The Contemporary Human Resources Function

The Contemporary Human Resources Function Mercedes Rodríguez-Fernández Carlos Bryan-Jiménez Current companies encounter important challenges day to day. Many factors such as the economic globalization, the change in the way of working, the Internet boom, and the importance that the service sector is experiencing nowadays influence the new society in which persons and businesses actually cope. Each of these contingencies obligates the Human Resource function to adapt to new organizational goals moulding their strategies and tactics to the in fashion topics. In this work we present the classical functions integrated in the Human Resources department constituting its base of performance. We also deal equally with the high performance practices and the importance that is acquiring the binomial human resources management strategies – business performance such as new tendencies applicable in this area. Keywords: human resources; professionalism; high-performance practices; business performance; human resources strategy JEL Codes: M12, M21, M54 Personnel functions Whether the company has or not a human resources department (afterwards referred to as HR), all organizations realize a series of functions regarding the people who work there. Following the historical analysis posed by Puchol (Puchol, 2000) in his HR management treaty, the characteristics of HR function during the 70´s, 80´s and 90´s have changed with the course of time. In this way, during the 70´s the HR function becomes independent informing the general direction. During this period a lot of weight is placed on collective negotiation of large companies and the multinational company renumbering merit system used by national companies. During the 80´s, consolidation occurs in the personnel management as a responsibility strategy of the administration and handling of HR. Although the function of collective negotiation remains important, the payment system is generalized as a function of results. The decade of the 90´s is characterized by including systems in order to reward productivity in the collective negotiation as well as the appearance of individualized remuneration systems and a system of incremental value according to the evaluation of the results which guarantee an increase in efficiency through HR development and organization. If we review the practices comprising HR function, we find the following (Puchol, 2000): ●The employee function:  has as objective to provide the organization at all times with the necessary personnel both quantitatively and qualitatively, which optimize the development of the production processes and / or services, with a criteria of economic profitability. ●The personnel administration function:  refers to bureaucratic questions involved in management of company personnel ranging from contract signing at the beginning of labour relations to correspondence transmission when services are completed, passing through the preparation of payrolls, social security enrolment and withdrawal, elaboration tax withholding, etc. ●The compensation or retribution function:  try to get the application of a wage structure which satisfies with the triple objectives of being internally equitable, externally competitive and motivating. ●The HR leadership and development function:  intended that the individuals who make up the organization grow in it, that is, they are motivated by the work they do and who aspire to positions of greater responsibility. ●The labour relations function:  has to do with the treatment of individual conflict (a worker unhappy with their employment situation in the company) and partial collective dispute (a portion of the employees of the company) or total (discontent of the entire workforce). ●Lastly, the social services function:  it refers to all those measures which the company applies voluntarily to meet social needs of employees and thus achieve a better social and labour climate in the organization. Above these function must take into account that the HR department exists in order to support and provide services to the organization, both managers and employees. The area of HR is first of all a service area. As part of a service department, HR managers and specialists who support do not have the authority to direct other departments. Instead, exert a kind of authority called corporate  which is the power to advise other executives. As a result, the personnel department exerts considerable influence in the actions taken by other departmental areas (Werther and Davis, 2008, pp. 18-19). The above functions are developed in the human resources department being its director in charge to put into practice the tasks to meet the objectives set in the planning phase. This would be the classical approach of the question, although at present the new trends in HR direction lead us to consider the high-performance practices as a new perspective to consider in the direction of employees and implementation professionalizing the department plays an important role. Professionalising the human resources department It has been a constant throughout decades in Europe the concern for the status of the profession of HR director in organizations and the fight for a place in the structure of making corporate decision. If we look at the literature on professionalism, the subject on status has been widely explored by means of observation of the characteristics which department heads posses. Missing, however, find evidence of a link between the main feature of professional qualifications of HR managers and a higher perception of service they provide. The professionalization should be seen in this area, as an efficient service provider, discovering customer needs and mainly contributing to the achievement of the objectives of the organization. These factors or may not be the result of the individual qualities of the managers involved in the HR department but what is certain is that they involve much more than the mere combination of simple professional attributes (Farndale, 2005). In studies exploring the departmental dimension, professionalization has been measured by factors such as the existence of a functional department, membership of the board of directors of the company or the number of employees in the area of HR. Also in other HR management texts, at European level, factors such as participation in strategic decisions of the company are included from an early stage or return of HR activities to the corporate level that allows to demonstrate their contribution to organizational performance. Therefore, from the professionalism point of view, the HR department is defined as the department which makes a valuable strategic contribution to organizational life. In HR management literature there exists a tendency that argues that national, institutional and cultural contexts influence the role that is expected to play this department. Considering the institutional national context, there are clear factors that exert a force of considerable importance in this regard, such as legal and regulatory systems, economic wealth and functioning of labour markets. Also cultural factors influenced the issues related to the validity of life at work, the formalization of work organization, relations boss / subordinate, the definition of what makes an effective manager, the issue of predominance of machismo, the distances to power and the desire to avoid uncertainty. Based on data obtained from the Cranet survey (data were collected between 1990 and 2000 by the Cranet network, a global network of about 30 prestigious business schools from different European countries working together to investigate in the field of HR management), we present the results obtained in different aspects of the professionalization of HR: ●Participation in the strategic direction of the company.  The fact that a department is called to participate in making strategic decisions of the company is considered a key factor in the importance that the department has within the organization. In the case of the HR department in Spain, superior values above all other participating countries (England, Germany, France and Sweden) in the years analysed are detected, indicating the strong presence of HR representatives in the strategic decision making process within Spanish company. ●HR  Influence.  One way to measure the influence of HR in the organization is examining its positional power within it, that is its hierarchical position and power to participate in the strategic development of the corporation. The results of the Cranet survey indicate that Spain ranks third after France and Sweden in terms of percentage of organizations where HR has a place on the board of directors of companies. This provides a formal comparative idea on the departments board membership. ●Evaluation of the HR  department.  The fact of holding positions of authority, such as membership of the board of directors of the company, participation in strategic decision-making or accountability in company policy are important elements in the overall picture of the professional role the HR department has in an organization.  Based on the data offered by the Cranet survey, we see that Spain ranks first in the percentage of organization conducting a systematic evaluation of the HR department. It is noteworthy this result, because it is ahead of the other countries surveyed and the prevalence remains in all the years analysed. Viewed globally aspects analysed by the Cranet network, we note the high level of professionalism presented by Spanish organizations in comparative terms compared to other European countries that have become part of the study. This gives us a solid basis for the applicability of human capital management techniques to give optimum results translatable in terms of corporate profitability, as is the case of the practices which are considered next. High-performance practices in human resources It has recently aroused great interest the concept of high performance practices in the field of HR management. These practices include high levels of labour flexibility, forms of teamwork, contingent renumbering, security in employment and empowerment or delegation of power to the employee (Ordiz Fuentes, 2002). They also receive other denominations, such as best practices  , innovations at work or new work practices  . It is non-traditional work practices that have spread in the business world and consisting of the right combination of organizational capabilities and employee motivation by creating synergies that go beyond the mere sum of the elements involved in the process. They are work practices involved in the qualities and skills of employees, ways of job design that allow them to collaborate in solving problems and provide them with incentives to motivate them to use their effort discretely (Guest, 1997; Appelbaum et al., 2000; Colvin et al., 2001). High-performance practices are interpreted as an asset or capability that can be molded and leveraged by HR managers to enable the creation and appropriation of specific revenue for the company (Castanias and Helfar, 1991). They have conducted empirical research both nationally and internationally to try to determine what factors influence the adoption of such practices. In Spain, Ordiz Fuentes (2002) reaches similar conclusions to those obtained by his predecessors in the study of this subject (Stace and Dunphy, 1991), which hold the existing interdependence between management style, the degree of competition in the environment and the type of HR practices. Thus, it seems clear that in very competitive environments the degree of rivalry in the sector influences the type of practices to be applied in HR management. Thus, if we find environments where competition is very intense, there are frequent technological changes and barriers to imitation of current resources are very limited, the company must affect worker motivation as a source of value creation necessary to operate in these environments (Barney, 1991). Also in this work the influence of culture in high performance practices observed. So the expected relationship between participatory management style and corporate culture focused on people, determining in turn the adoption of high performance practices is confirmed. n this sense, some authors suggest that the ability to attract and retain human capital is reflected in the culture of the company, as in the Japanese environment where above all sense of belonging and job security come first. Regarding the management style something similar occurs: authoritarian management styles do not fit well either with empowerment  or promoting teamwork. That is, the management style and corporate culture are aspects closely related to the HR system, and only through the achievement of full congruence sustainable long-term competitive advantages are obtained. Regarding sector analysis, this study reveals, as did Hunter's (Hunter, 2000), that manufacturing companies make most use of high performance practices against other types of practices that are used by services businesses, such as job sharing or flexible schedule. As for the size and age, no significant results were extracted, as both large and small and both young and mature companies make use of high performance practices, unable to determine a fixed pattern of behaviour with respect to these factors. And regarding the strategic approach of the company, we see it is not a determining factor for the adoption of these practices, although it seems to confirm that, traditionally such practices has been attributed exclusively to companies that base their competitive advantage in product differentiation and were not necessarily the only ones who use it. Pfeffer (Pfeffer, 1998a) already pointed out that a strategy based on costs does not have to refer to labour costs; inclusive a containment policy on spending can be established investing at the same time in personnel. Also another author, Ichniowski (Ichniowski, 1992), observed that companies that implement high performance practices tripled profitability even after having increased their labour costs by 40%. It is logical to think that when employees are motivated and have sufficient capacity and knowledge to implement them, there should not be a distinction between a strategy of costs and of differentiation. Other authors (Thompson and Heron, 2005), using the resource-based theory, explore in their work the role played by two forms of management capacity, general and specific HR and analyse its relationship with the use of high performance practices also seeing its influence on business performance. They found a strong positive relationship between the use of high performance practices and added value for the employee, but did not detect differences between the two aforementioned forms of employee capacity management. Human resources and business performance management practices The link between human resources management practices and business performance has been investigated profusely from different perspectives (Simon and Akhton, 2003), reaching different approaches trying to find dependency relationships between both constructs established. 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