Segi College University Individual Assignment IHRM

TABLE OF CONTENTS
1.0 Introduction ............................................................................................................................................ 2
2.0 Training and Development...................................................................................................................... 3
2.1 Theoretical Underpinning of Training and Development ................................................................... 3
2.1.1 Abraham Maslows Hierarchy of Needs Theory .......................................................................... 4
2.1.2 Herzberg s Two-Factor Theory .................................................................................................... 4
2.2 Impact of Employee Training and Development on Employee Performance .................................... 5
2.3 Relationship between Training and Organization Performance......................................................... 6
2.4 Training and Development Case Study ............................................................................................... 6
2.5 discussion ............................................................................................................................................ 7
3.0 Reward Management ............................................................................................................................. 7
3.1 Theoretical Underpinning of Reward Management ........................................................................... 8
3.1.1 Agency Theory.............................................................................................................................. 8
3.2 Intrinsic Reward Management and Organization Performance ......................................................... 9
3.3 Extrinsic Reward Management and Organization Performance ...................................................... 10
3.4 Reward Management Case Study ..................................................................................................... 10
3.5 Discussion.......................................................................................................................................... 11
4.0 Conclusion ............................................................................................................................................. 11
5.0 References ............................................................................................................................................ 12

LIST OF FIGURES
Figure 1: P.V Morgans Dimensions of IHRM ................................................................................................ 2
Figure 2: Maslows Hierarchy of Needs ........................................................................................................ 4
Figure 3: Hertzbergs Two-Factory Theory.................................................................................................... 5
Figure 4: Agency Theory Framework ............................................................................................................ 8

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1.0 INTRODUCTION

By overseeing International Human resources (IHRM) effectively, it can empower an

association/frim to contend all the more effectively in the world market place (Plessis, 2010).
Plessis (2010) clarifies International Human Resource Management in terms of a system: an
arrangement of particular activities, capacities and procedures that are coordinated at attracting,
developing and maintaining the human resources of a multi-national enterprise. The residential
based term of Human Resource Management covers all the concepts, strategies, policies and
practices which associations use to oversee and develop the individual who work for them
(Rudman, 2010). The main significant distinction amongst IHRM and HRM is the way that one
identified with multinational corporations while the other is related to domestic based associations.
Morgan (1986) has portrayed and characterized International Human Resource Management as
the exchange among three (3) measurements (shown in figure 1): Resource activities, types of
employees as well as countries of operation (Mathur and Gupta, 2011).

Figure 1: P.V Morgans Dimensions of IHRM

Source: (P.V. Morgan, 1986)

To start with, the most essential elements that influence the operational performance of the
associations is the human resources (Sendogdu, Kocabacak and Guven, 2013). Consequently, the
improvement or development of organizational commitment needs powerful human resource
management practices. Human Resource Management, as a key player in the creation and
advancement of a profoundly productive workforce, lies in the focal point of the debate on the
competitiveness of companies (Lepak, 2006). Practices that advance and promote worker

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motivation and exertion, knowledge, aptitudes and capacities, and opportunities for employees
contribution (Jiang, Lepak, Hu, Baer 2012) produce good conditions for the improvement of
resources and capabilities that create value for associations, adding to their performance as well as
to the development of sustained competitive advantages (Brito and Oliveira, 2016).

This paper presents a theoretical analysis of the relationship between Human Resource
Management (HRM) and organization performance. Theoretically, this paper discusses Training
and Development (TD) and Reward Management (RM) as two (2) strategic functions of Human
Resource Management and its impact on business performance. The first section of the report
focuses on Training and Development and its effect on employee performance and organizational
performance, while the second section of the paper focuses on reward management and the
influence it is has towards organizational performance. Relevant theories as well as case studies
will be utilized for both functions of HRM to support the discussion. The paper will end with a
summary of findings in context with the theme of this paper.

2.0 TRAINING AND DEVELOPMENT

As it is realized that training and development alludes to the procedure to acquire or exchange
Knowledge, Skills and Abilities (KSA) expected to do a particular activity or task: consequently,
benefits of training and development both for manager and employees are vital in nature and
subsequently much extensive. Knowledge and skills required by an association can be given to
learners through training (Fitzgerald, 1992) in light of the fact that not all employees will come to
the job with complete knowledge and experience essential for performing regulated assignments.
In this way, most associations consider the development of human resources as imperative
investment exertion towards the development of the performance of the association (Hau and
Omar, 2015).

2.1 THEORETICAL UNDERPINNING OF TRAINING AND DEVELOPMENT

This paper shall adopt two (2) theories with a specific end goal to clarify behavioral variables that
influence employee performance which can be adjusted through employee training and
development in order to accomplish organizational performance. These two (2) theories are:
Maslows hierarchy of needs and Frederick Herzbergs two-factor theory.

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2.1.1 Abraham Maslows Hierarchy of Needs Theory

Maslows Hierarchy of Needs theory contends that people have five (5) basic needs: Physiological
needs, Safety and Security needs, Social needs, Esteem needs, and Self-Actualization needs (figure
2). This theory demonstrates that individuals exhibit experience of five (5) needs, happening at
various times, contingent upon the person. Basically, Maslows theory is dependent on three (3)
presumptions (Winston and Christine, 2016). Firstly, individuals must fulfill needs on the lower
level before heading for the need on the hierarchy. Secondly, behavior is only fortified by
unsatisfied needs. Thirdly, the need of normal individuals ranges from exceptionally essential to
more perplexing needs (Maslow, 1943).

Figure 2: Maslows Hierarchy of Needs

Source: (Maslow, 1943)

2.1.2 Herzberg s Two-Factor Theory

Herzbergs two-factor theory arranged motivation and job satisfaction/fulfillment into two
categories of components known as the motivation factors and hygiene factors (figure 2). Hygiene
factors are elements of the work environment, which limits discomfort and insecurity (Mensah and
Tawiah, 2016). Hygiene factors are job connected variables, which incorporate organization
policy, supervision, association with superiors, work conditions, relationship with peers, personal
life, salary, relationship with subordinates, job security and status (Herzberg, 1959). He proposed
that motivation factors are elements of work environment which advances employee growth and
development (Baah and Amoako, 2011). Motivation factors are job content variables, which
incorporate achievement, recognition, responsibility, advancement and growth.

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Figure 3: Hertzbergs Two-Factory Theory

Source: (Herzberg, 1959)

Hygiene factors are the environmentally related components related with negative feelings.
Conversely, motivation factors empower exertion: notwithstanding an absence of these will not
increase satisfaction as will the hygiene factors, rather, it will prompt
disappointment/dissatisfaction (Ghazi, Shahzada and Khan, 2013). In this manner, the
fundamental premises of the two-factor theory are that if an employer tries to build job satisfaction
inferred on the job alongside with job performance for employee or the co-workers, then the need
to give careful consideration to those components that influence ones job satisfaction is vital (Tan
and Waheed, 2011).

2.2 IMPACT OF EMPLOYEE TRAINING AND DEVELOPMENT ON EMPLOYEE PERFORMANCE

Employee performance is more noteworthy in a satisfied worker and the management likewise
finds it less demanding to offer motivation to high performers in the process of achieving their
organizational goals (Ampomah, 2016). Employees can only derive fulfillment when they feel that
they are able to perform their obligations, when this is accomplished through effective training and
development programmes (Falola, Osibanjo and Ojo, 2014). Perceiving the imperative role of
training practices gives the top executives a safe and good working environment that goes along
in enhancing the motivational level and performance yield of the workforce. An association that
offers value to knowledge as a wellspring of increasing competitive edge over their rivals, are

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supposed to build up a system that guarantees steady learning, and a compelling method of doing
as such is through employee training.

Olubukunola (2015) states that a well prepared and trained workforce tends to be more capable to
record performance targets and furthermore, gain high competitive advantages within the market.
The employee performance that is accomplished through training alludes to ceaseless
enhancements in knowledge, skills and capacities to do obligations identified with work, and thus
accomplish more employee commitment towards the companys goals.

2.3 RELATIONSHIP BETWEEN TRAINING AND ORGANIZATION PERFORMANCE

There are many variables which enhance the viability of the workforce for instance, scheduling
and training. It is required for the association to delineate raining plans carefully in order to
accomplish employee job engagement and perpetually organizational efficiency (Abbasi and
Hollman, 2000). The training design ought to be made according to the needs of the employee,
those associations which develop a decent training design as per the need of the employee and the
association dependably obtain good results (Olubukunola. 2015).

Training has a positive association with internal organizational performance (Ahmad and
Schroeder, 2003). In particular, these reviews uncovered that training practices impact business
performance outcome and quality performance results. A complete training design structure is fit
for enhancing productivity and empowering better product performance and quality (Guerrero and
Barraud, 2004). In addition, a study conducted by Laplagne and Bensted (1999) gave an account
of the effect of training and innovation on the performance of workplaces in Australia. The
connection between training and internal organizational performance is likewise upheld by other
research works in different settings. For instance, in accordance to Hau and Omar (2015), training
can have a constructive outcome on product innovation and product quality.

2.4 RAINING AND DEVELOPMENT CASE STUDY

The electric business unit of a noteworthy Midwestern utility organization confronted the
challenge of preparing workers for a more focused and competitive deregulated market (Callahan,
1997). The company initiated a few projects for enhancing inward processes, including customer
service. One of the customer service initiative included combing job roles: customer service

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employee would have more extensive duties as opposed of being specialists in one area. The
training department has to rapidly design and develop financially effective training for more than
200 workers in marketing and technical training so they could end up competent in their new roles
in a short amount of time. The outcomes of this included enhanced competence and certainty
among staff as well as better customer service and satisfaction (Callahan, 1997). Staff productivity
additionally ascended because of less requirement for classroom training and more dependence on
job aids and performance support. Staff reported more prominent job satisfaction with extensive
occupation obligations.

2.5 DISCUSSION

It is exceptionally essential for an association to design the training carefully. The design of the
training ought to accord to the necessities of the employees. Those associations which build up a
decent training design as per the need of employees and additionally to the association dependably
obtain good results. It appears that training assumes an extremely imperative role in the employee
as well as organizational performance. An awful training design is only a loss of time and money
(Khan, 2011). Training assists employee to obtain the knowledge of their job in a better way.
Individuals gain more from their viable experience much better as contrast with erudite knowledge.

3.0 REWARD MANAGEMENT

There is rising requirement for association to create reward systems that motivate employee to
work harder and quicker. Proficient reward frameworks channel employees endeavors towards
acknowledgment of its goal (Musenze, 2013). Reward management has been characterized by
Musenze (2013) to include formulation and implementation of strategies and policies that aim to
reward individuals reasonably, impartially and in a consistent manner, which ought to be in
accordance with organizational values in order to allow the association to realize its strategic goal.
Reward systems consist of compensation (pay and bonuses), benefits, learning and development
and the work environment around employees.

Work environment motivators comprise of money related and non-fiscal impetuses (Armstrong,
2006). Monetary incentives require remunerating employees for their excellent job performance
though money. These motivators incorporate benefit sharing, project bonuses, schedule bonuses,

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additional paid vacation time and many others. These have helped to maintain a positive
motivational environment for employee, significant for enhanced organization performance. Non-
monetary reward incentives, then again, depict a remunerating framework for employee aimed at
generating excellent job performances though opportunities such as flexible work hours, training
opportunities, pleasant work environment and vacation leaves (Yasmeen, Farooq and Asghar,
2013).

3.1 THEORETICAL UNDERPINNING OF REWARD MANAGEMENT

3.1.1 Agency Theory
The speculative framework supporting an extraordinary part of the literature on sales force
compensations is given by the agency theory (Tremblay, 2003). Agency theory relies on an
agreement between two (2) parties: the principal (the firm) and the agent (sales employee) as
shown in figure 3. It depends on the thought known as the agency problem, that there is a hostile
clashed of interest between the principal and the agent, as without the right or proper incentives,
the agent may focus on his/her own particular monetary self-interests which may not compare with
those of the association or firm. To ensure the agent acts to the greatest interest of the association,
the principle needs to collect dependable data or information on the sales employees behavior or
the association can link his/her compensation to sales results (Fooladi and Chaleshtori, 2011).

Figure 4: Agency Theory Framework

Source: (Mandhu, 2015

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The fundamental idea was that the change of the connection between ownership and leading the
company prompts a circumstance with principle (the owner) and an agent (the executives) (Fauzi
and Locke, 2012). In executive compensation literature, the agency theory is frequently utilized as
a result of the fact that from an agencys perspective, the executive compensation can be viewed
as an agreement between the agent and the principal (shareholder). This is done in order to align
the interest of the shareholder (principal) with the interest of the executive director (agent) and can
be viewed as a support for the compensation paid to the executive director (Kunz, 2002).

3.2 INTRINSIC REWARD MANAGEMENT AND ORGANIZATION PERFORMANCE

Intrinsic rewards have been found to affect both individual and organizational performance. For
instance, the employees in an association have achieved the esteem stage of development and
conceivably the self-actualization stage through the impact of intrinsic rewards (Mikander, 2010).
Intrinsic rewards encourage and energize as well as enhance both employees and employer to have
the capacity to challenge them and achieve new tasks and coordinate with other to work in a
harmonized environment (Ong and The, 2012). Aside from that, intrinsic rewards empower
employees to have greater concertation and keep them in invigorating and self-managing
conditions (Wei and Yazdanifard, 2014). By having abnormal levels of intrinsic rewards,
employee become the informal recruiter and markets for their organization in which they prescribe
to their companions to work in the association and prescribe products and services to potential
customers.

By having the high levels of intrinsic rewards, employees become the informal recruiters and
marketers for their organization in which they recommend their friends to work in the organization
and recommend product and services to potential customers. As per Kikoito (2014) , intrinsic
rewards create a win-win circumstance for associations and its employees. The employees feel
happy and satisfies as they experience feelings of accomplishment and self-esteem, which create
job fulfilment/satisfaction, and this translates into improved work performance. In the meantime,
the association increases its sales volume and profit. Besides, intrinsic rewards encourage greater
levels of satisfaction and competency. As a result, employees have more intrigue, excitement and
confidence in performing tasks which leads to enhanced organization performance.

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3.3 EXTRINSIC REWARD MANAGEMENT AND ORGANIZATION PERFORMANCE

The extrinsic rewards cover the fundamental needs of income to survive, a sentiment of stability
and consistency (the job is secure), and recognition (my workplace values my skills). An extrinsic
reward is considered as outcomes supplied by the association and incorporate salary, status, job
security and fringe benefits. One can contrast these rewards to the job context items that Herzberg
called hygiene factors. Kikoito (2014) demonstrated that monetary rewards and social recognition
rewards affected employee performance.

While experimental research has demonstrated that extrinsic rewards assist in enhancing individual
creative performance which contribute ultimately towards organization performance. In any case,
the effect of extrinsic rewards on group adequacy or job performance is indistinct and the models
provide little direction with respect to particular types of rewards that maximize particular
outcomes in work group. Nonetheless, Kikoito (2014), found that reward
measurements/dimensions have noteworthy impacts on employees performance. Specifically,
they found that compensation, performance bonus, recognition and praise are the tools that
management can use to motivate staff in order for them to perform effectively and efficiently.

3.4 REWARD MANAGEMENT CASE STUDY

A remarkable hand-toll producer in America had never endeavored incentives with their distributor
network since the organization did not believe they would be worth the investment (Dawson,
2012). In order to set up a solid base from which to assemble and effective sales incentive program,
the association expected to address their inner issues first. Subsequent to tending to the internal
issues, they executed an incentive program (rewards in the form of National Football League
tickers and merchandize and monetary commissions) which was a major accomplishment as it
outperformed unique goals and achieved additional results. Over a time period of nine (9) months,
the motivation program results accomplished: Increased net sales by $ 1,440,164, increased gross
margins from 30.4% to 35% and accounts receivable were lessened from 59 to 45 days.

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3.5 4.4 DISCUSSION

With reference to sales performance, for sales targets is to urge compelling in motivating a sales
employee, it should be reasonable and plausible however, offer a challenge to the employee of the
association. The significance of reward system in everyday performance of employees duties
cannot be over emphasized particularly with regards to being compensated for the job done.
Employee performance of any sort is enhanced by increased motivation. To guarantee a successful
reward system that prompts to the desired behavior, it is fundamental to consider carefully the
benefits and strategies used to ensure that the rewards are based on performance. Empowering and
rewarding performance ought to be a constant management action, and not only a yearly custom
of compensation. Reward systems, when legitimately setup, have proven to be a vital tool for
accomplishing organization goals.

4.0 CONCLUSION
This paper served the purpose of providing cognizance with respect to the effects that specific key
elements/functions of Human Resource Management have towards enhancing organizational
performance. Among these specific elements of Human Resource Management, one might say that
Training and Development positively influences organization performance in several aspects such
a customer satisfaction. Furthermore, Reward Management has found to have a positive
relationship towards organizational performance in terms of sales performance and creativity,
however, it has become critically important for associations to evaluate and related these rewards
(both intrinsic and extrinsic) towards the needs of employees. Another might say that,
organizational performance is heavily dependent on the satisfaction level of its employees, this
paper demonstrates that satisfaction is improved given the appropriate reward system and training
and development opportunities.

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