Introduction

With the changing dynamics, the HR functions becoming more strategic in nature, there is
greater need for HR strategy. HR strategy means accepting the HR function as a strategic partner
in the formulation of the company's strategies as well as in the implementation of those strategies
through HR activities such as recruiting, retaining, motivating, rotating and rewarding personnel
(Armstrong and Baron, 2002). Strategy formulation is concerned with making decisions with
regard to defining the organization's vision and mission, establishing long and short range
objectives to achieve the organization's vision and selecting the strategy to be used in achieving
the organization’s objectives (Armstrong and Baron, 2004). Strategy implementation is
concerned with aligning the organization structure, systems and processes with the chosen
strategy. It involves making decisions with regard to matching strategy and organizational
structure and providing organizational leadership pertinent to the strategy and monitoring the
effectiveness of the strategy in achieving organization's objectives. Implementing change of
strategic dimensions is likely to involve persuading employees to make changes in their working
styles and methods. HR strategy greatly recognizes HR's partnership role in the strategizing
process to achieve organizational excellence in all respects through a highly committed and
competent workforce, preferably in a non-union environment.

Philippe Lorrino (1997) states that: ʺPerformance in the enterprise is what contributes to
improving cost-value couple and not just what helps to reduce the cost or increase the valueʺ.
The first stage of the ʺtranslationʺ of the costvalue couple in concrete ʺpilotableʺ elements is to
describe in global terms how the enterprise creates and will create value. It is, therefore, about
defining ʺvalueʺ in the view of future developments. To design the value of tomorrow is to
define a strategy. The first stage is therefore to translate the cost-value couple in strategic
objectives. Measuring an organization’s performance is particularly important for boards and
management who apply for funding, need their funding renewed, or seek donations and support
from the community. It is a means of being accountable to funders and the community, and is a
practical way to ascertain the need for change. Structural contingency theory holds that the effect
on organizational performance of organizational structure depends upon how far the structure fits
the contingencies, such as uncertainty, strategy, and size. Organizations facing low uncertainty
are fitted by specialized and centralized hierarchical structures, whereas organizations facing

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high uncertainty are fitted by lower specialization and decentralization (Richard et al., 2009).

The public sector consists of governments and all publicly controlled or publicly funded
agencies, enterprises, and other entities that deliver public programs, goods, or services
(Carpenter 2002). It is not, however, always clear whether any particular organization should be
included under that umbrella. Therefore, it is necessary to identify specific criteria to help define
the boundaries. The concept of public sector is broader than simply that of core government and
may overlap with the not-for-profit or private sectors. The public sector consists of an expanding
ring of organizations, with core government at the center, followed by agencies and public
enterprises. Around this ring is a gray zone consisting of publicly funded contractors and
publicly owned businesses, which may be, but for the most part are not, part of the public sector
(Rhee and Valdez 2009).

General and specific HR Strategies that would be used to improve organizational

performance in the public sector
Some strategies are simply very general declarations of intent; others go into much more detail.
But two basic types of HR strategies can be identified: general strategies; and specific strategies
relating to the different aspects of human resource management.

General HR strategies
General HR Strategies are like formation of guidelines for day today streamlining of
organizational HR activities. The three main approaches are explained below.

High-performance management
High performance management is developing and implementing high performance work
systems. High performance management aims to make an impact on the performance of the
organization through its people in such areas as productivity, quality levels of customer service,
growth, profits and the delivery of increased shareholder value. High performance management
practices include rigorous recruitment and selection procedures, extensive and relevant training
and management development activities, incentive pay systems and performance management
processes. Jupp and Younger (2004) argued that high Performance management is a process that

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provides feedback, accountability, and documentation for performance outcomes. It helps
employees to channel their talents toward organizational goals.

In a high-performance organization, there is a designated leader or leaders who steer the ship and
always keep an eye on what's ahead. These leaders help the organization achieve excellence by
bringing out the best in people, helping them adapt to changing circumstances and promoting
good and harmonious teamwork. Making the best use of the company's most valuable resource –
its people – is key to delivering sustainable success. Managers act with integrity and serve as role
models for their reports. They are credible and consistent and exhibit a strong set of ethical
standards that gain the trust and respect of their teams. They are people-focused, and they are
results-focused. High-performance managers make swift and effective decisions instead of
overanalyzing, and they encourage others to do the same. They give people continuous support,
coaching and freedom to act in ways that are consistent with the organization's standards.
Ultimately, they expect people to take risks, make the tough calls and hold themselves
accountable for their own decisions (Willcoxson, 2000).

According to proponents of the rational process perspective, high performance is attributed to the
ability of organisations to effectively interpret the business environment, and to anticipate and
act upon new business opportunities. Organisations also have the flexibility necessary to
maintain ‘core values’ while adjusting outputs to meet new market demands, and the willingness
to implement employee remuneration strategies that increase productivity and financial returns to
the organisation (Willcoxson, 2000). Reflective of a private sector management orientation, the
rational process perspective emphasises the financial performance of organisations and the
ability to respond to market demands. The same principles would be applicable in the public
sector, with an emphasis on cost efficiency and the ability to anticipate and respond to changing
political and administrative demands.

High-commitment management
High commitment management is the management of employees based on trust, which
emphasizes on the regulation of oneself rather than being controlled by external pressure. Studies
have been carried out to investigate whether best practice or High commitment management may
lead to improvements in organizational performance or improvements in a worker. The idea that

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particular human resource practices can contribute to improved worker behaviors and attitudes,
reduce levels of absenteeism and labour turnover, increased levels of productivity, quality and
customer care. It is argued that this has the ultimate effect of increased profitability. However,
not all studies report a positive connection between best practice HRM and performance, there
are doubts about the HR practices that comprise high commitment, about their supposed
connection with one another, about the workers and employers attraction to it, and about its
universal application. Even if there is a link between High commitment management and
performance, questions are raised about the processes and about the direction of cause that drive
and underpin this connection (Marchington and Wilkinson 2005).

The reason why employee involvement is essential in the paradigm of high commitment is; first,
it ensures employees are informed about company issues through communication about financial
performance, operational matters and strategy, it also sends a message that the employees should
be trusted and treated in a positive way. Second, for team work to be a success employees need
information to provide a basis from which to offer their suggestions and contribute to improve in
company performance. Third, employee participation provides the management with legitimate
reasons for any action taken on the grounds that the ideas had been put forward by the employees
before decisions were made (Marchington and Wilkinson 2005). Even if an organizations
management has more power than workers, the relationship of employment is not complete and
defined legally but open to disagreement and interpretation over how it is enforced on a daily
basis.

Huselid (1995) divided high commitment practices into two groups: worker motivation and
worker skills and organizational structure. The latter is concerned with number of employees
participating in attitude surveys, number of hours trained in the previous year and the number of
employees that are required to take an employment test as part of the hiring process. The former
includes the number employees with performance appraisals linked to compensation and the
applicants where hiring took place most frequently. Turnover of labour, corporate financial
performance and productivity are output measures. Huselid (1995) concludes the magnitude of
investment returns in high performance is substantial. High performance increases workers job
satisfaction, trust and commitment and no work intensification and high levels of stress.
Employee discretion and effort is enhanced when they have the opportunity to participate.

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Human resource management has a great impact on profits and productivity than a range of other
factors. Peccei (2004) agrees that high commitment management has a positive impact on all
companies, irrespective of size, sector or state. Companies only need managers who possess
insight and courage to produce large economic gains that are available from best practice HRM.

High-involvement management
Guthrie (2001) defines high involvement performance as a rigorously selected interrelated HR
practices consisting of hiring, extensive capacity building of employees through selective
training programs, compensation packages, performance appraisal and employees involvement
in decision making. Wright, Dunford, and Snell (2001) debated that researchers should
investigate the role high involvement employee in managing internal resources, like employees
and HR systems and utilized it as competitive advantage over time. US department of Labor
(1993, p.1) define high performance work system as “Systems of mutually reinforcing practices
that create multiple ways to develop worker skills, to align individual and organizational goals,
and to share information crucial to solving problems”. In recent study of high performance work
system, focus on the information sharing; decisions decentralization and work enrichment, that is
providing employees with opportunities for participation in decision making and innovation.
Walton (1985) and Lawler (1986) emphasis on the employee involvement in decision process
enhance the employee commitment and satisfaction and directly influence the employee
performance for the benefit of organization. The performance of individual employees is
optimized by the high involvement of employees. Previous studies have established a strong a
positive association between High-involvement management and firm performance. After
investigating that organizational innovation is positively related with firm performance, this
study will examine whether high involvement is related with capacity building, job involvement,
employee compensation and performance appraisal.

Evidence of the effectiveness of high-involvement work practices has been documented in

several research studies. Barney (1991) presented the idea of resource based view of the firms
which suggests that HR systems can develop capabilities of the employees that can help firms to
achieve sustainable competitive advantage. Barney presented his model of resource based view
to get the competitive advantage on the basis of two assumptions. First, all firms have
strategically heterogeneous resources. Second, these resources are not perfectly mobile. In his

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research Barney emphasized that all the assets or material resources can be copied by the other
firms in operating the market but it is only human resources that can not be perfectly mobile
across the firms. It is the employees of the firm who, with their natural adjustment with the
culture, climate and experience within the same organization, can get sustainable competitive
advantage for a firm from the other the firms operating in an open market. Chew (2005)
suggested that unsatisfied employees have weak linkages with the organization and they often
display turnover intentions. Everyone likes to get better monetary and non-monetary rewards and
looks for his career development and this limitation calls for a sophisticated HRM infrastructure
that may enhance employees ‘attachment with the organization so as to play their valuable role
in the development of the organization.

Specific HR strategies

Specific HR strategies set out what the organization intends to do in areas such as those
explained as below:
Human capital management
Human capital management is an approach to employee staffing that perceives people as assets
(human capital) whose current value can be measured and whose future value can be enhanced
through investment (Kearns, 2005). Any company that wants to achieve great success needs to
pay close attention to human capital management. The employees of a company are the biggest
asset it has and by keeping that asset strong, the company has the best chance of success. A
company that pays little attention to its employees will end up with a team of employees who are
unmotivated and unproductive. Human capital management can be the difference between a
company with a winning team of employees all pulling together toward a shared goal, and a
demoralized group who are providing little overall value. It is important that each and every
member of the team is considered as an individual, each with their own set of strengths and
weaknesses. Human capital management assumes that any lack of knowledge amongst the
employees of a company is purely down to lack of training or teaching, rather than looking upon
it as a fault of an individual or a team.

Human capital management provides a strategic approach to managing staff at a company. It

differs from traditional HR practices as it is concerned less with administrative tasks and

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procedures and focuses more on getting the most out of staff for a happy and productive team.
Companies who currently do not have any type of human capital management program in place
should think carefully about implementing one. The employees benefit greatly from human
capital management which in turn means the company benefits greatly too. The approach to
managing and organizing employees through a human capital management program is done in a
number of ways. In essence, the approach should provide a fully inclusive strategy from even
before a new employee is hired right through to their exit. Another important part of human
capital management is succession planning and talent management. Being able to identify key
members of staff as possible future managers can make the decision making process for current
senior management more straight forward, and allow for greater ease with forward planning.
(Peccei (2004).

Human Capital Management is important because employees, the individuals who spend much
time each day working and contributing to the success of an organization, are a valuable resource
that can either make or break an organization (Fombrun, 2001). Thus, Human Capital
Management is essential for acquiring and retaining high-performing employees. The
responsibility of human resource professionals is to create and implement ways for employees to
be hired, oriented, trained, motivated, and engaged. Human Capital Management plays an
essential role in helping the organization’s human resources department increase the overall
productivity and happiness of employees. In turn, productive and happy employees work harder
and care more about the success of the organization (Montana & Charnov, 2008).

Corporate social responsibility

Corporate Social Responsibility (CSR) means that a business or government entity takes
responsibility for the effects of its business activities on people, the environment and business
operations. The company makes conscious choices to find a balance between People, Planet and
Profit. Companies can take this one step further and focus on new market opportunities, growth
and innovation that benefit people, society and the environment (Fombrun, 2001). With CSR,
organizations take responsibility for the impact of their activities on customers, employees,
shareholders, communities, and the environment in all aspects of operations. This effort extends
beyond simply obeying local laws, as organizations voluntarily take steps to improve the quality

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of life for employees and their families, as well as society at large. CSR is sometimes called
“corporate citizenship,” meaning that a company should be a good neighbor to the communities
that are affected by its presence (Rionda, 2002). There are compelling reasons why companies
should engage in some form of effort aimed primarily at social welfare. Proponents of CSR have
used four arguments to make their case: moral obligation, sustainability, license to operate, and
reputation. Moral obligation means that stakeholders of a growing number of companies are
satisfied only when the company balances the impact of its business with socially responsible
practices.

To illustrate how critical social responsibility has become, previous research by Cone
Communications found that more than 60% of Americans hope businesses will drive social and
environmental change in the absence of government regulation. Nearly 90% of the consumers
surveyed said they would purchase a product because a company supported an issue they care
about. More importantly, roughly 75% will refuse to buy from a company if they learn it
supports an issue contrary to their own beliefs.

Consumers aren't the only ones who are drawn to businesses that give back. Susan Cooney, head
of global diversity, equity and inclusion at Symantec, said that a company's sustainability
strategy is a big factor in where today's top talent chooses to work. The next generation of
employees is seeking out employers that are focused on the triple bottom line: people, planet and
revenue," said Cooney. "Coming out of the recession, corporate revenue has been getting
stronger. Companies are encouraged to put that increased profit into programs that give back." In
addition to a better company image, Schmidt said sustainable development can help your
business financially. For example, using less packaging and less energy can reduce production
costs.

Organization development

An Organization development (OD) strategy is a comprehensive plan based on a thorough

analysis of organizational needs and goals. It is designed to bring about specific changes and to
ensure that appropriate steps are taken to secure those changes. Included in it are: Desired
objectives; Specific interventions aimed at achieving objectives; Time scales; A monitoring,

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review and evaluation system. The strategy must specify contingencies as well as primary
interventions and take into account the power and influence dynamics of the organization
(Richardson, R and Thompson, 1999).

Specific interventions, such as team building and job redesign, are not strategies. Interventions,
unlike strategies, are simple activities with limited end objectives. Practitioners who confuse
interventions with strategies seldom exert significant, long-term impact on organizational
performance. If real organizational change is to be achieved and organizational performance
improved, interventions must be seen only as parts of, and be embedded within, an overall
strategy (Richardson, R and Thompson, 1999).

Organization Development applies behavioural science knowledge and practices to help

organizations change to achieve greater effectiveness. It seeks to improve how organizations
relate to their external environments and function internally to attain high performance and high
quality of work life. Organization Development emphasizes change in organizations that is
planned and implemented deliberately. It is both an applied field of social practice and a domain
of scientific inquiry. Practitioners, such as managers, staff experts, and consultants, apply
relevant knowledge and methods to organization change processes while researchers study those
processes to derive new knowledge that can subsequently be applied elsewhere. Thus
Organization Development is an action science where knowledge is developed in the context of
applying it and learning from the consequences (Argyris et aI., 1985).

The most recent applications of Organization Development involve structuring organizations so

they are better aligned with their strategy and environment. Such large-scale change has become
more prevalent in the past two decades as organizations have increasingly faced complex, rapidly
changing environments that often demand radical changes in how they compete and design
themselves (Mohram et aI., 1989). Organization Development has expanded its focus to the total
organization and its competitive environment. Drawing on a variety of perspectives in corporate
strategy (Miles & Snow, 1978; Porter, 1980; Hamel & Prahalad, 1994; Grant, 1998),
Organization Development has created interventions for assessing an organization's competitive
situation and making relevant changes in strategy if necessary. Also Organization Development

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has created new structures that fit in the current trend in the larger system and complex dynamic
and turbulent environment.

Engagement
Engagement is Employee engagement is defined as “the extent to which employees commit to
something or someone in their organization, how hard they work and how long they stay as a
result of that commitment (Cummings and Worley (2005).

Engaged employees work harder, are more loyal and are more likely to go the ‘extra mile’ for the
corporation. There are different levels of engagement, and understanding the types of
engagement provides perspective into employee behaviors that can either positively or
negatively affect organizational success. Employee engagement can be considered as cognitive,
emotional and behavioral. Cognitive engagement refers to employees’ beliefs about the
company, its leaders and the workplace culture. The emotional aspect is how employees feel
about the company, the leaders and their colleagues. The behavioral factor is the value-added
component reflected in the amount of effort employees put into their work (Cummings and
Worley (2005).

Employees who are highly involved in their work processes—such as conceiving, designing and
implementing workplace and process changes— are more engaged. As highlighted in the
literature, the link between highinvolvement work practices and positive beliefs and attitudes—
as associated with employee engagement and generating behaviors leading to enhanced
performance—is an important driver for business success. For example, a recent study analyzed
132 U.S. manufacturing firms and found that companies utilizing high-performance work
systems had significantly higher labor productivity than their competitors. When employees have
the power to make decisions related to their performance, can access information about company
costs and revenues, and have the necessary knowledge, training and development to do their
jobs—and are rewarded for their efforts—they are more productive (Bach 2011).

As highlighted in a recent report by the SHRM Foundation (Wood, 2001), employee

engagement can be measured in dollars and can yield significant savings. For example, at the

10
beverage company of Molson Coors, it was found that engaged employees were five times less
likely than non engaged employees to have a safety incident and seven times less likely to have a
lost-time safety incident. In fact, the average cost of a safety incident for an engaged employee
was $63, compared with an average of $392 for a non engaged employee. Consequently, through
strengthening employee engagement, the company saved $1,721,760 in safety costs in 2002. In
addition, savings were found in sales performance teams through engagement. In 2005, for
example, low-engagement teams were seen falling behind engaged teams, with a difference in
performance-related costs of low- versus high-engagement teams totaling $2,104,823 (Wood,
2001).

Knowledge management
Knowledge management (KM) is the process of creating, sharing, using and managing the
knowledge and information of an organization (Thompson, M and Heron, 2005). It refers to a
multidisciplinary approach to achieving organisational objectives by making the best use of
knowledge. Knowledge management strategy is a general, issue-based approach to define
operational strategy and objectives with specialized KM principles and approaches. It helps in

addressing questions like − Which knowledge management approach, or set of approaches, will

bring the most value to the company? How can a company prioritize alternatives, when any one
or several of the alternatives are appealing and resources are limited?

Choi et al. (1999) researched relation between knowledge management activities and
organizational outcomes in the form of firm competitiveness and economic performance. Study
revealed that activities inside of knowledge management area such as IT technologies and human
resource management have positive effect on competitive advantage. On the other hand IT
technologies improve financial performance only when supported by human resource
management which on its own has positive impact on financial performance. Abu Sung, J and
Ashton, D (2005) study examined relationship between knowledge management practices and
growth performance in construction industry. Growth performance measurement is undertaken
through company turnover and employment growth. The results show that knowledge creation,
storage, transfer and application have a significant relationship with growth performance. On the
four processes knowledge transfer has strongest impact on growth performance.
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Resourcing
Resourcing strategy ensures that the organisation obtains and retains the people it needs and
employs them efficiently. The objective of resourcing strategy is to find the most suitable
workforce the organisation needs, with the appropriate qualities, knowledge, capabilities and
potential for future training. The aim of this strategy is therefore to ensure that an organisation
achieves competitive advantage by employing more capable people than its rivals. This strategy
also seeks to retain them by providing better opportunities and rewards than others and by
developing a real organisational culture (Gratton, L et al, 1999).

Strategic HRM emphasizes the importance of human resources in achieving organizational

capability and therefore the need to find people whose attitudes and behaviour are likely to be
congruent with what management believes to be appropriate and conducive to success. In the
words of Gratton, L A (2000), organizations are concentrating more on ‘the attitudinal and
behavioural characteristics of employees’. This tendency has its dangers. Innovative and
adaptive organizations need non-conformists, even mavericks, who can ‘buck the system. If
managers recruit people ‘in their own image’ there is the risk of staffi ng the organization with
conformist clones and of perpetuating a dysfunctional culture – one that may have been
successful in the past but is no longer appropriate in the face of new challenges (Gratton L A.,
2000).

The HRM approach to resourcing therefore emphasizes that matching resources to organizational
requirements does not simply mean maintaining the status quo and perpetuating a moribund
culture. It can and often does mean radical changes in thinking about the skills and behaviours
required in the future to achieve sustainable growth and cultural change. It also means using a
systematic approach, starting with human resource planning and proceeding through recruitment,
selection and induction, followed by performance management, learning and development,
recognition and reward.

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Talent management
Talent management refers to the anticipation of required human capital for an organization and
the planning to meet those needs (Dyer, L and Reeves, 1995). Talent management requires the
selective development of certain key people or the belief that all employees are talented
(Armstrong, 2004). The development and implementation of a talent management strategy
requires high-quality management and leadership from the top and from senior managers and the
HR function. Developing talent from within is often thought to be more cost-effective than
recruiting it externally, especially at more senior levels.

Talent management professionals enjoy a low corporate status and recognition because they lack
an understanding of the effective ways to prove impact on revenue to executives and leaders
based on talent management initiatives introduced, or on talent brought into the organisation. For
talent management professionals to master organisational performance management and gain
corporate status and recognition, they need to have strong talent management expertise,
accompanied by strong business and financial acumen – a combination of skills we do not find
very often.

Talent management strategies in an organization helps in reducing attrition rate thereby

improving employee retention and organizational performance as the employees are engaged,
motivated and satisfied (Dyer, L and Reeves, 1995). This also benefits the organization in a way
that talent management allows the organization to plan most potential candidate to become the
future leader whenever certain position is vacant. So, inhouse recruitment takes place in terms of
succession planning, which is a proactive approach of talent management. The other variable in
which this study is interested is organizational performance. Generally, organizational
performance is referred to achievement of objectives such as extraordinary profit, delivering high
quality products, increased market share and good financial results. Accomplishments of these
goals for an organization reflect the productivity and engagement levels of its employees. In
other way, these targeted goals are only achieved when the organization care for and develop its
employees so that they deliver on dotted lines. It is, therefore, important for the organizations to
achieve their goals in competitive world, so that their employees are adequately motivated and
encouraged towards their tasks and assignments (Dyer, L and Reeves, 1995).

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Learning and development
Learning and development aims to improve group and individual performance by increasing and
honing skills and knowledge. Learning and development, often called training and development,
forms part of an organisation’s talent management strategy and is designed to align group and
individual goals and performance with the organisation’s overall vision and goals (Cappelli, P,
1999). Learning and development is a structured program with different methods designed by
professionals in particular job. It has become most common and continuous task in any
organisation for updating skills and knowledge of employees in accordance with changing
environment. Optimisation of cost with available resources has become pressing need for every
organisation which will be possible only by way of improving efficiency and productivity of
employees, possible only by way of providing proper employee training and development
conditioned to that it should be provided by professionals.

Training and development is an essential element of every business if the value and potential of
it’s people is to be harnessed and grown. Many studies have highlighted the clear links between
well designed and strategic training and development initiatives and the bottom line within the
business. The image of an industry and of individual employers is also influenced by the extent
and quality of staff training and development. Potential employees in such an open labour market
will assess the track record of prospective employers in this vital area. Career Progression and
development is an increasingly attractive or even basic requirement for many such employees. In
today’s business climate where all industries are experiencing staff and skills shortages,
companies are faced with stiff internal and external competition for quality employees. Each
employer who invests seriously in the area of training and development will reap the benefits of
an enriched working environment with higher levels of staff retention as well as increased
productivity and performance (Cappelli, P, 1999).

Studies on the relationship between learning and development activities and organizational
performance have included those by Boxall, P F and Purcell, J (2003). The research by Benabou

14
examined the impact of various training programmes on the business and fi nancial results at 50
Canadian organizations. The conclusion reached was that in most cases a welldesigned training
programme can be linked to improvements in business results and that return on investment in
training programmes is very high. But Benabou referred to the following limitations. A national
survey of training evaluation in specialized healthcare organizations (hospices) conducted by
Boxall, P F (1993) showed that while there appeared to be some links between training and
performance it was not possible to reach firm conclusions about causality. However, the study
reached the important fi nding that where organizations undertake assessment of their training
and development (both formal and informal learning) then there is a greater belief in the positive
impact training and development has in the organization. While it is possible and highly
desirable to evaluate learning, as described in Chapter 42, establishing a link between learning
and organizational performance is problematic. It may be diffi cult to distinguish between cause
and effect. Boxall, P F and Purcell, J (2003) warn that it is risky to adopt simplistic views that
training leads to improved business performance because it is more likely that successful
companies will under certain conditions increase their training budget. A further complication
was identified by Benson et al (2006), who made the following comment.

Reward
Reward means what the organization wants to do in the longer term to develop and implement
reward policies, practices and processes that will further the achievement of its business goals
and meet the needs of its stakeholders (Armstrong, 2004). An effective total rewards strategy
enables organizations to deliver the right amount of rewards, to the right people, at the right time,
for the right reason. Reward strategies must be anchored in business reality to be effective which
means linking it to your business strategy, the needs of your employees as well as your
organization. To be effective, a total rewards package must tie together the organizational
strategy, workforce strategy and HR strategy. Total rewards should align each employee with the
organizational objectives.

The effectiveness of skilled employees is likely to be limited if they are not motivated to
perform. One of the means that organizations can use to enhance employee motivation and
performance is to provide performancerelated compensation (Delaney and Huselid, 1996). A

15
reward and compensation system is based on the expectancy theory, which suggests that
employees are more likely to be motivated to perform when they perceive that there is a strong
link between their performance and the reward they receive (Mendonca, 2002). In other words,
the compensation system (e.g. profit sharing) contributes to performance by linking the interests
of employees to those of the team and the organization, thereby enhancing effort and
performance (Kalleberg and Moody, 1994; Huselid, 1995; Kling, 1995). Four commonly used
variable pay schemes are profit-related payment, employee share-ownership plans (ESOP),
profit-sharing schemes, and group performance-related schemes. Profit-related pay schemes
provide employees with tax-free payments linked to the profitability of their companies. An
ESOP allows employees to take a stake in the company they work for through shares of stock
that are awarded to them. A profit-sharing plan rewards employees with a part of a company’s
profits for their contribution to the company’s success. The reward can be in the form of cash,
shares or a combination of both. Group performance-related schemes reward a group or team of
employees with a cash payment for achieving an agreed target. These schemes are all designed to
enhance company performance by aligning the interests of employees with the financial
performance of their companies. Several studies have revealed the positive effects of reward and
incentive systems on organizational performance.
Banker and Lee’s (1996) empirical research, which is based on data from 34 stores of a major
retailer over 77 months, supports the theoretical prediction that stores that implement an
incentive plan will experience a positive impact on sales, profit and customer satisfaction.
A study based on data from the US National Organizational Study, conducted by Kalleberg and
Moody (1994), also found that profit sharing is positively correlated with product quality,
product development, profit, customer satisfaction, and growth in sales. Cook (1994 in Kling,
1995) found that the use of profit sharing was positively associated with higher productivity in
an analysis of 841 manufacturing establishments. All employees are satisfied by extrinsic
rewards while low level employee satisfied with intrinsic rewards(Clifford J. Mottaz 1985) The
result obtained from the analysis showed that there existed relationship between extrinsic reward
and the performance of workers, while no relationship existed between intrinsic rewards and
workers performance(Chris Ajila and Awonusi Abiola journal of social science 2004)..

Employee relations

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According to CIPD (Chartered Institute of Personnel & Development, 2010) Employee relations
is a broad term that incorporates many issues from collective bargaining, negotiations,
employment legislation to more recent considerations such as work-life balance, equal
opportunities and managing diversity. It comprises of the practices or initiatives for ensuring that
Employees are happy and are productive. Employee Relations offers assistance in a variety of
ways including employee recognition, policy development and interpretation, and all types of
problem solving and dispute resolution. It involves handling the pay–work bargain, dealing with
employment practices, terms and conditions of employment, issues arising from employment,
providing employees with a voice and communicating with employees. Employee relations is
concerned with maintaining employee-employer relation, which contributes to satisfactory
productivity, increase in employee morale and motivation.

Today, Employee Relations is a much broader concept. It involves maintaining a work

environment that satisfies the needs of individual employees and management. Improving
employee morale, building company culture, conveying expectations. An effective employee
relation involves creating and cultivating a motivated and productive workforce. It’s necessary to
keep the dynamics of employer-employee relationship in mind. It covers all the relations
between employers and employees in industry. Employee relations also includes giving scope for
employee participation in management decisions, communications, policies for improving
cooperation and control of grievances and minimization of conflicts (Appelbaum et al, 2000).

People are generally motivated from within, but HR and organization focus should be on what
they can do to help foster the type of environment where employees thrive to give their best
performance. Motivated employees have higher level of work engagement, reduced turnover and
better performance as compared to disengaged employees. Since the organization success is
directly linked with the performance of its employees the companies maintaining strong
employee relations initiatives will benefit because their workforce is highly motivated to put
their best efforts (Appelbaum et al, 2000). Hence managing these relationships becomes
important for business success, as strong and healthy relationships can lead to greater employee
happiness and even increased productivity.

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Employee well-being
Workplace Wellbeing relates to all aspects of working life, from the quality and safety of the
physical environment, to how workers feel about their work, their working environment, the
climate at work and work organization (Armstrong, 2002).
The public sector tends to take a proactive approach to well-being. The public sector takes a
more strategic and integrated approach to well-being than the private sector, although there is
still definite room for improvement. Job satisfaction is the most frequently studied aspect of job-
related SWB and has a long history dating back at least half a century (e.g. Brayfield and Rothe,
1951). It can be examined in different ways, however. Some enquiries use a single question
asking the respondent about their degree of satisfaction with the job as a whole (perhaps
alongside questions asking them about their satisfaction with other 'domains' of their life, such as
their family life or social activities). Research that is focused on the work domain, however,
tends to utilise a battery of questions which ask the respondent about their satisfaction with a
number of different 'facets' of their job, such as the level of pay, the provision of training
opportunities, and their relationships with supervisors or co-workers. These facet-specific
questions may then be analysed separately, grouped into coherent subsets (e.g. satisfaction with
extrinsic versus instrinsic rewards) or combined together to form a single index. Whether using a
single item or a range of facet-specific items, the level of satisfaction is typically rated on a five
or seven-point scale from 'Very satisfied' to 'Very dissatisfied', with a mid-point labelled 'Neither
satisfied nor dissatisfied' s (Appelbaum et al, 2000).

Conclusion
Human Resource Strategies help to unify and direct the behavior and actions of all people and
their overall development in accordance with the needs of the organization. It allows a
meaningful planning and management of all work with human resources.

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