Human Resource Functions: The Major Challenges That Increased Its Importance in Organizational Success (Grade A Paper)

Human Resource Functions:

The Major Challenges That Increased Its Importance in Organizational Success

Jelissa Edwards

Management 0100

Sasha Chatar

October 30, 2014

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Introduction

Human resource functions, such as recruitment and selection, training and development,

performance management, compensation, and occupational health and safety management are

vital to organizations. Human resource functions are the roles that human resource managers use

along with their competencies, in alliance with the organization’s goals, to get the most from the

organization and its employees.1 These functions are important because they help to keep the

major challenges of profitability and increased competition faced by human resource

departments and organizations (within the business environment) ascertained.

The business environment consists of factors belonging to both the external and the

internal environment. To give a clearer understanding, the business environment has a set of

factors, both internal (within the organization) and external (outside of the organization), each of

which entailing sub-factors that are understood to have some effect on organizations. This paper

will focus on some of the challenging factors of the business environment and the functions that

prevent these challenges, as well as identify three organizations that consider the significance of

these functions. Some of the challenges faced within the internal business environment by human

resource managers and their organizations include attracting highly qualified individuals,

retaining highly qualified employees, and measuring productivity; while some complications

faced within the external business environment include designing a fair compensation package

and implementing occupational health and safety (OHS) in the workplace according to

legislative laws. Nestlé, Duke University, and Brigham and Women’s Hospital all understand the

1 Sasha Chatar, “Unit 1—Overview of Human Resource Management,” The Learning Exchange—University of the

West Indies, accessed November 9, 2014, http://goo.gl/brwFgE.

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depths of these challenges and have considered human resource functions, as listed in their

human resource policies, as an avoidance.

The Business Environment

All organizations exist within interrelated environments.2 As mentioned earlier, the

business environment is the sum of all factors that can affect the performance of an organization.

Its sub-factors are divided into two categories: the internal environment and the external

environment. The internal environment includes the factors within an organization that can affect

its functionality, while the external environment includes factors outside of an organization that

may have some influence on the way an organization functions internally. Internal and external

factors can include a new business law passed by government, consumer demand for a particular

product, competition from an international firm, a sudden economic downturn, the release of a

new piece of technology, an employee filing a lawsuit, and leaks of confidential information.

Although some factors can be of benefit to organizations, other factors can be more of a

challenge than they are beneficial. Some organizations may find that the business environment

they are in is competitive and might find themselves fighting for profits. To compete in this

changing business environment, organizations use their main competencies and strategies. In

order to do so effectively, they must understand the factors within this competitive environment

that are increasing challenges and implement a means of prevention, such as the use of human

resource functions.

2 Sasha Chatar, “Unit 2—Understanding the Business Environment,” The Learning Exchange—University of the

West Indies, accessed November 9, 2014, http://goo.gl/zxtwL8.

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Human Resource Functions

According to the Oxford Dictionary, the word “function” is defined as work or to operate

in a particular way.3 Ms. Chatar states that human resource managers have strategic

functionalities within the organization, which she identified as training and development,

performance management, recruitment and selection, compensation, and occupational health and

safety. 4 As per the definition given that a function is the way in which something—a person, in

this instance—operates and based on the functionalities of human resource managers described

by Sasha Chatar, human resource functions are the responsibilities of human resource managers

and are used to balance the organization’s employees and goals. Its purpose is to increase

organization’s competitive advantages by preventing complications that may derive from

challenging factors of the business environment. These challenges that interfere with the

organization’s performance are divided amongst the two categories (internal and external

environment) of the business environment.

Training and Development within the Internal Environment

There are several challenging factors within the internal business environment that can

interfere with an organization’s performance. One such factor is retaining highly qualified

employees. Based on my research throughout the semester, I have found that employee turnover

was identified as the most common challenge that organizations face. Although some believe

that high employee turnover for certain businesses can be a good thing, a vast majority believes

that it is a problem for organizations. According to Derek Torrington, the majority of

3 Oxford Dictionary, s.v. “Function,” accessed November 9, 2014, http://goo.gl/NHghIH.

4 Chatar, “Unit 1.”

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organizations that feel high employee turnover is an interference spend most their time finding

solutions to the problem.5

However, people leave jobs for many different reasons, one of them being because they

may wish to “move into new areas of work for which there are better opportunities.”6 Although

this is not the only reason for high employee turnover, organizations may overcome this

challenge and retain their employees through one of the important human resource functions:

training and development. According to Gary Dessler, a professor at Florida International

University, “training is giving new or current employees the skills that they need to perform their

jobs,”7 while development is defined as human resource methods that focus on employees’

personal and future careers.8 Training may be more related to the organization’s current aspects,

in that human resources managers only train employees on what they need to know for the time

being; however, it can also give employees a sense of personal advancement and a reason to

remain with the organization.

The level of importance for employee development, on the other hand, is far higher than

employee training in the case where an employee desires a career change. A development

scheme that focuses on the employee’s career needs allows employees to feed their urge for

development and obtain the experience that they may resign from the organization to receive

elsewhere.

5 Derek Torrington et al., Human Resource Management (London: Pearson Education Limited, 2005), 169.

6 Ibid.

7 Gary Dessler, Human Resource Management (London: Prentice Hall, 2012), 226.

8 Sasha Chatar, “Unit 4—The Basics of Human Resources Development,” The Learning Exchange–University of the

West Indies, accessed November 9, 2014, http://goo.gl/oHxti6.

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Nestlé, “the world’s leading Nutrition, Health and Wellness Company”9 founded by

Henri Nestlé in 1866, relies on the importance and benefits of ensuring that its employees has

some means of development. As stated within its human resources policy, “training is done on-

the-job” and “the company endeavors to offer the opportunity to progress for those having the

determination and the potential to develop their capabilities.”10 In agreement with Nestlé, an

effective training and development program is one that serves a purpose and aims to improve

employees’ skills and competencies. To ensure this is the case, Nestlé has designed its training

and development using a framework of individual development programs. Training and

development—a function carried out by organizations’ human resource managers—in a form

that allows personal development (like Nestlé’s) can improve the productivity of the

organization, reduce employee turnover, and help retain employees.

Performance Management within the Internal Environment

Another challenging factor of the internal environment is lack of productivity. According

to Anthony Inman “Productivity is an overall measure of the ability to produce a good or service.

More specifically, productivity is the measure of how specified resources are managed to

accomplish timely objectives as stated in terms of quantity and quality.”11Increased productivity

is important to organizations because it can result in higher profits. Therefore, measuring the

organization’s performance output is vital, in that is helps the organization gather accurate

information that can be used to help improve itself to become more competitive.

9 “The Nestle Human Resource Policy,” Nestle, accessed November 9, 2014, http://goo.gl/2FxQzj.

10 Ibid.

11 Anthony Inman, “Productivity Concepts and Measures,” Reference for Business, accessed November 9, 2014,

http://goo.gl/EbXDLw.

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The organization’s performance output is a direct result of its employees’ individual

performance. The dictum “employees are the most valuable asset of an organization” is a great

way to explain this case. If the organization’s employees are not performing their work duties to

the best of their abilities, then the organization can expect their low productivity to be reflected

within its productivity measurements. In order to prevent low productivity, the organization

should consider employees’ individual performance outputs.

Performance management, which is considered to be a function of human resources, can

be used by organizations to manage employees’ performance. Michael Armstrong, former chief

examiner of the Chartered Institute of Personal Development (CIPD), defines performance

management as “a systematic process for improving organizational performance by developing

the performance of individuals and teams. It is a means of getting better results from the

organization, teams, and individuals by understanding and managing performance within an

agreed framework of planned goals, standards, and competence requirements.”12 Based on

Armstrong’s definition of performance management and my understanding of performance

management, prioritizing and practicing this function, which has various implementation

methods, can help increase the organization’s productivity.

Brigham and Women’s Hospital—a collaboration of “three of Boston’s oldest and most

prestigious Harvard Medical School teaching hospitals—the Peter Bent Brigham Hospital, the

Robert Breck Brigham Hospital, and the Boston Hospital for Women,”13 which combined in

1980—understands the importance of performance management and that it helps increase

12Michael Armstrong, Performance Management: Key Strategies and Practical Guidelines (London: Kogan Page

Limited, 2006), 1.

13 “Policies and Procedures,” Brigham and Women’s Hospital, accessed November 9, 2014, http://goo.gl/CzEwNK.

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productivity within its organization. Brigham and Women’s Hospital’s human resource policy

clearly states that employees’ performance is reviewed regularly. Performance management

seems to be a strict and precise asset within an organization’s culture. Brigham’s employees’

performance standards are assessed based on “clearly defined expectations, duties,

responsibilities, and competencies”14 from the beginning of employment. Performance

management is important because it helps the organization prevent or overcome challenges, such

as a lack of productivity, by first managing the work output of its most valuable assets: its

employees.

Recruitment and Selection within the External Environment

Like the internal business environment, the external business environment also consists

of challenging factors that can interfere with an organization internally. The only difference is

that these challenges are located outside of the organizations. An external challenge that

organizations face includes attracting qualified individuals for employment. After reading

several articles, some of which were written by unknown bloggers, and studying in my spare

time throughout the semester, I have also learned that organizations have difficulties attracting

individuals with the qualifications needed to fill open positions, mainly because of competition.

To my understanding, other organizations sometimes offer job opportunities to qualified

employees within minutes of their recruitment to another firm. These employees often accept

because the opportunities provide better incentives and/or greater benefits.

Since this may be the case, organizations can use a revised form of the recruitment and

selection function in order to attract employees. Although recruitment and selection can be done

from within the organization and can therefore be considered an internal factor, it can also be

14 Ibid.

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done externally and can thus also be considered an external factor. Recruitment is “finding

and/or attracting applicants for the employer’s open positions,”15 while selection is the process in

which organizations sort between various applications and decide upon who is best suitable for

the job. Sharon Cunningham, president of Business Management Group, a management

consulting firm based in Hartford, Connecticut, believes that “employees today might move to

another job for better compensation, but they are also looking for growing, successful companies

which provide an employee-friendly environment where they can participate in the decision-

making and be part of the team.”16

The recruitment process consists of steps that are taken by organizations before they

begin their selection process. Amongst these steps is the announcement of the job opening

through whatever means of advertisement the organization chooses. The aim at this point is to

attract qualified individuals, in the hopes that they would be interested in working with the

organization yet alone apply for the position. Following Ms. Cunningham’s beliefs, it is

important for organizations to spend time advertising their job openings during the recruitment

process in a manner that highlights areas that portray the organization’s uniqueness. Doing this

can increase the organization’s chances of attracting qualified individuals. One example of a

company that advertises its uniqueness during recruitment is Duke University—an ever-growing

educational institution derived from a tiny schoolhouse in Randolph County, North Carolina, that

opened in 1838. Duke’s human resources policy is concise about how its recruitment and

selection program operates. Advertisements must state “that Duke is an Equal Opportunity and

15 Dessler, 146.

16 Sharon Cunningham, “Attracting and Retaining Employees in a Competitive World,” Insurance Journal, accessed

November 9, 2014, http://goo.gl/OAXNXA.

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Affirmative Action Employer.”17Although this does not exactly say how Duke is unique, it is an

attempt to differentiate the organization from others. To give a fairer example, Duke University

has advertised why working for the organization is beneficial and different from others, in the

form of a commercial. Its career commercial, which attempts to attract individuals for

employment at its police department, states:

The Duke University Police Department is a unique law-enforcing opportunity because

Duke is a unique place…and gives police a pivotal role in providing a safe atmosphere.

Duke University police officers maintain the same basic training requirements as any

other police force in North Carolina, and the department exceeds state standards while

holding higher requirements than city and county officers.18

From this statement, we know that working with Duke University’s police department is unique

because it exceeds the state’s standards and has higher requirements compared to other officers.

It is likely that Duke’s commercial has attracted qualified individuals who love the idea of

working for a highly accredited organization. The commercial utilizes the recruitment and

selection process in a manner that portrays the organization’s differentiation, which can help

increase the likelihood of capturing qualified individuals for vacant job openings.

Compensation within the External Environment

Another challenging factor within the external business environment is designing a fair

compensation package. According to Sasha Chatar, organizations should design their

compensation package in favor of trade unions where there is one in place to represent workers.19

17 “Policy Statement,” Duke University, accessed November 9, 2014, http://goo.gl/IMIjTv.

18 Duke University, “Careers at Duke University Police Department” (video),

December 11, 2013,accessed November 9,2014, http://goo.gl/JCJ1e2.

19 Sasha Chatar, “Unit 5—Understanding Compensation,” The Learning Exchange—University of the West Indies,

accessed November 9, 2014, http://goo.gl/mBdjoP.

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It is understood that compensation packages should offer fair salaries, when compared to payouts

received by employees of other organizations. I have learnt from doing research for my case

study on keeping Suzanne Chalmers that employees tend to compare their compensation benefits

and salary with those of other organizations. This behavior gives employees a sense of security.

However, Ms. Chatar also indicates that a compensation package should adhere to the state’s

laws regarding the payout for employees; otherwise, trade unions that represent employees may

have a case to prosecute employers for unfair pay.20 Within the United States, the United States

Equal Employment Opportunity Commission instated the Equal Pay Act, which requires “men

and women in the same workplace [to] be given equal pay for equal work.”21 Like the United

States, compensation packages in certain places are standardized by industry. For instance, in the

banking industry in the Bahamas, loan officers, bank managers, and tellers’ compensation

packages are similar across the board, regardless of which bank they are employed at.

Because of increased competition to attract qualified employees, designing competitive

compensation packages that are fair but remain within the organization’s budget has steadily

become an increasing challenge. Yet, although designing a competitive and fair compensation

package is difficult, it is not impossible. Human resource managers’ strategic competencies,

when aligned with human resource functions, can help organizations execute an attractive and

fair compensation package. A concise definition of the compensation function is “the system of

rewarding individuals for work completed according to some pre-arranged agreement.”22A

20 Ibid.

21 “Equal Pay/Compensation Discrimination,” U.S. Equal Employment Opportunity Commission, accessed

November 28, 2014, http://goo.gl/WIyBr0.

22 Chatar, “Unit 5.”

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compensation package like Nestlé’s would be of good use, as it seems to offer what Nestlé’s HR

policy refers to as fair remuneration. Agreeing with Nestlé’s HR policy, again organizations

should “establish a compensation practice taking into account relevant external compensation

levels as well as the requirement of internal fairness.”23 Considering such factors such as those

mention in Nestlé’s policy can help organizations design a fair compensation package without

such difficulties. However, a competitive and fair compensation package can adversely affect an

organization’s profit margin.

Organizational Health and Safety within the External Environment

A third cost-effective challenging factor of the external environment for organizations is

managing work-related employee injuries. According to Derek Torrington, “in the year to April

2003 … 226 people lost their lives in the UK as a result of accidents sustained at work, mostly as

[a] result of falls and motor vehicle accidents.”24As per Torrington’s research, I have concluded

that organizations in the United Kingdom struggle with the constraints of on-the-job accidents.

Work-related injuries can trigger a domino effect among organizations, where one complication

often follows another. For example, an injury can lead to a lawsuit and a lawsuit can lead to a

worsened reputation or business closure. Protecting employees by providing a safe working

environment can prevent or decreases the likeness of triggering this domino effect on the

organization.

Implementing organizational health and safety—one of the most important functions of

human resources—is best suitable for securing the lives of workers. According to the

International Commission on Occupational Health (ICOH) and the International Ergonomics

23 Nestle, “HR Policy.”

24 Torrington 2005, 490.

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Association (IEA), in 1950, the “joint committee of the International Labour Organization (ILO)

and World Health Organization (WHO)” defined occupational health and safety as the focus on

“promotion and maintenance of the highest degree of physical, mental and social well-being of

workers in all occupations; the prevention among workers of departures from health caused by

their working conditions; the protection of workers in their employment from risks resulting

from factors adverse to health; and the placing and the maintenance of workers in an

occupational environment adapted to their physical and mental needs.”25 In addition, one of the

OHS principles states that employees and customers are to be given quality conditions when they

are within the workplace.26 The objective of OHS seems to not only be to protect employees, but

anyone within the organization’s environment.

Although there are several assets of OHS at Brigham and Women’s Hospital, its

employees receive on-the-job medical attention from the personal physician and nurse assigned

to the organization free of charge. Additionally, Brigham demands that its employees undergo a

free health screening upon employment. Knowing the expense of such medical procedures, I find

Brigham’s OHS policy structure to be amusing. Giving employees on-the-job medical attention

not only increases the organization’s competitive advantage, but also reduces absenteeism and

allows the organization to deal with and reduce minor work-related injuries firsthand, as well as

possibly prevent them from happening. Implementing the most important human resource

25 Pat Scott et al., “Ergonomics Guidelines,” International Commission on Occupational Health, accessed November

28, 2014, http://goo.gl/iIAfwD.

26 Sasha Chatar, “Unit 6—Occupational Health and Safety,” The Learning Exchange—University of the West Indies,

accessed November 28, 2014, http://goo.gl/FUW6Di.

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function—occupational health and safety—is a great way to reduce on-the-job injuries that can

bring about additional complications.

In conclusion these challenges can all be prevented through the strategic use of human

resources functions (training and development, performance management, recruitment and

selection, compensation managing, and occupational health and safety). These human resource

functions has become important to organizations today because they are the avenues needed to

ensure that the challenges of the business environment that the organizations are trapped in are

kept at their, bare minimum in order to increase the organizations’ profit margin and competitive

advantage. Nestlé, Brigham and Women’s Hospital, and Duke University’s human resource

policies are written proof of this statement.

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Bibliography

Armstrong, Michael. Performance Management: Key Strategies and Practical Guidelines.

London: Kogan Page Limited, 2006.

Brigham and Women’s Hospital. “Policies and Procedures.” Accessed November 28, 2014.

http://goo.gl/CzEwNK.

Chatar, Sasha. “Unit One—Overview of Human Resource Management.” The Learning

Exchange, University of the West Indies. Accessed November 28, 2014

http://goo.gl/brwFgE.

Chatar, Sasha. “Unit Two—Understanding the Business Environment.” The Learning Exchange,

University of the West Indies. Accessed November 28, 2014. http://goo.gl/zxtwL8.

Chatar, Sasha. “Unit Four—The Basics of Human Resource Development.” The Learning

Exchange, University of the West Indies. Accessed November 28, 2014.

http://goo.gl/oHxti6.

Chatar, Sasha. “Unit Five—Understanding Compensation.” The Learning Exchange, University

of the West Indies. Accessed November 28, 2014. http://goo.gl/mBdjoP.

Chatar, Sasha. “Unit Six—Occupational Health and Safety.” The Learning Exchange, University

of the West Indies. Accessed November 28, 2014. http://goo.gl/FUW6Di.

Cunningham, Sharon. “Attracting and Retaining Employees in a Competitive World.” Insurance

Journal. Accessed November 9, 2014. http://goo.gl/OAXNXA.

Dessler, Gary. Human Resource Management. London: Prentice Hall, 2012.

Duke University. “Careers at Duke: Duke University Police Department.” (video). December 11,

2013.Accessed November 28,2014. http://goo.gl/JCJ1e2.

Inman, Anthony. “Productivity Concepts and Measures.” Reference for Business. Accessed

November 9, 2014. http://goo.gl/EbXDLw.

Nestlé. “The Nestlé Human Resource Policy.” Accessed November 28, 2014.

http://goo.gl/2FxQzj.

Scott, Pat et al. “Ergonomics Guidelines.” International Commission on Occupational Health.

Accessed November 1, 2014. http://goo.gl/iIAfwD.

Torrington, Derek. Human Resource Management. London: Pearson Education Limited, 2005.

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Addendum

Layout and Preparation

Introduction (h1)

Business Environment (h1)

Human Resource Functions ( h2)

(Training and Development) within Internal Environment (h3)

Retaining highly qualified employees (Challenge)

training and development (HRF)

o Company that uses this function within their HR policy

(E.g. Nestle)

(Performance Management) within Internal Environment (h3)

Low productivity (Challenge)

performance management (HRF)

o Company that uses this function within their HR policy

(E.g. Brigham and Women’s Hospital)

(Recruitment and Selection) within External Environment (h3)

Competing to attract highly qualified individuals (Challenge)

recruitment and selection (HRF)

o Company that uses this function within their HR policy

(E.g Duke.)

(Compensation Managing) within External Environment (h3)

Designing a fair compensation package (Challenge)

compensation managing (HRF)

o Company that uses this function within their HR policy

(E.g. Nestle)

(Occupational Health and Safety) within External Environment (h3)

Work related Injuries (Challenge)

OHS managing (HRF)

o Company that uses this function within their HR policy

(E.g. Brigham and Women’s Hospital)

Conclusion(h1)

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Project Question

The major challenges of profitability and increased competition (faced by hr and its

organizations) have made the HRM function more important to business success than ever

before. Respond to your findings with examples of companies and their HR policies based on

these functions.

What are the major challenges of profitability and increased competition? Match

the challenges with the HRM function that increases profitability and

competiveness (which is important for organizations). Some of the challenges

faced within the internal environment of business includes: retaining highly

qualified employees and measuring productivity. While some complications faced

within the external environment of business is: Attracting highly qualified

individuals, designing a fair compensation package and managing and

implementing OHS in the workplace according to legislative laws.

What are HR Polices and what’s in them? Human resource policies are the formal

rules and guidelines that businesses put in place to hire, train, assess, and reward

the members of their workforce.

What is Human Resource Functions? HRF are all of the following performed to

help the organization remain profitable and competitive. Recruitment and

selection, training and development, performance management, compensation and

OHS managing.

Company Examples

5 companies with functions within their HR Policies

Nestle

Duke University

Brigham and Women’s Hospital