1.1 Background of the Study
The focus of this study is to examine the effect of human resource practices on performance using Honda Manufacturing Company Sango-Ota as a case study. Human management is one of the most important determinant of the performance of an organization and it however important to carry out a study that address the impact of the practices of human resources on the performance of Honda manufacturing company. Most employees in Honda manufacturing company often complain about job insatisfaction and how much their work environment is not conducive, these complain could be avoided by effective human resource practice and this propels the need to carry out a study on the effect of human resource practices on performance of Honda Manufacturing Company.
It is however important for Honda Manufacturing Company to adopt human resource practices such good wages and salary, employees’ incentives, and conducive work environment in order to foster employees’ job satisfaction which in turn influences the performance of the organization.
Human resources (HR) are considered the most valuable asset in an organization but they make a better bottom line only for a few organizations (Wimbush, 2005). The extent to which, if any, human resource management (HRM) impacts on organizational performance has emerged as the central research question in the personnel/HRM field. Although initial results indicate that some human resources practices may have a positive effect on organizational performance, most scholars suggest that more conceptual and empirical work is required (Zhu, 2004).
Human Resource Management can be described as a strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations (Armstrong, 2010). It has a strong conceptual basis drawn from the behavioral sciences and from strategic management, human capital and industrial relations theories. This foundation has been built with the help of a multitude of research projects.
At the conceptual level, according to the resource-based view of the firm, which poses that superior performance is the result of the idiosyncratic mix of corporate resources, HR practices may lead to higher firm performance and be sources of sustained competitive advantage because these practices are often unique, causally ambiguous, and difficult to imitate (Voss et al. 2005). Essentially, as confirmed by a growing body of empirical evidence, not every HR practice can be a source of sustained competitive advantage (Barringer et al., 2005). Research has begun to isolate a few critical HR practices that seem to have a significant contribution on firm performance.
Organizations can improve the quality of current employees by providing comprehensive training and development activities. Considerable evidence suggests that investments in training produce beneficial organizational outcomes (Hamon, 2003). The effectiveness of skilled employees will be limited, however, if they are not motivated to perform their jobs. Organizations can implement merit pay or incentive compensation systems that provide rewards to employees for meeting specific goals. Incentive compensation and performance management systems enhance the performance of employees and organizations (Dessler, 2008). Performance management as a process explicitly recognizes that in today’s globally competitive industrial environment, every employee’s efforts must focus on helping the company to achieve its strategic goals (Dessler, 2008).
Organizational performance (OP) is an indicator which measures how well an enterprise achieves their objectives (Hamon, 2003). Organizational performance is concerned with product or service quality, product or service innovation, employee attraction, employee retention, customer satisfaction, management/employee relation and employee relation (Delaney and Huselid, 2016). Human resources have been identified to be both valuable and a source of competitive advantage (Legge, 2005). According to Bontis (1999), the human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization. Delery (2008) observed that the methods used by an organization to manage its human resources can have a substantial impact on many organizationally relevant outcomes.
When organizations face challenges such as an economy recession, it depend thoroughly trained professionals who react quickly to changes in the environment and create strategies for success. Human resource management (HRM) is responsible for carefully selecting and training people with the necessary skills to pursue the strategy effectively. Some external factors can be predicted; others, such as the collapse of large banks and insurance companies, can seemingly come out of nowhere (P.Robbins, 2010).