Literature review on Hiring and investing in the right staff as well as retaining those in the workforce
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Hiring and investing in the right staff as well as retaining those in the workforce.
An excellent workforce determines the competitiveness of business firms and overall success. A firm’s workforce can constitute the differentiating factor that sets a firm apart from its competitors or the workforce can contribute to the cost advantage of firms in a highly competitive industry. (Porter 1998) The literature review covers various theories and empirical data revolving around hiring, retention and staff investment strategies to achieve targeted financial and non-financial returns. The literature review takes a deductive approach by starting with the general principles and moving on to specific concepts.
Human resource management (HRM) encompasses hiring and retention (Bratton & Gold 2000), as aspects of investments in the right staff. Literature provides different perspectives of human resource management. On one hand, Bratton and Gold (2000) define HRM as the process of developing knowledge and practices on the nature and requirements of tasks and regulation of employment relations. Boyd (2003) also considers HRM as encompassing the aggregate of work-based processes such as work environment, terms of employment, and representation. On the other hand, Mathis and Jackson (2006) is an approach of achieving firm goals by developing, directing and utilizing human resource knowledge, skills and talents both effectively and efficiently. The latter definition considers hiring, retaining and investing as areas of strategy development so that this coincides with the concept of strategic human resource management, which involves the management of human resources in line with firm goals (Armstrong & Baron 2002). It is the latter definition of human resource management and the concept of strategic human resource management that provides theoretical support to the study.
Literature provides requisites to the implementation of effective hiring, retention and staff investment strategies covering two perspectives, which are organizational and employee perspectives. In terms of the organizational perspective, organizational culture emerged as the factor that the firm needs to focus on to support strategy formulation governing hiring, retention and staff investment. Katz and Khan (1996) define organizational culture as the shared ideas, norms, rules, values, processes and systems that unify a group of people. Organizational culture defines the working environment, work relations, and work completion processes (Cabrera & Bonache 1999). Literature point to the importance of building a strong organizational culture but the organizational culture should match the business context of the firm. With regard to the employee perspective, motivation and job satisfaction have been widely discussed as directly linked to hiring, retention and staff investment. Luthans (1998) define motivation as the process of meeting need deficiencies that affect the work behavior of employees. As such, Sonnenberg (1991) explained that motivating employees considers needs, drivers, and incentives. Meyer and Allen (1997) add that motivation is the psychological state of workers towards their jobs, co-workers, working environment, and the firm. Luthans (1998) explain job satisfaction as made up of the three dimensions, which are emotional reaction to the work situation, the extent of expectation matching, and attitudes as response to motivation activities by the firm. However, literature differs on the manner of ensuring motivated and satisfied employees to secure and retain excellent employees. Heneman (1992) explains that rewards comprise the most common motivation and satisfaction determinant of employees but reward systems do not necessarily ensure motivation. As such, other studies looked into other factors such as a good working environment (Schermerhorn 2001) or extrinsic (Wiley 1997) and intrinsic rewards (Quigley & Tymon 2006) linked to fair and uniform performance measures (De Waal 2007). Since many factors motivate and satisfy employees, the intrinsic and extrinsic or intangible and tangible, taken together, comprise the determinants of motivation and job satisfaction that affect hiring, retention and staff investment.
Literature also provides specific strategies targeting hiring, retention and staff investment in separate studies. Sheehan (2000) provides that aptitude, attitude, motivation and personal chemistry are variables in hiring the right personnel. However, hiring the right personnel involves not only the requirements of the firm but also focusing on the development of a good firm reputation (Barrett, Neeson & Billington 2007) to attract qualified employees (Heneman & Berkeley 1999). Strategies for retaining employees are diverse such as good compensation and benefits programs (Hannay & Northam 2000), pensions and other work benefits (Taylor 2000), and mission statement that influence positive attitudes (Brown & Yoshioka 2003). Literature also provides the importance of investing in staff to prevent turnover (Huselid 1995) and reflecting the prioritization and valuation of personnel in the organizational culture (Pickett 2000).
Literature takes the theoretical or empirical approach to hiring, retention and staff investment or considers the application of general concepts of particular strategies. The present study involves the integration of theoretical and empirical approach by investigating the application of concepts in actual business settings and combines the specific factors or strategies to provide a comprehensive perspective of the manner that business firms can understand and develop effective hiring, retention and staff investment practices.
Armstrong, M & Baron, A 2002, Strategic HRM: The Key To Improved Business Performance, Chartered Institute Of Personnel And Development, London.
Barrett, R, Neeson, R & Billington, L 2007, Finding the “right staff” in small firms, Education + Training, vol. 49, no. 8/9, pp. 686-697.
Bratton, J & Gold, J 2000, Human Resource Management: Theory and Practice, 2nd edn, Macmillan Press Ltd, London.
Boyd, C 2003, Human Resource Management and Occupational Health and Safety, Routledge, London.
Brown, WA & Yoshioka, CF 2003, Mission attachment and satisfaction as factors in employee retention, Nonprofit Management and Leadership, vol. 14, no. 1, pp. 5-18
Cabrera, E & Bonache, J 1999, An expert HR system for aligning organizational culture and strategy, Human Resource Planning, vol. 22, no. 1, pp. 51-59.
De Waal, AA 2007, The characteristics of a high performance organization, Business Strategy Series, vol. 8, no. 3, pp. 179-185.
Hannay, M & Northam, M 2000, Low-cost strategies for employee retention, Compensation Benefits Review, vol. 32, no. 4, pp. 65-72.
Heneman, RL 1992, Merit Pay: Linking Pay Increases to Performance Ratings, Addison-Wesley, Reading, MA.
Heneman, H & Berkely, R 1999, Applicant attraction practices and outcomes among small businesses, Journal of Small Business Management, vol. 37, no. 1, pp. 53-74.
Huselid, MA 1995, The impact of human resource practices on turnover, productivity, and corporate financial performance, Academy of Management Journal, vol. 38, no. 3, pp. 635-672.
Katz, D & Kahn, RL 1996, The social psychology of organizations, John Wiley, New York.
Luthans, F 1998, Organisational Behaviour, 8th edn, Irwin McGraw-Hill, Boston.
Mathis, RL & Jackson, JH 2006, Human Resource Management, 11th edn, Thompson South-Western, Boston, MA.
Meyer, JP & Allen, NJ 1997, Commitment in the workplace: Theory, research, and application, Sage, Thousand Oaks, CA.
Pickett, Les 2000, People make the difference, Industrial and Commercial Training, vol. 32, no. 6, pp. 225-229.
Porter, ME 1998, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York.
Quigley, NR & Tymon, WG 2006, Toward an integrated model of intrinsic motivation and career self-management, Career Development International, vol. 11, no. 6, pp. 522-543.
Schermerhorn, J 2001, Management, John Wiley & Sons, Inc., New York.
Sheehan, LE 2000, Variables in the hiring equation: Ensuring that the right candidate is hired, Information Systems Management, vol. 17, no. 3, pp. 1-12.
Sonnenberg, FK 1991, A strategic approach to employee motivation, Journal of Business Strategy, vol. 12, no. 3, pp. 41-43.
Taylor, S 2000, Occupational pensions and employee retention: Debate and evidence, Employee Relations, vol. 22, no. 3, pp. 246-259.
Wiley, C 1997, What motivates employees according to over 40 years of motivation surveys, International Journal of Manpower, vol. 18, no. 3, pp. 263-280.
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