Role of HRM in Organization Culture

Organizational Culture

Every Organization has its own organizational Culture. There are various definitions for this. ‘Culture is the way things are doing around organizations’ (Deal & Keneddy, 2000), ‘Organizational culture is the sum of values and rituals which serve as ‘glue’ to integrate the members of the organization’ (Richard Perrin) and ‘Culture is the organization’s immune system’ (Watkins, 2013).

Organizational culture is the most important intangible resource for the organization. Organizational culture guides how the employees of organization should interact with other stake holders such as clients, suppliers, government officials and peoples within the organization (Ravasi & Schultz, 2006). Organizational culture is always subject to change depending on the macro and micro business environment related to the organization. It includes Vision, Mission, values, beliefs and habits unique to the organization (Needle, 2004).

HR Role in Organizational Culture

In contemporary organizations the function of human resource manager is far broader than the function of people manager. HRM can be defined as ‘a strategic, integrated and coherent (logical) approach to the employment, development and well-being of the people working in organizations’ (Armstrong & Taylor, 2014). Rather than considering ‘peoples as members of the organization’ (Henderson, 2017), HRM views peoples ‘as an asset to the organization’ (Beer, et al., 1984).

There are various types of models were introduced to describe to the role of HR in the business. These models help to identify HR functions and how it helps to influence the organizational culture. There are five best known HR models. Two models are given in the below.

1. The HR value chain
2. The Harvard Framework for HR
     

1. HR Value Chain

According to Paauwe and Richardson, (1997) the HR functions can be divided to two main categories, HRM activities and HRM outcomes. HR activities are traditional HR activities which includes recruitments, Training and performance evaluations /recognitions. These activities are directly related to the key performance indicators of the HR department of the organization. HRM outcome are the goals achieved by successfully implementing these HR activities. It includes employee engagement, employee retention, employee motivation to achieve organizational goals. According to this model when HR activities helps to gain positive HR outcomes, it automatically helps to the achieve business goals.

As an example, the company which I work manufactures surgical gloves which are an essential item for an epidemic like coronavirus (COVID19) we are facing now. Although government regulation came to close all manufacturing facilities for a period to avoid the spread of the disease, the management of our company wants to continuously run the plant because they are producing essential items to control this disease. So, in situations like these, HR department should play a major role to convince the message to the employees. But to do so, HR department should have done more HRM activities to get positive HR outcomes like employee engagement, employee retention and employee motivation as described in this model. Without doing those activities on regular basis it will be impossible to convince a message like this to the employees.

 Our company has very strong employee engagement activities like annual employee day, Family day, Scholarship awards, CSR projects on rural schools, annual Pirith ceromancy and birth day gift distribution for all employees. Also, company provides unique training on safety, leadership, kaizen and 5S throughout the year. Also, performance management system and promotion system of the company is very transparent and equal to everyone. Hence employee engagement and employee satisfaction are at better level. Therefore, it is easy to convey a message mentioned in above considering positive HR activities leads to positive HR outcomes and better company performance as per the model given below (Paauwe & Richarson, 1997).

Figure 1: HRM activities in relation to HRM outcomes and performance

(Source: Paauwe and Richardson, 1997)

1. Harvard Model of HR

As shown in figure 2.0 this model describes stake holders’ interests and situational factors drives HRM policy choices in the organization. Situational factors include Labor markets, unions, government laws and regulations (Beer, et al., 1984). By implementing good HR policies by considering stake holder interests and situational factors, positive HR outcomes will be achieved. This positive HR outcomes leads to Long-term Consequences of the organization like individual wellbeing and organizational effectiveness. This eventually leads to have better organizational culture to the business compared with other competitors (Beer, et al., 1984). This Harvard model of HRM, considers a macro view on HR function to the organization (Beer, et al., 1984).

 Figure 2.0: Harvard Model of HRM

 (Source: Beer, et al., 1984)

 Good HR Practices influence the behavior of the employees. Shop floor employees contribute to more innovation of the organization than the senior management because they know the production process better than others (Garvin, 1993). If HR can develop positive thinking about these innovations though HR policies, activities and strategies, it would motivate employees to do more innovations. Ultimately this will create more innovation in the organizational culture. But to retain this innovation culture HR department should introduce more activities on employee engagement, employee recognition and employee rewards (Armstrong, 2019). Otherwise employees will not follow this organization culture because they are less motivated (Armstrong, 2019).

Nestles innovation examples through employee engagement

As the worlds’ largest food manufacturing company Nestle adopts an outstanding strategy for innovation through external and internal innovation. In 2014, company invested on new software to engage Nestle employees to provide innovative solutions to business challenges without language and geographical barriers. Many innovations were submitted via this platform by employees and company has implemented them and able to find solutions to many business challenges (Medley, 2019). Many innovations have initiated from new farming technologies to new software and new inventory control techniques through this. Refer video 1.0.

Video 1.0 Nestle’s innovation through employee engagement

Source: (ingenius, 2017)

As We concluded, HR play a vital role in maintaining organizational culture. Good HR practices produce better HR outcomes leads to better business performance (Paauwe & Richarson, 1997). In contemporary organizations, function of HR managers has a broader role from people’s managers to business leaders (Armstrong & Taylor, 2014).

Reference List

Armstrong, M., 2019. Armstrong's Handbook of Reward Management Practice : Improving Performance Through Reward: Kogan Page Limited.

Armstrong, M. & Taylor, S., 2014. Armstrong's Handbook of Human Resource Management Practice: Kogan Page Limited.

Beer, M. et al., 1984. Managing Human assets. New York: The Free Press.

Deal, T. E. & Keneddy, A. A., 2000. Cooperate Cultures: Basic Books.

Garvin, D. A., 1993. Harvard Business Review. [Online]
Available at: https://hbr.org/1993/07/building-a-learning-organization

Henderson, I., 2017. Human Resouce Management for MBA and Business Masters: Kogan Page LTD.

ingenius, N., 2017. Youtube. [Online]
Available at: https://www.youtube.com/watch?v=sBVve7kSif8
[Accessed March 2020].

Medley, S., 2019. Titans of Transformation: 5 Outstanding Examples of Innovation in Business. [Online]
Available at: https://www.business2community.com/brandviews/qmarkets/titans-of-transformation-5-outstanding-examples-of-innovation-in-business-02160900

Needle, D., 2004. Business in Context: Thomson Learning.

Paauwe & Richarson, 1997. Introduction Special Issue on HRM and Performance. The International Journel of Human Resouce Management.

Ravasi, D. & Schultz, M., 2006. Responding to organizational identity threats: Exploring the role of Organizational Culture. Academy of Management journal.

Watkins, M. D., 2013. What is Organizational Culture? Why Should We Care?. [Online]
Available at: https://hbr.org/2013/05/what-is-organizational-culture