The Value of Hrm to Business Organisations

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The value of HRM to business organisations

Section 1: Literature Review

The approach to the employment of people experienced a major shift from traditional personnel management towards human resource management (HRM) in 1980s, when the deflation and recession crashed into the infrastructure of employment. After that shift, the employees were more likely assumed as valuable assets and a key source of competitive advantage (Marchington and Wilkinson, 2002), and the effective management of ‘resourceful humans’ tended to be seen as a crucial approach to improve organizational performance through ‘the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques’ (Storey,
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If it is not large enough, then it is hard to trigger a change in work performance. As Lawler (1990, cited in Marchington and Wilkinson, 2002, p. 501) suggested that variable pay less than 10 per cent of base salary would be not attractive in PRP scheme.

An organization introduces and develops a PRP programme generally involving these main stages: setting objectives for rewarding employees according to their performance; analyzing the circumstances of organization, including its culture and the type of employees; determining who should be participated in - line managers, team leaders, employees and trade unions; considering methods of performance appraisal; carrying out the plan and assessing its effects. PRP should be schemed and conducted with great care and organizations have to be flexible to adjust the plan timely for constantly changing environment and the feedback from staff (Armstrong, 2002). The following part will describe two organizations conducting PRP scheme.

Section 2: Case Study Description
In this section, two pieces of empirical researches are introduced for the further analysis in next section. The first case of Finbank is regarded as an unsuccessful case of PRP system. And the second case of NHS has been chosen for two reasons: Firstly, though NHS is not exactly a business organization, the PRP of NHS was set by commercial-oriented objectives (Bach, 1994, cited in Dowling and Richardson). Therefore NHS still bears mush resemblance of
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