Business companies and organizations face an incredible number of social, economic, technological challenges, which they have to respond to in a timely manner, and, thus stay always flexible. None of the sources can provide the company with the flexibility besides qualified staff. Thus, this paper seeks to show the role of human resource management in modern organizations and its influence on the companies’ strategies aimed at high performance.

The Role that Human Resource Management Plays in Modern Organizations

For a long time, people used to be considered a work element as any of other sources available in the organization, including technology. The name of the department that handles the work with staff is a bright confirmation to this fact. Thus, the tasks of the Personnel Department most likely were limited with paperwork and statistical records of the employees. However, fast technological development and increasing globalization create a tough competition in the business environment. Looking for competitive advantages for the companies, the leaders turned their attention toward the staff and found their huge potential in the organizational development. The awareness of the value of employees causes the shift from the simply acknowledging the staff’s member to making them professionals. Such change was immediately reflected in the department’s titles that transform from the Personnel Department to the Human Resource Management (Aslam, Aslam, Ali & Habib 2013).

Moreover, the definition of the human resource management concept also became wider and went beyond the frames of traditional activities, such as hiring and support of the staff. Thus, according to Monody and Noe (2005) human resource management of 21st century is a process utilizing the skills and knowledge of employees to achieve the goals of the company (Carpenter, Bauer & Erdogan 2012). Another professional on human resource management, Dave Ulrich (1997), emphasizes the importance of the multi-faceted approach to human resource management that should meet the needs of both employees and employers (Thill Venegas & Groblschegg 2014). Thus, one can see that professionals underline three points, such as “skill and knowledge,” “company’s goal” and “needs of employee” that can be considered as basic concepts concerning human resources management (Kolachi & Akan 2014). Balanced interplay between these leading factors is the crucial precursor for successful activities and prosperity of any business company. That is why, human resource managers, who provide interpersonal communication and direct the flows of the information, play an indispensable role in modern companies (Kolachi & Akan 2014).

The system of human resource management consist of five elements, such as recruitment and selection, training and development, working relations, payments and benefits, evaluation of performance and feedback (George & Jones 2008). Each of them has a significant meaning for the successful functioning of the company. Such division suggests that human resource management plays a crucial role.

Based on systematic analysis of changes in markets, human resource management provides an organization with complementary, innovative and diverse competencies that are developed according to the company’s purposes. However, selection of the professionals is a small part of the process. Explaining them the primary principles and goals of the organization, integrating different talented persons in a single coordinated team is a more important task of human resource managers. Thus, it plays the primary role in the development of the intellectual capital, which is to be an axis of the company around which all activities revolve. It can be said that human resource management determines the contribution to the competence of the company (Nestorovska 2013).

Employees are the most crucial mechanism that drives and maintains the health functioning of an organization (Stali?ski 2012). As the health of the organization is a critical factor for its survival in the competitive global environment, the role of human resource management becomes more evident (Jabbour & Santos 2008)

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The satisfaction of employees is one of the aspects that keep the organization healthy. Brett Simmons, who is Nevada’s Professor of Management, claims that “attitudes are strong drivers of behavior, especially job satisfaction, and organizational commitment.” (Simmons, 2011). Those who do not evaluate the staff’s satisfaction level and commitment may get deplorable consequences without visible reasons. On the contrary, professional approach of human resources management could reveal the existing discontent on its early stage and prevent the aggravation of the situation.

The innovations became an integral part of human life and production process. Thus, the ability to change the way of operations, incorporating the latest products of the progress, is a crucial precursor for high performance. According to the Voorde and Beijer’s study (2015), the employee’s perception of the new systems is more meaningful for its successful introduction than their professional skills. Appropriate staff’s treatment of the novelties could be formed under the influence of information available at the company. Thus, human resource management plays a leading role in fostering innovation within the organization.

Moreover, a good balanced reward system of the staff for their achievements can promote creativity and initiative of the employees. In such condition, people tend to discover themselves and their hidden unique individual skills. Professionally inspired employees often make interesting non-trivial decisions that further transform into distinguishing features or the quality mark of the company. Thus, human resource management plays a key role in the idea generating process and enforcing the competitive ability of the organization.

Thus, human resources management plays an indispensable role in the modern organization. Skilled employees are the driving force of any company and effective human resource management is a science evolving nowadays. All the processes related to the selection the staff, educating and training of employees, stimulating and rewarding determine the level of company’s performance and, thus, its prosperity and returns.

Outline the Arguments for Performance Related Pay

There are numerous ways of evaluating the person’s activities and reward his or her efforts aimed at reaching any goal. In business, money is the best tool to appraise or penalize an employee, and is a stimulating and motivating factor. There is no surprise that it is also one of the most effective instruments for human resource management and motivational tool for achieving the organizational goals (Boachie-Mensah & Dogbe 2011).

However, this method of measuring individual and group performance is very controversial. There are many arguments both for and against the performances related pay. For instance, one of the theories claims that such system of motivation can undermine intrinsic interest. However, results of the study did not show any negative impact on the intrinsic aspects (Fang & Gerhart 2012). On the contrary, numerous human resource professionals, studying both negative and positive influences of the performance related pay, find that there is an evident linkage between the perceptions, pay and performance (Singh & Mishra 2013). They established numerous advantages of this way to reward the staff. Thus, merit pay is widely used within the modern companies, despite the existing negative theories.

Good personal motivation is the primary driving force that aspires employees to go beyond their job description. In this concern, the system of rewarding employees based on performance related pay plays a role of a crucial motivating precursor. According to Milkovich and Wigdor (1991), diverse empirical research indicates that an incentive plan motivates employees and improves their individual performance (Fisk 2010). It is worth to admit that the companies also use group appraisal as the motivational instrument of human resource management. Such reward system promotes teambuilding (Salas, Shuffler, Thayer, Bedwell & Lazzara 2015). High group performance has the most crucial meaning for the success of internal business processes, and it is even more important than individual results.

The recognition of employee’s significance in the organization often is more valuable than material rewards. Taking into account this fact, the performance related pay is not always effective. Employee satisfaction is an intangible reverse side of the merit pay. Thus, the satisfied staff is likely to stay longer in the company’s team and to be more productive than discontented one.

The humans desire to realize their potential and get the merit pay provokes them to look for innovative solutions of the organizational issues. Thus, performance related pay stimulates the employees’ creativity, as Chinese human resource professionals claim in their research (Zhang, Long, Wu & Huang 2015). Moreover, the unrelated to the assigned tasks decisions are the ground for the innovations (Ederer & Manso 2015).

Moreover, performance related pay has a positive influence not only on the employees who already work for the company but it also makes the organization more attractive for new skilled professionals. Linking the pay and performance together potentially introduces consistency in the structure of payments and makes the institutions and enterprises interesting for more employees (McNabb & Whitfield 2007). The most qualified employees improve organizational flexibility and help the organization meet the challenges more effectively (Stazyk 2012). Thus, with the help of the reward systems companies provide themselves with competent and promising staff that may become their crucial competitive advantages over other market players.

Competitiveness and desire to be better than others are integral parts of the human nature. People often compare their achievements with the colleagues’ progress and try to surpass them. Desire to be the best is a part of personal development that is inextricably linked to the professional growth. Thus, besides personal performance, merit pay promotes increased group work productivity and encourages the commitment of employees to the organizational values and goals.

In addition, the system of rewarding personal achievements could diminish problems related to gender or race discrimination (Kangasniemi & Kauhanen 2013). The performance related pay takes into account individual achievement of the person to ignoring his or her individual characteristics, such as sex, religion, and ethnicity. Thus, it is the ground for the equality between the employees in internal business process.

Performance related pay influences not only the staff of the company, but also promotes the set of positive changes in the organization. Thus, constant analyses of the individual or group performance, motivates the company’s leaders to become more oriented on results of their business. It promotes the development of the consistency in the internal business process.

Moreover, the society is one more beneficiary of the performance related pay system. Increasing the productivity of the staff, perfecting the internal organizational process, and achieving the results certainly influence the quality of the services company provides. Thus, the end users get the highest quality services.

As one can see, there are many arguments on the performance related pay in the human resource practice. Enhancing employee productivity by such means as motivation and satisfaction, preventing social discrimination, improving an internal business process and the quality of the public services are the above-mentioned strengths of the merit pay reward system. Despite such numerous positive effects of this system, there are many weaknesses that should be studied. When determining of the compensation method, other aspects, like the cultural values, should be considered (Chang 2011). Thus, companies should not limit their human resource management with only one instrument but invest more time and effort to find creative measures to evaluate the employee’s achivements (Nalbantian et al. 2014).

Is It Possible to Prove that Training Is a Worthwhile Business Investment?

Human capital is a crucial determinant of the growth and prosperity of a company. Professionals emphasize the division of this concept into three components, such as early ability or innate talents, knowledge and qualifications that person gain during formal education, expertise and competencies acquired while training for job (Blundell, Dearden, Meghir & Sianesi 1999). Thus, the need for constant individual development through training and diverse skill gaining programs in modern society is rather evident. However, it is often considered as the personal task of an individual to look for the opportunities to improve knowledge in order to be competitive in comparison to other professionals. At the same time, the impact of the training of employees on the company’s performance is less clear (Hansson, Johanson & Leitner 2004). The question whether the education of the employees could be considered as the effective human resource management and worthwhile investment of the company is not proven yet.

Having conducted numerous research related to the influence of the training on the return rate of the employees Bartel (2000) concluded that the analysis of the majority organizations’ practices did not provide the scientists with clear data that confirm or reject any suggestion. The non-fixed cost of the training programs is the primary reason that makes the process of empirical statistical analysis more complicated. Despite the lack of clearness in the question of training, the effectiveness of the organizations that spend billions of dollars each year on development and management training according to the Industry Report is higher (Saks, Tamkin & Lewis 2011). The majority of these training expenditures are directed towards the executives, supervisors and managers. Moreover, companies tend to increase the funding in the coming year, expecting that the money spend on training will provide them with effective managers who will make their organizations more successful and competitive.

Almost each organizational leader can answer the question whether the management training and development is effective without looking at the results of the global statistical investigations. They believe that effective training programs are crucial for every company. The level of performance is the most significant index for the measurement. In this concern, value of the intellectual capital of the company outdoes its financial resources because the staff is a ground for the company’s strategic flexibility (Hansson 2009). Taking into account this fact, one can see that any amount of money organization spends on training and development of the staff certainly increases employee productivity, creativity, and performance.

Boudreau and Ramstad (2005) argued that organizations must succeed in finance, products, markets, and human capital (or their workforce) domains in order to maintain a competitive position on the market (Salas, Tannenbaum, Kraiger & Smith-Jentsch 2012). Thus, education deals with increasing and updating the skills, knowledge, competencies and experiences of employees through a series of training and development programs, which play a central role in human resource management. (Obeidat, Masa’deh & Abdallah 2014). Moreover, it is crucial to equip employees with necessary skills and competencies in order to prevent the mistakes in the production process, especially in high-risk setting (Salas et al. 2012).

The process of training may include informing employees about company’s policy towards the commitment required by an individual to meet organizational goals. Such approach based on identifying an individual as an advantage of a company extends the effectiveness of the attempt to represent the goals of organization (Kadiresan 2015)

Summing up, it is worth to admit that training is certainly a worthwhile organizational investment because it improves the performance of a company and makes the business process more effective and efficient. Qualified staff is ready to overcome numerous challenges of the environment and maintain the prosperity of the organization. Moreover, skills of the employees should always be improved, since it will help them to be more patient and attentive to the changing needs of customers. Thus, the quality of service the company delivers will be much higher.

Training is also essential for knowledge exchange. The process of sharing knowledge among staff, transfer of the information from the experienced employees who work in the company for a long time to young workers can help to save the significant achievements and modernize the internal business process. Moreover, it promotes teambuilding processes that lay in the ground of any successful business practices.

Furthermore, training and development instruments of human resource management have numerous significant motivational aspects. It is a manifestation of company trust and meaningful expectation of the responsible employees justify such treatment. New knowledge promotes raised self-esteem and brings the feeling of self-importance that is the crucial to achieve the maximum dedication of the staff. When the company invests in the skills and experiences of its employees, it invests in the company’s prosperity, providing flexibility, high performance and unprecedented level of service quality. That is why the costs company spends on the education of its staff is a strategic weighted investment that can help the organization occupy profound position on the trade market.


Human resource management has a crucial meaning for organizational prosperity because only people can help the company navigate through the majority of transitions. One can see that alongside with the new measures, the traditional effective tools, such as performance related pay and training programs, are widely used. Despite the positive results they bring, companies should not limit themselves by one strategy and continue to perfect human recourse management in order to be successful.

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