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The human resource department is one of the most crucial departments for every organisation as this department is directly associated with the crafter of success of an organisation. It is the human resource of an organisation that builds the base and building of success of an organisation and the HR department gives the workforce adequate and necessary environment and aspect for achieving the organisational goals (Gigauri, 2020). This department is responsible for managing challenges related to workforce performance management, safety, compensation, benefits, wellness, training and employee motivation.
Basically, the main function of the HR department is to find, attract and retain the most appropriate person for the available job role within an organisation. Based on the nature of challenges, the HRM department creates strategic decisions for managing people and the workforce environment (Kusu and Gowtham, 2021). This particular report will be focusing basically on the significance of HRM models in terms of impacting organisational productivity. In this regard, the report will be emphasising the implicated HRM model by the FarmBox company which is a UK based online platform that offers fresh food to consumers. Following this, the report will analyse the appropriateness of the deployed model and lastly, a theory will be recommended for enhancing employee relations via efficient HRM talent management.
The significant division of an organisation is responsible for identifying the right person, screening, recruiting and training the onboard employees. The HR department benefits in coping up with the fast-changing business environment and facilitates mitigating the higher demand for quality employees in the 21st century (Opatha, 2021). The presence of HR increase employee productivity and safeguard the organisation from any type of aroused workforce challenges.
The human resource model benefits organisations to manage the workforce efficiently with the purpose of attaining organisational established goals. The recruitment and selection procedure is among the most crucial activity for every organisation as it determines the right people for the job role of an organisation which impacts the productivity of a firm and the possibility of attaining organisational objectives. Recruitment is the procedure of finding the right candidate for the vacant position within an organisation (Singh et al., 2021). Selection is associated with the activity of choosing the right candidate from a large number of the applicant. Hence, every organisation need to hire the right people with the right skill which is often considered to be difficult to find an employee with the right knowledge. This is where the recruitment and selection model comes into play their appealing role.
The FirmBox company was basically a family-run organisation. Due to the rising demand caused by the regulations deployed because of the Covid spread, people were more inclined towards getting services at the doorstep to avoid contact with people for further spread of the disease. As a result, the firm has seen a significant rise in the sale within the company. To mitigate the demand, the organisation has onboarded some of the candidates within the operation (Islami and Mulolli, 2021). In order to successfully employ the right people for the specified job roles, the firm has utilised the Human capital theory.
The human capital theory is apparently a new theory that focuses upon providing incentives in order to acquire human capital. The theory states that labour capital is not homogeneous. Economists Gary Becker and Theodore Schultz in the year 1960 have proposed that education and training are the most crucial investment which can result in boosting organisational productivity (Latov and Tikhonova, 2021). Education has become an extremely significant component of the workforce. As per the theory, intellectual and human capital are addressed as renewable sources of productivity. Basically, the theory puts emphasis upon the education level of the employees in order to increase productivity and efficiency of the employees enhancing the cognitive stock of financially productive human capacity.
The implication of the Human Capital theory is significant for the organisation as it enables the firm to increase appropriate education and schooling required to meet the existing gap which benefits the employees of FarmBox to be more confident about their work and along with this, it has increased civic participation among the employees of FirmBox. Additionally, the firm also explores a fair distribution of wages among the workers and a high rate of civic participation has increased fairness and honesty among the workers. The employees also enjoy better health outcomes in addition to all of these.
As per the concept of the theory, increasing education delivers the skills among the employees to be more productive and wage differentials create productivity differences. As a result, these situations may create an imbalance but it also gives an advantage for the FireBox firm employees to explore the rise of learning enthusiasm among the workers (Wright and Constantin, 2021). An application of Human Capital theory fosters education-driven productivity within the environment of the firm. It is also considered that the concept is often considered very controversial as it supports the fact that education increases productivity and wage equally which is a subject of economic bias as according to most of the schoolers, education-driven productivity is considered to be potentially inconsistent within an organisation.
The application of Human Capital Theory gives multiple benefits along with several disadvantages to the organisation: FarmBox. Human capital is not visible well as not quantifiable. But it is very vital for an organisation to be successful in the long run. For instance, an employee who is not efficient in working with a computer is apparently not appropriate for a computer job. Here, computing skill is considered human capital. Therefore, an organisation will more likely be interested in investing and bringing out such employees who can be perfect for the duties of a job role via appropriate training.
It is very difficult to quantify employee expertise, skill, hence, the interview skill is of utmost importance. In a nutshell, human capital displays the economic value of the individual in a particular profession. According to the theory, Becker has emphasised human capital by delivering schooling and job training to the employees which benefits in increasing economic value. Therefore, the theory relates with the concept that the more education one individual possess, they are more capable of earning and increasing their value to the corporation (Castro, 2021). The theory also emphasises other aspects like medical care, immigration, human capital and price information. The main logic behind putting emphasise upon these aspects is these factors such as healthcare can benefit in reducing the sickness period and can prolong life. As a result, it allows the employees more time to work. For example, a sickness that can last more than a week can be lessened via giving antibiotics. Consequently, four workdays will be gained which will increase economic output.
There are several advantages that have been delivered by the Human Capital theory to the FirmBox firm. Such benefits include,
There are a significant number of disadvantages which is obstructing the steady flow of productivity of the organisation. Such disadvantages are,
One of the main limitations of the Human Capital Theory has is that it supports the fact that better education will bring more income for individuals. The theory is not all-encompassing. Higher education can contribute to a higher wage, but it is not the sole factor to consider.
Another drawback is that upper-level HCT applications treat schooling as a very homogeneous input. Higher levels of academic achievement and quality are assumed to result in increased output and salaries across the board in these applications (Hadi, 2021). Since the process of human capital building differs for communities and individuals, such an approach to education is troublesome. Individuals learn, therefore a “good” training in one setting could be worthless in another.
Fitness, capacities, and skill are all considered in the “Human Capital Theory”. Other features, such as the effect of rank, interacting, and communal infrastructures, are not engaged in explanation. There are individuals, e.g., who do not suit fine in an educational way (Rodríguez, González-Monteagudo and Padilla-Carmona, 2021). They may have the perspective of becoming the next Michael Jordan or “Lionel Messi”, but they are limited by the public education system. Offering an academic education to individuals who do not have access to one simply serves to limit their full potential (Becker and Woessmann, 2009).
More recent sociological and anthropological critiques of the human capital theory suggest that it presents relatively simple concepts that purport to describe everybody’s salaries, all of the period a universal link among human resources, productivity, and income. However, when researchers dig deeper, they discover that productivity disparities between people cannot be quantified reliably in the vast majority of cases.
Hence, it can be stated that the implication of the theory can not be entirely reliable. As the concept of great education leading to great productivity is in many places considered to be controversial. Furthermore, this theory seems to be extremely simple for modern organisational settings.
Based on the areas of disadvantages found in the application of the theoretical approach of Human Capital theory within the FirmBox company, a theoretical approach can be applied in order to solve the challenges faced by the firm. The Michigan model can be considered as one of the most significant HRM theory which considers the fact that the employees should be treated well in order to attain organisational strategy. In this theoretical approach, the main emphasis is put upon the Hard HRM rather than soft HRM via using people as a resource in order to attain a competitive advantage within the firm. This theoretical framework focus upon the organisation in order to respond to the external environment (Opatha, 2021). There are multiple benefits that can deliver to the FirmBox firm via focusing on the level of organisation is control upon the management, such include formal structure, strategy and adequate culture. In addition to that, attending the organisational level benefits managers in order to assume the organisational strategy, structure and deliver more power than they possess in order to alter the individuals and the impact of the external environment.
According to the hard HRM, the main reason behind the improvement of HRM is to increase the productivity of an organisation. The proposed framework of strategic HRM recognises the importance of a firm is paramount. According to the view of this framework, every organisational purpose behind their existence is to achieve the organisation mission and objectives and strategic management include three interconnected issues. The first one is, the mission of FirmBox should be considered as this is the primary purpose of an organisation (Uysal, 2020). Secondly, all these aspects of FirmBox must be laid out properly, such are, organisational structure, tasks, personal requirements, communications and accounting. Thirdly, The Human resource system needs to be properly established and maintained by the FirmBox company as per the author “people are recruited and developed to do jobs defined by the organisation’s formal structure: their performance must be monitored and rewards allocated to maintain productivity”.
Fig 1: Representation of External and Internal factors via Michigan Model
In addition to this, the Michigan model also focuses upon the aspect that different business strategies are interrelated with the organisational structure which delivers a contrasting style of HRM in activities, including appraisal, rewards, development and selection. Different brand strategies and accompanying official measures can consequence in a variety of HRM methodologies in operations like recruitment, evaluation, compensation, and development, according to the “Michigan model” (Andalib, Darun and Azlinna, 2021). For example, a single-product corporation with a “classic functional department” will employ people depending on their experience in those activities. Worker performance will be measured primarily informally and through personal interaction; the compensation strategy will be ad hoc among departments, and employee development will be focused mainly on the functional department in which the worker performs. On the other hand, organisational organisations have a multi-divisional structure and strategy for goods for diversifying product range and they will also possess a distinct HRM system.
Performance is a function of the human resource department. According to the theory, selecting individual with the best ability to perform a job role as defined by the structure, delivering appraisal for the employee performance along with benefits and equitable distribution of rewards, providing motivation to the employees by associating rewards with the high level of performance and developing the employees in order to enhance the present performance at the workplace (Kumareswaran, 2018). Along with this, preparing the workforce in order to perform better in the coming future will be a very beneficial approach for the FirmBox.
This model is hard HRM as it is based upon the strategic control, organisational structure and systems associated with people management (Kumareswaran, 2018). This framework puts special emphasis upon the factors of motivating people and rewarding people but focuses upon the management of the human resource in order to attain the strategic objectives. Following the practices of Hard HRM by the FirmBox company will benefit the management to adopt a style where treating employees will be taken as a calculative approach primarily to achieve the firm’s goal. By this, the top management of FirmBox will focus on managing the firm rationally and attaining the ‘fit’ between the organisational structure, strategy and HRM system.
After analysing the entire report, it can be concluded that the importance of the human resource department is very significant. All the activities of HRM determine the success factor of an organisation. Hence, the application of an appropriate model will benefit a firm to make all the procedures systematic and will make the objective attainment procedure easier. Human Capital theory application benefits the FirmBox company in multiple ways but there are certain gaps that are limiting the productivity of the firm. Application of the Michigan Model will benefit the firm to improve the operational process and explore increased efficiency within the workforce and enhance the present procedure.
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