MANAGING THE HUMAN RESOURCES OF BUSINESS ORGANIZATIONS IN A DEPRESSED ECONOMY

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Organizations are increasingly looking at human resources as unique assets that can provide sustained competitive advantage. The changes in business environments with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never ending changes that organizations are undergoing have led to increased need for managing human resources (Devanna, Fombrum, and Tichy, 1998). A human resource (HR) department that is highly administrative and lacks strategic integration fails to provide the competitive advantage needed for survival, thus losing its relevance. Huselid and Becker (1997) found that there were noticeable financial returns for organizations whose human resource management (HRM) systems have achieved operational excellence and are aligned with strategic business goals. According to Ulrich (1998), a major role of Human Resource Personnel is to become a strategic business partner. Youndt and Scott (1996) find that firms employing HR practices according to the stated strategy are regarded as having better perceptual performance. Singh (2003) gives a broader approach to looking at strategic human resources management (SHRM) by integrating various functions and establishing the linkage between these functions and the business plan. It is important not only to identify HR competencies in concurrence with the business needs and to develop selection and development practices to secure those competencies, but also to evolve and implement a performance evaluation plan that links the performance of the employees to the strategic goals.

Knowledge is important for organizational performance, and by implementing a human resource strategy to develop the knowledge worker and to retain the knowledgeable, a firm can understand how to create, transfer, and use it effectively to develop a competitive advantage. As a result, knowledge has emerged as the most strategically significant resource of the firm (Grant, 1996) and is built into the very nature of the firm (Penrose, 1959).Knowledge workers are not labor, they are capital (Drucker, 2002). The loyalty of knowledge workers and the ways to minimize turnover are critical management problems (Alvesson, 2000).

Modern businesses are full of challenges, to face these challenges, organisations should recognise the fact that human resources are indispensable. This is because of their role as the prime mover or initiator of all productive activities. According to Donnelly et al (1992:315) human resource management is the process of accomplishing organisational objectives by acquiring, retaining, terminating, developing and properly using the human resources in an organisation. The acquisition involves recruiting, screening, selecting and placing personnel. Recruiting efficient individuals matters a lot to an organisation for it to  attain  its objectives.  Employees at a particular time must be fired for breaking rules and regulations or failing to perform their duties regularly.

Human Resource Management issue have been major concerns for managers at all levels  because they all reach their goals through the effort of others this requires the effective and efficient management of people (Desler et al 1999). The spacious array of HRM activities for example, planning, recruiting, selection and training just to mention a few place enormous responsibilities on supervisors and managers alike. These include  analyzing  jobs, planning  labour needs, selecting employees orienting and training employees, managing compensation, communicating (which includes counselling and disciplining) and maintaining employee commitment.

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