

Strategic Alignment:

Strategic alignment involves ensuring that HRM practices, policies, and initiatives are closely integrated with and supportive of the organization's overall strategic objectives and priorities (Schuler & Jackson, 1987). It requires alignment at both the organizational and individual levels to optimize human capital contributions to organizational success.