Is the Most Important Asset of an Organization

Question : “Human Resource (employees) is the most important asset of an organization. ” Introduction Traditionally, human resource focused mainly on administrative functions and process personnel management. However, due to technology advancement, administrative tasks have reduced. The role of human resource has shifted and seems to be taking up more responsibility in company strategic planning and development. This theory has been supported in the work of Noe et al (2010, p. 719) Durai (2010, p. 109) stated, “Employees are the precious asset of an organization”.

In view of this statement, human resource planning plays an important role to optimize the utilization of its asset in term of cost and productivity. Involvement with company’s strategic planning will allow human resource department to have a broader view of employees’ skill requirement and deployment. Ineffective planning will cause a hindrance to employee satisfactory and organization success. In this paper, we will study how the theory of compensation management, job rotation, recognition and training will motivate employees.

Correspondence to these theories, organization will gain in productivity and profit once the employees are appeased with the working environment. Employee engagement with the organization Employees’ talent and efforts have tangible effects on an organization’s productivity and stability. And such efforts are often been neglected and fail to satisfy employees’ needs. When employees’ efforts are not recognized, there will be a lack of commitment to the organization. Thus, employees will not be motivated and will be less creative.

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Effectiveness of Compensation Management

In order to facilitate the achievement of an organization’s goals and key values, compensation management plays an important role in human resource management function. Employees should be managed properly and motivated by providing the best compensation system based on the job done and its result. A good compensation system will attract and retain skilled and productive employees. (Pattanayak B, p. 284) According to Armstrong (2002, p. 8), the compensation system consists of a total remuneration of direct financial rewards (fixed wage and variable pay) and employee benefits (annual leave and sick leave).

And, non-financial rewards such is job recognition, opportunities for career advancement and personal growth are also part of the compensation system. Diagram 2 shows the list of financial and non-financial rewards that an organization can apply under the compensation system. [pic] Noe et al. (2010, p. 547) mentioned that employees’ emotion and function towards the organization is mainly influence by the compensation payout. Difference in individual personal characteristic will draw people to different compensation systems.

A great solution to compensate employees in the organization is to adapt combination program rather that one program over another. List of compensation programs are merit pay, incentive pay, profit sharing, ownership, gain sharing, and skill-based pay. Merit pay is one of the best rewarding compensation programs. Employees are measured and payout annually based on the individuals performance appraisal rated by employees’ supervisor. Many companies in Singapore are adapting this compensation program for their permanent staffs. Employees will be more motivated when their performances are recognized and their basic pay is increased.

Another example of compensation program is incentive pay. Incentive pay is usually seen in organization with sales team that brings in revenue and profit that will gain market share for the company. Employees with higher performance will gain in such compensation program as they measured based on the amount of products or services sold and the payout is not part on the employee’s basic pay. Payment will be earned on a weekly or monthly basis depending on the organization’s policy. Once an individual is motivated by such monetary rewards, he will sell more products and services for the rganization. However, if the compensation program is not well planned, it will have a negative effect to the organization to support its business objectives. As mentioned in the article by Daly D (2009), skilled-based pay is the remuneration to payout employees with a better skilled knowledge that related to the job. Employees who have attained new skill and knowledge will be compensated more comparing to their co-colleagues. Taking an example of a technician in a manufacturing organization, he will be rewarded once he has completed the machine repair and maintenance program.

In order for him to continue to be compensated with better basic pay, he has to continue to upgrade his skillsets. Once the employees’ market value has increased, he will be motivated to contribute more to the organization and improve productivity. Effectiveness of Job Rotation & Recognition Apart from monetary rewards, job rotation has a function to motivate employees to enhance their skill knowledge and contribute more to the organization. Job rotation is systematic procedure whereby individual employee is shifted from current position or department to another in a given period of time.

Employees will be multi skilled and able to support the organization when skillsets are required. When a job is less lifeless or monotonous, employees will perform better and improve productivity. Hence, employees will gain a promotion and increase their income. (Noe et al, p. 430) Effectiveness of Recognition Recognize and reward are exactly what the employees in the organization looking forward for a better growth in their career. The right motivation will influence the employees’ behavior and in return employees will achieve the organization’s goals and objective and strive for higher productivity.

Once the employees are satisfied and feel rewarded, it is unlikely for them to leave the organization. Employees will dedicated their skill and time for the organization. Therefore, the management should always be enthusiastically recognizing the talented and hardworking individuals to create a healthier working environment for the employees to come to work happily every day. Effectiveness of Training and Development Engaging employees with training and development are the two fundamental components in an organization.

Both training and development do co-exist, as training will provide the skillsets and knowledge for the employees’ needs in the job. Whereas, development is a process to prepare employees in gaining new skills and knowledge for forthcoming demand in the current job or a job that do not exist. When employees obtained new skills and knowledge, it will improve the quality of the work. Organization will take the opportunities to attract and retain talented employees to gain profits and productivity. This theory is support by Noe et al. (2010, p. 87)

Conclusion

Employees are still an integral part of a company, being important assets. They must be constantly motivated and rewarded financial or non-financial on effort done on the job. Thus, human resource management has to balance the needs and achieve the goals and objective of both employees and the organization. Once the employees gained the recognition from the organization, they will produce better results and profits.

Reference

• Armstrong M, 2002: Employees Rewards, London: CIPD Publishing. Durai P, 2010: Human Resource Management, New Delhi: Dorling Kindersley (India)
• Pvt Ltd.Noe, Hollenbeck, Gerhart, Wright, 2010: Human Resource Management Gaining A Competitive Advantage, 7th Edition: New York, McGraw-Hill.
• Pattanayak B, 2006: Human Resource Management, 3rd Edition: New Delhi, Prentice Hall of India Private Limited.
• Daly D, 2009. Employee Relations, Motivation, Performance Management, DeGarmo Group. Available http://www. degarmogroup. com/index. php/2009/03/the-effectiveness-of-skill-based-pay-systems/ [1 Dec 2010] Own Referencing Employee reward Michael Armstrong CIPD Publishing, 2002 - 573 pages
• http://books. google. com/books? d=keiVwGxm3i0C&pg=PA363&dq=financial+and+non+financial+rewards&hl=en&ei=lELSTtXwHYLorQeht-XnDA&sa=X&oi=book_result&ct=result&resnum=1&ved=0CDcQ6AEwAA#v=snippet&q=total%20remuneration&f=false Durai P, Human Resource Management, Pearson Education India Page109
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