HRM & ORGANIZATIONS

HRM AND THE LIST OF THEORIES APPLIED IN ORGANIZATIONS

                                                             Niklas-Luhmann.

• IDENTIFICATION OF ISSUE:  Development of innovative ideas

• APPLIED THEORY: Systems Theory

• PRACTICAL THEORY: Learning the innovative process of development

• LINKED THEORIES:  System Theory Niklas-Luhmann & Hawthorne Theory            

• SOLUTION: Correcting the old system into a new innovation.

👀In 19th century Europe, Robert Owen and Charles Babbage developed the human resources field, emphasizing the importance of people in an organization's success(McWilliams & Siegel, 1997). 

👀The father of human resource management (HRM) is generally considered to be George Elton Mayo, an Australian-American social psychologist who conducted Hawthorne Studies in the 1920s and 1930s(Bosch & Lazić, 2015).

👀The whole Human Resource planning is an evolving process as it is a part of Human Resource management; it is an evolution from scientific management developed in the late 19th century by Frederick Winslow Taylor and the System Theory by Niklas-Luhmann.

• Organizational Lifecycle Theory
• Strategic Contingency Theory
• General Systems Theory
• Transaction Cost Theory

🙆Organizational lifecycle theory, the first HR theory, posits that organizations, like living organisms, have life cycles. These cycles include birth, growth, maturity, decline, and death. Studying the organizational life cycle has led to predictive models, highlighting the impact of external and internal factors on growth and development. This theory is also applicable to products and industries(Ruta, 2005a).

💁Strategic contingency theory is an HR theory based on the concept of contingency and strategic aspects. It suggests that a leader becomes central due to their unique skills in solving HR challenges, making them difficult to replace. This theory highlights the importance of effective management in an organization(McWilliams & Siegel, 1997).

💁General Systems theory is an HRM theory that focuses on the interdisciplinary study of systems, which are cohesive conglomerations of interrelated parts, either natural or human-made. Systems are bounded by space and time, influenced by their environment, and defined by their structure and purpose. Changes in one part of a system can affect others or the whole system. The goal of systems theory is to model system dynamics, constraints, and principles for optimized equality, making it a widely spoken HR theory(Ruta, 2005b).

🙆Transaction cost theory is an HR theory in corporate governance and agency theory, focusing on the costs arising from external transactions. It describes governance frameworks as based on internal and external transactions, rather than contractual relationships. Transaction costs include search and information costs, bargaining and decision costs, and monitoring and enforcement costs. Management aims to internalize transactions to reduce risks and uncertainties about prices and quality(Welch, 1975).

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Today's HR Activities

In today’s HR world, we ensure that we cover several specialist disciplines, including:

• Diversity (plus other aspects of employment law)
• Reward (including compensation, benefits, pensions)
• Resourcing (such as recruitment, disciplinary and redundancy processes)
• Employee relations (including performance and absence management)
• Organisation development and design
• Learning and development
• Correcting systems, policies & procedures

                                                            (Marois et al., 2008)

These disciplines ensure that your business is working to best practice, within the law and making maximum use of its team. This offers financial and operational benefits to the business and team(Farndale et al., 2010).

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🔰HR executives often handle administrative tasks like recruitment, performance measurement, training, and compensation, but they lack strategic alignment. Empowering the HR department can enhance business strategy by supporting growth and success(Wright et al., 2003).

🔰An effective HR strategy aligns with business strategy, enhancing alignment of activities and ensuring the HR department understands business demands, ensuring organizational success(Whittaker & Marchington, 2003).

🔰Organizations must adapt to external and internal factors that alter job roles and skill sets, requiring an HR strategy that aligns with the organization's strategy(Mitsuhashi et al., 2000).

🔰Supported and trained employees lead to increased productivity and satisfaction, while positive organizations face fewer recruitment hurdles, emphasizing the importance of HR strategy in organizational strategy(Marois et al., 2008).

HR strategy is crucial for an organization's growth and development, as it identifies employees' skills and capabilities, making it a key driver of strategy(Farndale et al., 2010).

                                                             (Farndale et al., 2010)

Importance of Organizational Theory to Businesses

Organizational theory is a crucial field for managers and leaders to optimize their organizations' processes, structures, and strategies. It examines the behavior, structure, and function of organizations, focusing on the efficiency of the organization. An online Master of Business Administration (MBA) with a concentration in Management from Arkansas State University can enhance managerial expertise by combining practical leadership skills with advanced cognitive theories. Students can customize the degree to meet their personal interests and professional goals(Bosch & Lazić, 2015).

Organizational theory consists of six types: classical, neo-classical, modern, continuity, motivation, and open systems. Each type focuses on different aspects of a business, such as task division, employee behavior, decision-making, motivation, and environmental factors influencing an organization(McWilliams & Siegel, 1997).

Organizational theory is crucial for businesses as it enhances decision-making, improves efficiency and productivity, fosters innovation and adaptability, and promotes effective leadership. It provides a systematic framework for managers to analyze complex situations and make informed choices. It helps identify bottlenecks and optimize resource allocation, enabling companies to streamline processes and improve communication. Organizational theory also helps leaders identify strengths and weaknesses, allocate resources effectively, and create a supportive work environment that encourages employee engagement. Overall, organizational theory is essential for businesses to succeed(Ruta, 2005a). 

REFLECTION 

Organizational lifecycle theory, strategic contingency theory, general systems theory, and transaction cost theory are all HR theories that focus on the life cycles of organizations. Organizational lifecycle theory posits that organizations have life cycles, while strategic contingency theory emphasizes the importance of effective management. General systems theory focuses on the interdisciplinary study of systems, aiming to optimize equality. Transaction cost theory, in corporate governance and agency theory, focuses on the costs arising from external transactions, aiming to reduce risks and uncertainties about prices and quality.In the HR field, we cover diverse, reward, resourcing, employee relations, organization development, learning, and system and policy correction.HR executives often manage administrative tasks like recruitment, performance measurement, training, and compensation but lack strategic alignment. Empowering the HR department can enhance business strategy, support growth, and ensure organizational success. An effective HR strategy aligns with business demands, adapts to external and internal factors, and increases productivity and satisfaction. HR strategy is crucial for organizational growth and development.

Reference list entry

Farndale, E., Scullion, H., & Sparrow, P. (2010). The role of the corporate HR function in global talent management. Journal of World Business, 45(2), 161–168. https://doi.org/10.1016/j.jwb.2009.09.012

McWilliams, A., & Siegel, D. S. (1997). The role of money Managers in Assessing Corporate social reponsibility Research. ˜the œJournal of Investing/˜the œJournal of Investing, 6(4), 98–107. https://doi.org/10.3905/joi.1997.408440

Marois, C., Macintosh, B., Barman, T., Zuckerman, B., Song, I., Patience, J., Lafrenière, D., & Doyon, R. (2008). Direct imaging of multiple planets orbiting the Star HR 8799. Science (New York, N.Y.), 322(5906), 1348–1352. https://doi.org/10.1126/science.1166585

Mitsuhashi, H., Park, H. J., Wright, P. M., & Chua, R. S. (2000). Line and HR executives’ perceptions of HR effectiveness in firms in the People’s Republic of China. International Journal of Human Resource Management, 11(2), 197–216. https://doi.org/10.1080/095851900339828

Whittaker, S., & Marchington, M. (2003). Devolving HR responsibility to the line. Employee Relations, 25(3), 245–261. https://doi.org/10.1108/01425450310475847

Wright, P. M., Gardner, T. M., & Moynihan, L. M. (2003). The impact of HR practices on the performance of business units. Human Resource Management Journal, 13(3), 21–36. https://doi.org/10.1111/j.1748-8583.2003.tb00096.x