HRM System In Sustainable Value For Stakeholders Essay


Discuss about the HRM System in Sustainable Value for Stakeholders.



A company is as strong as its employees, their motivation, training and performance. It is the job of the HR department to ensure employee satisfaction. Considering all these aspects help in achieving an effective Human resource management system in the company. A company can only succeed if it hires, motivates and maintain individuals who are able to respond to and adapt to the challenges and changes in the future. As employees matter more to a business, the competencies sought by companies are changing focus towards the management of relationships, people's ability to network, innovate and to partner.

A Human Resource Management system can be defined as a complex system comprising of several internal systems resulting from HRM activities and HRM levels and sub-levels which have to work together in order to achieve harmony within the company, achieve competitive advantage and promote innovation (Alfes, 2012). In order to link all the levels, sub-level and the whole HRM mechanism and to see how these level and the mechanism work together to achieve company's organisation and performance outcome, a Strategic Human Resource management system( SHRM) is applied (Arthur & Boyles, 2007;). The HRM systems that have to fit together are HRM processes, practices, policies and philosophies (Alzola, 2018).

Jenkins and Delbridge (2017) define HRM philosophies( highest level) as, “an integrated set of assumptions and beliefs about the way things are and should be guiding organization’s policies to treating its employees on the one hand, and shape the perceptions shared by employees on the other hand”. These assumptions are basically a company's mission and vision. HRM policies ( second highest level), provided the guideline on how to achieve HRM philosophies. They include the company's goals and they are based on HRM practices. This level of HRM contains details of how a company values of its human resources and defines how employees and managers should be treated in order to realize company success. Human resource managers are responsible for creating HRM philosophies and policies since their stakeholders develop statements and the denotations on how employees are valued and recognized and how this is reflected with the particular goals the company is trying to achieve. The third and fourth levels of an HRM system are HRM practices and HRM processes. HRM practices contain the method to implement the pre-determined HRM policies. They are specific means to achieve company goals and can, therefore, be motivating to employees and provide a perception into task performance. HRM processes, on the other hand, are the actual implementation of HRM practices. They are the actions of the employees. The key difference between HRM policies and practices is that policies do not contain explained information on how to implement a specific practice since it lacks precision. In short, HRM philosophies entail a perception into how employees contribute value to the company in order to contribute to the company success, HRM policies can be regarded as particular HRM-associated goals which should be achieved, HRM practices are tools and means on how to achieve these goals and HRM processes are the actions executed by employees achieve these goals.

The word stakeholder was first used in 1963. It means those individuals without whose support the company would cease to exist. They include share-owners, employees, customers, lenders and society (Jenkins & Delbridge, 2017). The major aim of any organization is profit maximization, this can only be achieved through co-operation of all the parts of the company. Human resource department ensures a good employee engagement. According to Tillmann (2016), employee engagement can be defined as a positive attitude held by the employee toward the organization and its values. An engaged employee knows of the business context and works other with employees to improve the performance of their work, Kahn (2011). An engaged employee has vigour and dedication to the extent that they are fully focused on their work. In order to fully engage an employee, HRM resorts to several activities

Training aims at giving an employee the opportunity to improve and hone skills, qualifications, and activities. Training provides the opportunity to cope with and adapt to problems and challenges and to be able to come up with solutions to them as pointed out by Arrowsmith and Parker (2013).

HRM policies are the driver for training. It illustrates which company-specific skills are needed to perform which specific task within the firm to ensure that training is aligned with those tasks requirements (Jenkins & Delbridge, 2017). Thus, taking employees back to school is the perfect way to train employees and teach new generic skills [generic skills are a skill set which can be applied to a variety and is transferable between organisations].

Secondly, job design. This includes a clear description of the job assigned to and employees and any other related tasks. It furthermore integrates expectations regarding the relationship with fellow workers in order to contribute to the company competitiveness. Within job design, company goals are translated into job requirement which employees satisfy (Arrowsmith & Parker, 2013). During employee recruitment, HR needs to understand the tasks and responsibility that needs to be fulfilled for the sake of company success. This is catered for by the HRM philosophies and policies, they provide insight that is used for the approach of job design. Job design can easily be used to motivate employees; jobs are designed in a challenging and interesting way in order to motivate employees. HRM practices aim at motivating employees by adding variety within the task, rotating employees between jobs and increasing the authority or responsibility for the task (Lepak & Gowan, 2010). It is prudent to communicate the intention for job rotation.

Compensation is also essential as a way for the employee to get paid. This can be done by either financial or non-financial means. CIPD (2003) define compensation as "a show of how firms and people around them value them as individuals”. There are two ways with which a company can compensate an individual; either on an individual basis- which aims at motivating a single employee into better performance or on a group or organizational basis. HRM practices can pay an individual on the amount of work done or a specific amount of time that an employee is expected to reach a target. Individuals can also be compensated using awards, which are given out if a task is completed or done excellently. On a group level, HRM practices offer incentives for plans for teams and are paid should the team reach a goal. Furthermore, gain sharing, profit sharing are also paid on a group basis in order to reduce any related labor costs. Finally, documenting of group performance can also be considered an act of compensation.

Human resource management system is an essential way to create sustainable value for a company. A company's value depends not only on its profits but also their employee satisfaction. HRM, in particular, use different means to make the working environment for the employees better. Different theories can be used to explain their endeavor, theories of performance, Henri Fayol argued that in order for employees to work more efficiently, management also has to be effecient [ from that came the four functions of management]. Motivation theory, Abraham Maslow invent the pyramid of employee motivation, the base is the basic needs, then security, then love, then a sense of accomplishment, then finally, for self-actualization.

HRM also factors in behaviour; organizational behaviors, such as culture and structure, group behaviour, such as the functionality of a team; individual, such as ability or personality. These put through a good HRM system can be used as a means to motivate an employee and thereby increasing company success. In the case of customers, stakeholders are incongruent in terms of duties, stakeholders identified with the role of HR managers in regard to expectation of their front-line employees. They identified with the duty of the facilitator and expected front-line employees to enlist in the production of new services to meet their customer's needs.

HRM philosophies and HRM policies, set by HR managers, rate the establishment of efficient processes by the creation of strict HRM activities and the advancement of a cost-efficient method. Numerous methods aim to advise especially lower employees on how to perform a particular task. Management is about dealing with complexity, HR deals with the complexity of the workplace in order to increase company success. This can only be done when the individual employee's personal ambition and goal are similar to that of the company. As stated by Tillmann (2016), constant, uninterrupted and motivating communication is necessary to achieve this. HRM always recognizes an individual's worth, proper compensation for an employee's work and time.


The valuation of a company is a long-term issue. It takes a long time to be highly valued and to maintain that value a good HRM system is important to keep the employee motivated. HRM philosophies, policies, practices and processes are implemented to keep the stakeholders of a company interested, to keep the employee engaged. This will, in turn, keep the valuation of a company sustainable.


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