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Running head: HUMAN RESOURCE MANAGEMENT

Human Resources Management: Literature Review
Mary-Ann R. Foster
Liberty University
August 12, 2014

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HUMAN RESOURCE MANAGEMENT

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Abstract
Human Resource Management (HRM) plays a vital role in any organization, as it is the
initial and the final interaction an employee will have with the organization. As HRM continues
to evolve, the role of HR and its effects on organizations continues to change also. HR practices
affect both internal and external factors of an organization, such as competition, compensation,
legislation, recruitment and labor relation. These factors influence the organization’s competitive
advantage over competitors, both domestic and international. After reading this review the reader
will have a better understanding of the role of HRM today, how HRM has evolved, how HRM is
influenced by internal and external factors of its environment and the effects of HRM on
organizations today compared to the past. The future of HRM will also be discussed. The review
will also highlight research gaps in previous research, and provide suggestions about the HR
areas that future research should address.

According to Koch and McGrath (1996). and growth.HUMAN RESOURCE MANAGEMENT 3 Literature Review Human resource management (HRM) entails making the best use of people in the organization in order to attain organizational objectives. An organization ought to have effective HRM practices in order for it to have a reasonable HRM system. The ability of HR to convert other organizational resources such as money into products and or services creates a competitive advantage for an organization (Tiwari & Saxena. investing in human capital. Wright & Snell. Strategic management of human capital may be best attained through effectual HR practices (Hussain & Ahmad. HRM practices denote organizational activities that are directed towards managing the team of human resources. There is thus a need to identify opportunities through those emerging challenges. Hussain and Ahmad (2012) maintain that. as well as for attaining organizational success. 1996.. 2007). job satisfaction and employee motivation gained more interest instead of just rational administration (Hartel et al. organizations across the globe are facing serious challenges such as globalization. Surviving these challenges has been associated with the ability to develop new capabilities. Improved employee performance is one way in which Human Resources management can assist organizations in improving organizational behavior (Lingham. HRM has assumed additional significance after realizing that individuals are of great strategic importance. 2013). At the present. as well as making sure that the human resources are utilized towards achievement of organizational goals and mission (Koch & McGrath. economic changes. In that case. . effective HRM needs sound HRM systems. This definition was formulated towards the end of the twentieth century. 2012). human resource strategies may be used as an essential tool for dealing with the challenges. After that. 1991). 2012). change management.

When conflicts and disputes arose. the function evolved to incorporate legal compliance. mediators were used to solve the problems. Industrial Relation focuses on the development of scientific knowledge. hiring. In the 1960s. during the 1920s. addressing ethical issues. assessing. At the present. organizational managers had a tendency of treating individuals as interchangeable. Originally perceived to deal with employee hiring and compensation. Personnel Administration During the 1940s. advice and support to supervisors and managers on employees’ issues (Vosburgh. when the Industrial Revolution took place. employees’ rights as well as formal rights emerged. and solving problems. Failure to adhere to regulations put organizations at risk of lawsuits. Labor Relations As from the 1900s. after the First World War. the function currently has a close alignment with an organization’s strategic plan. as well as handling employees in difficult situations (Vosburgh. and training employees. Industrial Relations Drawing from Vosburgh (2007). . Compared to the past. 2007). administration of personnel focused on enhancing efficiency. To receive the respect that the function deserves.HUMAN RESOURCE MANAGEMENT 4 Evolution of HRM The field of human resource management keeps on evolving. HR managers should respond appropriately to challenges such as lacking power. maintenance of a balance amid employees and management. It also involves providing training. recruiting. 2007). the HRM function currently involves negotiating and managing collective bargaining treaties with unions. most organizations do not have a function for industrial relations because only fewer unions exist.

as well as automated procedures. Influential Factors in HRM .HUMAN RESOURCE MANAGEMENT 5 Workforce administrative tasks concentrated on completing paperwork in order to avert the risks (Christensen. HR managers act as strategic partners with other top managers to create and sustain an organizational capability and culture. Under the upper-left quadrant. 2012). At the present. The lower quadrants represent a daily operational focus within the company. workforce planning and organizational design experts collaborate with business managers. & Ulrich. management of human resources included application of novel theories relating to motivation. Human Resources Christensen (2006) asserts that. This resulted in augmented focus on optimizing the employees. In recent times. The four-quadrant model developed by Ulrich puts administrative professionals at the lower-left quadrant. Instead. successful HRM aligns business strategy and HR. they focus more on recruiting the appropriate employees. The top quadrants reflect strategic planning and the way the HR function influences other functions of the organization (Younger. Organizational Capability Younger. and change management. team building. as well as managing performance. 2006). while the lower-right quadrant is for employee relations professionals. During that period. during the 1980s. developing and training the workforce. the growing use and popularity of computers has resulted in the rise of Web-based HR systems. Under the upper-right quadrant. Brockbank. Brockbank and Ulrich (2012) argue that. many organizations experienced acquisitions and mergers. HR departments pay less attention to the transactional activities of personnel administration.

Smart and Bourne (2001). There are significant structural differences amid organizations that affect the manner in which their HR practices are formulated and implemented (Hudson. & Bourne. HR practices should be done according to an organization’s preset HR strategy (Hudson. Organizations can enhance their work setting by making right choices regarding HR practices that always support their business strategy. Internal Factors Organizational Structure Human resources should consider the structure and strategic methods of an organization when considering changes or flexibility.HUMAN RESOURCE MANAGEMENT 6 Internal factors as well as external factors may affect HRM although the way it affects the organization may vary based on the organization and demographic location. to attain a competitive advantage. . Smart. Such strategies are highly effective when they are matched with an organization’s HRM practices. Business Strategy Drawing from Hudson. organizations use various competitive strategies. Accordingly. Smart. 2001). and cannot be changed in its favor in the short-term. & Bourne. Moreover. HRM practices are affected by its internal environment. These factors are responsible for the variation in HRM practices in different organizations and countries. Strategy One of the main factors that HRM considers when implementing change is a strategic approach especially when it comes to diversity. 2001). the external factors that affect a company’s HR practices are the pressures on the company that are not within its control.

HRM practices are adapted to suit prevailing economic changes both in the local and global markets (Garavan et al. several closely associated factors. In other words. 2008). history. Karrelson. . they should incorporate HRM practices when discharging their work (Alas.HUMAN RESOURCE MANAGEMENT 7 Culture and Past Practices in HRM Pardo and Fuentes (2003) maintain that. External Factors Economic Changes The global dimension of HRM practices has turned out to be more and more important following the development of the worldwide economy. such as traditions. & Niglas. and thus. As a result. in most cases. Management The influence of senior managers on HRM practices is highly acknowledged by many scholars. Innovation in Technological Technology alters the way people work. the activities they undertake. HR professionals often take part in making organizational decisions regarding HR practices and policies. Line managers have the responsibility of creating value within an organization. The importance of globalization has forced HR practices to shift from conventional topics to international competition and globalization (UKessay. & Niglas. thought it is just to the level of advising the senior managers to support the designing and implementation of HR policies (Alas. 2014). human resource management is conducted in a way that depends on a company’s previous way of undertaking HR practices. 2008). as well as the relations through which work is done. 2008). It facilitates the expansion of multinational corporations but generates concurrent issue of “unpluggedness” amid geographically dispersed employees. and previous practices of organizations have a tendency of creating resistance to change within most companies.com. Karrelson..

This has resulted in a great challenge for companies in managing their human resources. Effect of Competition There are several ways through which organizations may attain a sustained and lasting advantage or a competitive edge over their rivals. HRM practices of an organization will depend on the type of sector or industry in which it operates (Garavan et al. The effects of Regulations and Legislations Regulations and legislations directly affect Human Resources. Some organizations have attempted to shift their HRM functions from one nation to another. the world has turned out to be a single market because of globalization. Thus. Every nation has developed a group of regulations and legislations that oversee the management of personnel. but some have to be changed to become applicable in another . HRM practices must be modified or designed in accordance with these regulations and legislations. 2008). Organizations are crossing their home countries’ boundaries and are extending their operations across different nations. technological developments change the framework of HR practices along with the manner in which they are implemented. Therefore. Characteristics of Industries and Sectors Service and manufacturing are the two categories HRM concentrates on because of production and needs of the organization.HUMAN RESOURCE MANAGEMENT 8 Technology is central in the manufacturing industry since it provides a number of business benefits. Globalization Tayeb (1998) asserts that. nearly without any modifications. Consequently.. amid them being development of effective HR practices (Kane and Palmer. 1995). Some practices may be shifted across nations.

knowledge and availability . Guest model. and focuses on the soft or human element of HRM. a number of the practices that organizations imported from overseas have to be altered to make them match their local non-cultural and cultural contexts. and congruent (Beer et al. including Harvard model. To improve performance Human Resources Management should consider or factor in training. advices that employees should be treated as if though they were as equally important as other resources based on cost. Models Different groups of researchers have developed different models of HRM from one time to another. the HRM practices of multinational corporations are highly susceptible to domestic cultural influences compared to their general business strategies and policies.The model also stresses the interconnectedness of HRM practices. In addition. Michigan Model The Michigan model concentrates on the most important aspects of HRM and. Michigan model. the model works on the principle that workers need to be competent.. The results of the study carried out by Tayeb (1998) endorse the claim that. cost effective. Guest Model . Moreover. The Harvard Model encourages employee loyalty rather than control. the selection process and reward methods.HUMAN RESOURCE MANAGEMENT 9 location. 1984). The previously mentioned models have played an important role Human Resources Management. In addition. Harvard Model The Harvard model acts as a tactical map to direct all managers concerning their relationships with workers. and Warwick model. some HRM practices are more intensely culture-specific and are always not transferable.

customer complaints. such as flexibility and commitment. Role of HRM in Organizations HRM plays an essential role within an organization since it helps ensure effective and efficient utilization of human capital. To improve an organization the Human Resources Management department should consider cost. and effective utilization of workers. organizational performance. this model is based on the principle that a group of incorporated HRM practices will lead to superior organizational and individual performance. HRM affects and benefits an organization both directly or indirectly through its influence on other organizational variables. service quality. employee productivity. the model acknowledges the impact of HR practices on HR strategy. It maintains that. which in turn contributes to the success of the organization. These practices will in turn. 1990). trust. and through limited absenteeism. Warwick Model The Warwick model stresses on a systematic approach to management of human resources. employee turnover. enhanced innovation.HUMAN RESOURCE MANAGEMENT 10 According to Guest (1997). employee-employer relationship. there is a major difference between personnel management and HRM. result in better organizational outcomes. Other variables include employee commitment. innovating and innovation strategies. organizational performance will be improved through increased productivity. . such as competitive advantage. financial performance. It focuses on both the internal and external context of an organization (Hendry & Pettigrew. focusing on these main factors will enable HRM to effectively provide or develop better strategies to confront employee development. cost and training which translates to job security and a successful organization. Ultimately. 1997). Moreover. and conflicts (Guest.

and provide growth potential wither it is through training or promotions. Employees respect and are confident in employers who communicate effectively. Competitive advantage can be developed and retained be creating a unique. HRM practices act as a channel of communication amid employer and workers. are fair. Effective Utilization of Workers Vanhala and Ahteela (2011) presented a claim for fostering HRM practices claiming that human resources are often underutilized. job satisfaction. and experience possessed by an organization’s employees cannot be imitated by competitors. innovation and growth. and are contractshaping events. 2011).HUMAN RESOURCE MANAGEMENT 11 effective management of workers. Although. HRM practices assist organizations to attain competitive advantage over their rival companies. People are among the most essential factors providing adaptability and flexibility to organizations (Vanhala & Ahteela. In that case. and employee turnover. Relationships between Employees and Management One way to improve the relationship between employee and management is to improve the way employees view HRM and effective HRM practices. other organization have the ability to copy products and services the functions of an organization HRM department cannot be easily duplicated as there are created just for that organization. and frequently perform below the HRM ability for this . Competitive Advantage Vanhala and Ahteela (2011) argue that. Tzafrir and his colleagues carried out a survey to establish how effective HRM practices impact on workers’ trust on their superiors. The main goal and missing of HRM should be to provide a bridge between employees and employers. the skills. knowledge. In addition.

Employee Commitment Organizations are able to retain and recruit skilled and knowledgeable employees based on effective HRM practices. acquire and retain. Bhat. Thus. HRM methods have the ability to affect employee’s skills in various ways such as development and control/ acquisition.HUMAN RESOURCE MANAGEMENT 12 reason employee motivation and skills can be greatly affected. Customers rely on HRM to effectively inform the organization on changes that may affect the customer as well as the organization. the state needed to modify its HRM practices to efficiently strengthen the health care system’s functioning. The selection process and method is crucial as it sets the standard of the type of skilled employees an organization is able to attract. whether it is technology. HRM practices designed towards . & Saha. The findings also suggested that investment in developing various strategies for career development and growth of health workers was needed (Maheshwari. Employees as well as customers get there perception of an organization through HRM as they are the introduction to the organization and interacts with the employee through the period in which that there is contact between employee and management. 2005). This implies that workers’ service behavior partly mediates the link between service quality and HRM practices. In other words. service quality. Maheshwari and his colleagues undertook a study to assess health officials’ commitment and its respective implications for human resource practices in Maharashtra. service or products. According to the research findings. Tsaur and Lin (2004) carried out an empirical examination of the relationship amid HRM practices. the health officials did not have strong commitment to their department. Service Quality Research provides proof to indicate that HRM practices assist an organization to enhance its services’ quality. and service behavior in the tourism sector.

Performance review and employees’ attitudes towards the HRM department constituted the major predictors of employee commitment in the two organizations. and career development. The study was aimed at examining the level of employee commitment within the two firms that can be associated with HRM practices. On the other hand. Additionally. challenging tasks did not have a significant relation with employees’ intentions of staying. Studies have been conducted to compare different HRM practices in two different types of firms. Regression results indicated that different HRM practices significantly predicted organizational commitment among employees in both firms. the researchers found that career development and training did not have a significant relation with organizational commitment. In another research. and perceptions on organizational performance and . employees’ organizational commitment had a positive correlation with person-organization fit. HRM practices. where such practices are lacking. remuneration. with the fashion firm having a higher mean score on different HRM practices. training. Performance The research by Rondeau and Wager (2001) analyzed the relationship as it relates to workplace climate. From the study. Results showed that employees’ motivation to stay in an organization was related to factors such as employee recognition. They established that. there was a significant difference in the HRM practices of the two firms. recognition. Furthermore. Chew and Chan (2008) assessed how HR practices influenced permanent workers’ organizational commitment. as well as their intention of staying in the organization. low levels of employee commitment are likely to prevail. and a chance to carry out challenging employment tasks.HUMAN RESOURCE MANAGEMENT 13 the career development and growth of employees can help an organization foster employee commitment.

Selection and recruitment are examples of many factors to be considered when analyzing HRM practices. (2011) also found that effective implementation of HR practices within an organization has a considerable impact on an organization’s performance. They established that. In addition. Financial Performance Drawing from Tiwari and Saxena (2012). Another study was conducted to examine whether some particular features of hotels influenced organizational performance. HRM practices contributed to increased banks’ performance. It was found that the performance of hotels was positively related to hotel type and category. Furthermore. Gilal and Jatoi (2011) showed that there exists a significant relationship between firm performance and HRM practices. there is little empirical .HUMAN RESOURCE MANAGEMENT 14 concluded that nursing homes had better HRM practices or concepts. were likely to be considered to generally do better in several vital organizational outcomes. and empowerment. The researchers also established that. high performance job practices have a considerable impact on subordinate employees’ outcomes. and that strategic positioning of HRM is a driver for organizational performance. a study by Soomro. as well as to assess whether certain HRM systems affected organizational performance. the results showed that HRM practices such as training and employee involvement in decision making enhanced organizational performance significantly. nursing homes that had more effective HRM practices along with a workplace environment that strongly endorsed employee participation. Soomro. assessing how HRM practices impact on organizational profitability. as well as on long-term and short-term measures of a firm’s financial performance. such as productivity and turnover. Gilal and Jatoi. accountability. Compared to nursing homes hotels performance showed a positive relationship as it relates to Human resources Management. Furthermore.

HUMAN RESOURCE MANAGEMENT 15 support for an affirmative direct relationship amid organizational profitability and HRM practices. flexible training alternatives. such as decreased employee turnover. which may be considered adaptive in nature. An assessment of how HRM practices in China affected organizational performance. The researchers suggested that giving jobs plus open and online house tests. and project and skills centric training. Employees Productivity Involvement of employees in form of delegating responsibility and obtaining suggestions from workers on organizational matters might positively impact on the productivity of employees. In general. transparent performance appraisal systems. education referral recruitment. HRM practices may indirectly lead to organizational profitability through other positive outcomes. 2012). Most of the firms follow those HRM practices. Effective Management of Workers Laxman and Kumuda (2008) established that a bigger percentage of the sampled IT firms institute complex HRM practices. research shows that investing in HRM practices may substantially help an organization perform better. as well as employee relations found that HRM practices have positive and direct impacts on operational performance. There is an impressive relationship between HRM practices between non-managerial and managerial employees as it relates to performance. are among HRM practices which. more non-salary employment benefits. and opportunities for career development. Positive employee contribution can be attributed to cross training among different departments which some organizations refer as detail positions. could contribute to effective management of workers. Additionally. when . In other words. and increased employee productivity. financial performance. and employee relations (Tiwari & Saxena. above average remuneration.

and technology innovation have a positive effect on an organization’s technological innovation. . technological innovation was found to have a positive relationship with organizational performance. Innovations and Growth Laxman and Kumuda (2008) further maintain that. Ruwan (2007) evaluated the relationship amid employees’ overall job contentment and satisfaction with their pay. and reasonable job information have a negative correlation with IL. On the other hand. Research shows that compensation. The links between HRM. poor work-family balance has a positive correlation with the IL of marketing executives. Job Satisfaction HRM practices affect the level to which employees are satisfied with their jobs. Employees Turnover Employee turnover constitutes a big challenge for most organizations. Moreover.HUMAN RESOURCE MANAGEMENT 16 rigorously followed would help in the effective management of human resources in IT companies. an organization’s HRM practices have a more considerable influence on innovation and growth indices rather than on financial performance. and HRM practices. job analysis. performance. Furthermore. career development. as well as their contentment with pay. Regression results of HR practices against marketing executives’ IL indicated job analysis and compensation as strong predictors of IL. The results showed that a number of HRM practices increase employees’ overall job satisfaction. outcome control and material motivation have an adverse influence on a firm’s technological innovation. but organizations can lessen employee turnover rate through the implementation of effectual HRM practices.

there is a possibility of HRM of assuming a more central position in the running of organizations in future. Designer . mainly through empowering procedural and digital technologies. This will be accomplished partly through the use of computer-aided technologies allowing managers and employees to undertake transactions online. and enhanced learning (Brewster & Mayrhofer. Accordingly. the future of HRM seems promising. HR professionals are now operating as strategic partners in the formulation of organizational strategies and policies. as well as other organizational functions. HR will facilitate employee-employer connection. Having that in mind. Given the growing popularity and adoption of strategic HRM by most organizations. Facilitator According to Brewster and Mayrhofer (2012). There is also a possibility of the HR function being given more strategic responsibilities in future. including facilitator. This role will result in a continuous strive to lessen dependent relationships amid managers/employees and HR by transferring expertise and knowledge from HR to the clients of HR. which emphasize managerial independence and employee self-service. These roles will emphasize on less control over employees. and educator. since it significantly influences employees’ behavior and performance. 2012). HRM is likely to have a successful future that will revolve around three overlapping and complementary roles.HUMAN RESOURCE MANAGEMENT 17 Future of HRM Existing literature on human resource management has shown that the HR function plays a central role in the success of an organization. designer. The literature has also shown that. which they formerly required a HR expert to administer.

selective employment of new employees. 2012). and recruitment and selection. future research should look into . extensive training. have affected employees’ performance. Accordingly. It has also concentrated on how HRM practices such as training and development. and decentralized decision-making and self-managed teams (Brewster & Mayrhofer. 2012). Such strategies include employment security. Second. as well as how HRM interacts and influences other functions within an organization. successful adaptation. In terms of research gaps. career growth opportunities. motivation. compensation. Lastly. relatively high compensation dependent on performance. HR will communicate extensively to employees on what will be happening within the company and why (Brewster & Mayrhofer. to human resource management. performance appraisal. and then to strategic human resource management. Educator HR will act as a medium for communication and learning. previous research has not paid much attention on the effectiveness of different HR models in practice.HUMAN RESOURCE MANAGEMENT 18 HR will design and help in the implementation of high performance employee strategies along with line staff. HR will have three sub-roles. factors that influence HRM. Conclusion and Recommendations Previous research on HRM has focused mainly on evolution of HRM. it will introduce new ideas and fresh thinking to promote innovation. productivity. The major developments that have taken place over time include a shift from mere personnel administration. and creativity within the enterprise. extensive sharing of performance and financial information. First. As an educator. and satisfaction. it will continue enhancing mastery of espoused organizational process enhancement methodologies and practices by managers and employees. reduced barriers and status distinctions.

Instead. it will undertake an extensive qualitative research on this area through case studies of real organizations. My research will depart from previous research that has mainly highlighted the significance of human capital as a crucial source of competitive advantage for organizations.HUMAN RESOURCE MANAGEMENT 19 that area. a number of studies have highlighted human capital as a good source of competitive advantage. The research will make a great contribution to the field of human resource management by providing empirical evidence and facts. . Moreover. extensive empirical research on how different organizations use or have been using their human resources to attain a competitive edge over their rivals is yet to be carried out. However. which can guide other organizations and human resource professionals on how they can use their human resources to attain various organizational benefits.

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