DETERMINING THE SIGNIFICANCE OF HUMAN RESOURCES MANAGEMENT TO ACHIEVE ORGANIZATIONAL EFFECTIVENESS

Abstract

The external surrounding is prone to continuous changes, following global trends. Following the signals for external changes, their perception, acceptance and implementation, above all depends on the human factor. Employees are those, who thanks to continuous learning, development of their own potential and competence, contribute to maintaining competitive advantage of companies in an uncertain surrounding. Companies own material prerequisites for business development, but to what extent can employees use them and do they know how to use them? The increased turnover of human capital in companies, “scares” managers into investing in development, training and progress of employees. However, is it better for the company to own human capital, which is not growing or developing, and thus, stays in the company; or should it not focus on the fear that the human capital might leave the company, and invest and develop it? This is only one of the views on the approach to human capital. To be more precise, regardless of the business strategy, if people are not managed effectively, the results of the organization will remain minimal. Human resources management is a success strategy in today’s people-driven economy. It all begins and ends with the view that people are the richest source of competitive advantage.
Human capital approach implies that the organizational strategy is based on the human capital data. Respectively, when the strategy is being created, the company takes into account all available resources, including human resources. However, crucial characteristics of human capital regarding an organization’s performance, such as individuals’ flexibility and creativity, their ability to develop their skills over time, including motivation as well, slow down its evaluation. Therefore, it could be concluded that there is still a certain level of skepticism and distrust in organizations regarding the use of data and measures of human capital in the planning and decision-making process. Thus, they continue to invest their trust in the traditional accounting evidence, which records material and non-material means, the value of which can be expressed in monetary units, neglecting the value of the organization’s employees. However, the global economic crisis stirred interest regarding the relation between the organizational financial results and the people management and awarding thereof. It seems this period was made to inspire employers to consider their approach to human capital management, using which employees are perceived as value-adding means of the organization, and increases profit of investors through increased stock value.