The Importance of Human Resources Within an Organization

“It is in fact difficult to imagine how an organisation could effectively hire, train, appraise, compensate or use its human resources without the kinds of information derived from job analysis” (Ivancevich 1995, as cited by Stone 2002:129)

The importance of human resources within an organization is becoming increasingly understood in today’s rapidly changing and uncertain business environment (Davidson & Griffin 2000: 18).

In order to assist employees in helping an organisation to reach its strategic business goals, effective human resource managers often gather job related information in a job analysis and job description, which is vital to creating or re-designing jobs which provide employees with a high level of job satisfaction (Stone 2002: 123).

The basic human resource activity of gathering detailed information about a particular job’s duties, tasks and responsibilities, can help organisations achieve strategic goals more efficiently and effectively by avoiding both duplication and overlapping of work in jobs, and also providing a job description by which employers are able to recruit and select the most appropriate employees for the job (Stone 2002: 128).

By conducting a regular job analysis in order to create effective job descriptions, and utilising this information effectively, managers are able to design jobs keep employees motivated, performing at a high level and willing to retain their jobs, all while simultaneously utilising the element of human resources to achieve the organisation’s goals (Davidson & Griffin 2000: 18) (Stone 2002: 128).

In analysing the effects of job analysis and design on employee’s motivation, performance and retention rate, this essay will also concentrate on the large effect that financial incentives can have on an employees desire to retain or leave their job.

The effects of job analysis and job design on motivation and job satisfaction.

Research suggests that money is a motivating factor for many people in employment related decisions (Campion 1991, as cited by Li-Ping Tang et al.2000: 216). However, it is extremely difficult to determine which factors motivate high performing employees, as according to Weiss et al. (1967, as cited by Li-Ping Tang, Jwa K, Shin-Hsiung 2000: 213) “Two individuals may express the same amount of overall (intrinsic and extrinsic) job satisfaction but for entirely different reasons”. In order for managers to have the ability to design jobs that keep employees motivated, satisfied and enthusiastic toward their jobs, it is most important that they understand the various external and internal factors which act to motivate employees, thus making them more likely to perform at a high level and retain their positions (Cacioppe et al 2001: 50).

Although it is relatively quite unclear what such motivating factors may be, it has been stated that “job design, the system of rewards, management style, corporate culture, organization structure and change management” (Stone 2002: 398) each have a large impact on employee motivation. Once the key motivational factors have been determined, a job analysis can enable human resource managers to design a new job, or redesign an existing job, which best delivers motivation and satisfaction to the employee (Stone 2002: 123). Guthrie (2002) has conducted a large amount of research on the motivational factors of pay by examining the use of financial reward schemes to increase the productivity of employees.

Guthrie’s research emphasizes the importance of job design in motivating and retaining employees, by analyzing the different motivational affects when group based rewards schemes, as compared to individual rewards schemes, were offered (Guthrie 2002:421). A positive connection between motivation and financial rewards was established when high skilled employees were paid according to their level of skill and qualification, as this not only increased production and job satisfaction, but also increased job retention (Guthrie 2002:421) It has been stated that job motivation and job satisfaction are strongly linked (Li-Ping Tang et al 200: 214), and therefore human resource managers must aim to analyse the aspects of a job that may provide an employee with satisfaction, such as financial rewards, feedback, promotions, job enrichment or job enlargement in order to have motivated, high performing employees, and a low rate of employee turnover (Davidson & Griffin 2000: 18-22) (Guthrie 2002).

The effects of job analysis and job design on employee performance.

In recent years, the various studies conducted by Li-Ping Tang et al. (2000), Kirschenbaum and Mano-Negrin (1999) and Guthrie (2000), have drawn conclusions that particularly the employee’s level of job performance has a large effect on the rate of employee retention and degree of job satisfaction.

The connection between the way a particular job is analysed and designed to meet an employees needs has a large effect an an employee’s individual level of performance in a job (Li-Ping Tang et al 2000). This can be particulary related to the information regarding personnel requirements of a job collected in a job analysis, which details the “job-related knowledge, sills and abilities” that an employee must possess in order to be able to perform the job at a reasonable standard (Stone 2002: 125). By thoroughly analysing such personeel requirements, the job analysis information can be used to set standards which inturn can be used in the human resource function of recruitement and selection, in order to employ people who have suitable requirements for the job in the desire to attain a high level of employee performance throughout the organisation (Stone 2002:128).

For example, organisations which offer wages based on an employee’s level of skill not only improve job satisfaction among high performers- thereby increasing retention- but also “encourage and reward employees to increase their depth of knowledge and skills”, thereby directly benefiting the efficiency of the organisation (Guthrie 2002:421). Job appraisal is another human resource function derived from information gathered in a job analysis, without which managers would not be able to accurately assess the relative performance standards of their employees, thus making them incapable of fairly offering rewards to deserving employees (Mitchell et al 2001) (Stone 2002: 128). Establishing the neccessary levels of skill, experience or production required in a job from a job analysis allows the creation of a comprehension job description and job specification, against which managers are able to assess the performance levels of employees by conducting a performance appraisal (Stone 2002: 123,128,133).

There are various actions which can be taken based on the results of performance appraisals which assist the company in more efficiently using human resources to reach their strategic goals (Stone 2002: 128). For example, the problem of an employee identified as having an unsatisfactory level of production or skill for his or her job may be rectified by either deployement, or offering the employee training and development programs dervided from the infromation of a job analysis (Stone 2002: 128). In this way, human resource managers can utilise the benefits of a job analysis to affect and improve an employees level of performance, thereby also assisting the company to reach its strategic business goals without the regular problems of job duplication or overlapping, or the costs involved from a high level of employee turnover (Stone 2002: 128) (Allen & Griffeth 1999).

The effects of job analysis and design on the way financial incentives are offered in order to decrease employee turnover.

In prior studies regarding turnover, the wage received by employees has been overlooked as an influential element which able to increase employee retention in organisations (Guthrie 2002:421).

When an organisation has a high rate of turnover amoung high performing employees, the overall effectiveness and functioning of the organisation is affected, with money wasted on recruitment and training new employees (Allen & Griffeth 1999; Mitchell, Holtom, Lee, Sablynski, Erez 2001:1102). Research suggests that money is a motivating factor for many people in employment related decisions (Campion 1991, as cited by Li-Ping Tang et al.2000: 216), and therefore the relationship between employee performance and turnover is most strongly effected by financial rewards (Allen & Griffeth 1999). Using the human resource function of job analysis, managers have the information to design jobs which increase an employees job satisfaction by awarding benefits and bonuses according to the employees level of performance or skill. In evidence of this, Allen & Griffeth (1999) overlook the impact of perceived job opportunities, and instead present the argument that “higher performers are likely to have less desire to leave an organisation” and therefore their rate of turnover is low.

This is due to the fact that high performing employees’ “desirability of movement” is reduced, as they have higher levels of job satisfaction due to the contingent financial reward systems offered (Judge, Thoresen, Bono, & Patten, 1998, as cited by Allen & Griffeth 1999). The information gathered from a job analysis about a job’s compensation is extremely important, as the way the compensation system is designed or re-designed has large and various impacts on the way the employee perceives his or her job. For example, when a job’s compensation system is considered to be fair by the employee, there is generally a higher level of satisfaction among employees, especially high performing employees, which in turn contributes to the employee’s sense of organizational commitment (Mitchell, Homtom, Lee, Sablynski, Erez 2001) and ultimately overriding any desire to leave the organisation (Allen & Griffeth 1999).

Job design has a large effect on the level of retention within an organisation, as Guthrie (2002), Allen and Griffeth (1999), and Li-Ping Tang et al (2000) provide evidence to suggest that managers are able to have some control over the retention of their highly skilled and high performing staff by designing jobs which offer financial incentives and rewards to improve the job satisfaction of their employees. By taking both a job-oriented and employee-oriented approach to job analysis, systems of offering employees rewards can be analysed and then systematically re-designed in order to better compensate employees according to the various physical and psychological requirements of the job, including the knowledge, skills and abilities required, and the job context and content (Stone 2002:125-6).

It has been noted, for example, that increased pay for highly skilled and high performing employees may reduce a dysfunctional rate of turnover and increase job satisfaction (Allen & Griffeth 1999:527), however, due to a lack of detailed research, it has not yet been determined whether the system would be financially detrimental to the organization in the long term (Guthrie 2002). This is due to the fact that by offering financial incentives, managers are encouraging employees to be high performers, thereby also motivating employees to seek or perceive alternative employment opportunities for a higher level of income (Guthrie 2002). The long term effects of a job design which offers alternative pay practices, such skill based pay systems, promotions and wage growth (Allen & Griffeth 1999), must be further researched, as it would be extremely wasteful for organisations to invest money into producing high performing and high skilled employees who left the organisation when offered new opportunities (Guthrie 2002).

It is the function of a job analysis to gather detailed information about a particular job’s duties, tasks and responsibilities (Stone 2002: 123) and in order to help organisations achieve strategic goals more efficiently and effectively by avoiding both duplication and overlapping of work in jobs, job analysis should be used to design jobs which provide the employees with the necessary factors, such as feedback, rewards systems and promotions, to increase job satisfaction (Guthrie 20002) (Stone 2002: 133).

As an organisation’s employees may be considered to be the organisation’s most valuable resource, it is the duty and function of human resource managers to effectively utilise the information gathered in a job analysis to design jobs in a way that keeps employees motivated, performing at a high level, and willing to retain their jobs (Kirschenbaum and Mano-Negrin 1999) . Drawing from the various research conducted by Guthrie (2002), Allen and Griffeth (1999), and Li Ping Tang et al (2000) on the subject of employee job satisfaction and motivation, it can be concluded that the most influential element of a job’s design is the way in which financial incentives are offered to employees, in the attempt to create a high level of job satisfaction. It is therefore recommended that human resource managers particularly pay attention to the way a job is designed to financially reward employees, as this has been seen to have the largest effect on the motivation, performance and retention of employees (Campion 1991, as cited by Li-Ping Tang et al.2000: 216).

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