Creation Of Long-term Value For Stakeholders By Organisation's Management Of Its Human Resources

Human resource management is referred to process of acquiring, developing and optimising employees. In context to modern rapidly changing and complex organisational environment, people plays a crucial role in enhancing organisational performance that can ultimately translates into achievement of organisational goals. Effective human resource management has also effectually become an underlying component of modern firm’s overall strategy in response to market and competitive pressures. It also greatly assists present day entities while addressing challenges of modern diverse, collaborative and agile workplaces. Research shows that each function of human resource management can add long term sustainable value for stakeholders for an organisation (Malik, Pereira, & Budhwar, 2018). Effective management of human resources in form of efficient planning, appropriate job design and specification, adequate employees’ training and development, proficient performance and remuneration management, and employees wellbeing can help contemporary organisations to attain competitive edge in form of cost effective workforce, committed, motivated and dynamic employees, and efficient operations.

Value creation through effective human resource management is largely dependent on effective HR strategic planning, as it enables firms to develop appropriate HR actions plans in response to rapidly changing modern organisational environment. Through strategic HR planning, contemporary managers are able to identify factors stemming from environment changes that can influence firm’s HR program. Although HR planning process involves with significant utilization of resources both in time and monetary terms, however contemporary organisations tend to benefit in form of organisational effectiveness and efficiency (Devanna, Fombrun, Tichy, & Warren, 1982). For instance, through HR strategic planning, organisation can spot labour shortages and surplus through forecasting of labour demand and supply. As a result, modern managers are able to formulate appropriate HR strategies and practices that can fill these gaps. In addition to that, value is also created through effective integration of other functions of HRM such as remuneration management, succession planning, performance management and employees’ retention. Effective HR planning can also deliver competitive advantage to a firm in form of smooth, effective and efficient operations of business cycle (Noe, Hollenbeck, Gerhart, & Wright, 2015). However, for long term sustainable value creation, HR approach needs to be aligned with organisational overall strategy, culture and objectives on continuous basis. In addition to that workers need to be engaged with throughout the planning process and managers must be held accountable for the strategy implementation (Delery & Roumpi, 2017). Lastly, HR planning processes also needs to be reviewed and evaluated constantly to establish whether gap-closing strategies are effective or not.

Job analysis is also a critical component of HRM value chain, as it assists firms to develop appropriate job descriptions and person specifications. It involves with determination of key competencies, responsibilities, skills, knowledge and attributes that is needed for a given job. Here the value can be created through effective planning, data collection and data analytics (Brannick, Levine, Morgeson, & Brannick, 2007). Effective data analysis would also assist organisations in reviewing and subsequently determining the appropriate changes that are required in entity’s HR practices and programs. Job analysis leads to job design that involves with determining the contents and tasks of the job under consideration. Job design is increasingly becoming an important area of HRM, where long term value can be created. Job design aimed at enhancing flexibility and employees’ empowerment through job enlargement, job enrichment and creation of collaborative workplace environment can positively contribute towards employees’ satisfaction and wellbeing (Wood, Van Veldhoven, Croon, & de Menezes, 2012). In long term, these job design considerations are also likely to translate into positive organisational performance and outcomes. However, for sustainable value generation, organisational culture and structure needs to be flexible and adaptable enough to support changes in HR policies and practices. In addition to that job analysis approaches need to be carefully selected through an optimum combination of task based and workers’ focused methods.

Attraction, selection and recruitment are also key functions of HRM, where value can be created through effective management. Attraction and influencing of potential candidates is first stage of employee life cycle and it involves with development interest and response in relation to job positions. Modern organisations that are known for best workplaces and ‘employer brand’ create value as they can stimulate positive response from a larger talent pool (Aldousari, Robertson, Yajid, & Ahmed, 2017). There is where, companies like of Google and Amazon has done extremely well by developing powerful employer brands in form of creating positive image in stakeholders’ minds. By presenting itself as a great place of work, firms can attract greater response from a highly competitive labour market. Modern firms can develop their employer brand through strong organisational culture, vision, mission and management approach along with appropriate marketing, brand awareness and following (Prajapati & Patel, 2017). On other hand, during selection and recruitment stage, value can be generated by employing an appropriate transparent mechanism that can capture meaningful data of candidates. Utilization of emerging recruitment channels such as social media platforms and digital HR marketing also offers great potential to create value by reaching out to wider audience in an efficient manner. In addition to that development and application of effective personality assessments, skills exercises and tests can also assist firms to choose candidates that meet requirements of organisational fit. Another key consideration that organisations need to take into account is not to over rely on unstructured interview technique and reference checks, as these recruitment and selection tools often have validity issues (Schmidt, Hunter, & Eisenberg, 1998).

Human resource development, effective talent management and career planning can also significantly contribute towards long term value creation for stakeholders in an organisation. HRD is referred to process of enhancing workforce skills, competencies and knowledge through training, employee management, further education and knowledge management. Human resource development was traditionally aimed at task based training, however role of HRD has greatly evolved over the years. In context to modern organisational environment, HRD has effectively become a strategic function that can generate long term value generation by developing skills for the future (Scully-Russ, 2012). Developing psychological capital of employees through enhancing their self-efficacy, self-awareness, resilience and optimism levels can deliver highly productive, agile, committed and skilled workforce that can play its part towards organisational success. Research shows that higher psychological capital among workers is directly and positively correlated with their respective performance and wellbeing (Shahid & Muchiri, 2018). In addition to that for long term and sustainable value creation, modern firms fully need to embrace the learning organisation notion through implementing and promoting open communication, critical systematic approach and sharing of knowledge and ideas. In addition to that organisations can also generate value through effective talent management and career planning. This involves with anticipating needs of the future and subsequently building and maintaining human capital along with integration of business planning with HRD. Modern organisations are also taking a more mutual approach towards career planning of their employees through working with them in close partnerships while workers advance in their professional lives (Schein & Van Maanen, 2016).

Effective performance management that is also backed up by appropriate reward and recognition strategy is also key contributors of long term value creation in relation to complex and rapidly changing organisational environment. Research indicates that committed and appropriately rewarded workforce is pivotal for long term success of an organisation, as it effectively builds a climate of trust that is based on fairness, transparency and equity (Rowland & Hall, 2014). Value can be created for stakeholders by devising and adopting a value-added reward and recognition system that can generate mutual value for both the workers and the organisation. Furthermore, remuneration system must also be carefully designed, so that it can effectively attract, retain, develop, support and motivate employees. It needs to be based on achievement of both short term and long term objectives with a right mix of monetary and non-monetary rewards that are also in line with industry average. On other hand, performance management can play a crucial role on value generation capabilities of a firm by enabling it to effectively assess performance levels at both individual and group level (Bourne, et al., 2013). A well-formulated performance management system backed up by appropriate performance rating methods can effectively appraise performance of employees and managers at all levels. Value is created through effective determination of goals and objectives by setting directions and defining expectations first. Once an action plan is implemented, modern organisations create value through conducting periodic assessments, so that underlying causes of bad performance can be identified and accordingly acted upon in time through coaching and mentoring (Chin, 2008).

All functions of HRM are interlinked, and to create value in modern complex organisational settings, each component of HR needs to be managed in effective and efficient manner. For long term sustainable value creation and competitive advantage, HRM processes, tasks and activities must be analysed and evaluated on continuous basis, so that inefficiencies and problems along with opportunities for improvement in HRM value chain can be identified and adequately acted upon in time. In addition to that, organisations also need to be proactive, dynamic and flexible in their approach, so that it can appropriately respond to disruptions and challenges of modern diverse and agile workplace environments. Other key characteristics that are crucial for long term and sustainable value creation are simple and compelling vision, focus on self-learning, guiding values, learning culture, collaborative environment and strong working relationships between employees that are based on mutual respect and trust.

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