Answer to Question #184559 in Management for Tyford

Question

Discuss using concrete illustrations and with reference to your own situation, how the eight (8) guiding theories in Human Resource management are elated to the fundamentals of Human Resource management. 

Answer 1

Organization life cycle theory

Advanced organization life cycle theory which characterizes organizational development from formation, growth, maturity, decline, and death. According to the theory, the powerful force in all these stages is the environment of the workforce. Also, at the maturity stage, the organization cannot continue to grow or survive if there is no organizational structure that supports human resource creativity, innovation, teamwork, and high performance, which will withstand pressure from competitors.

Role behavior theory:

Role behavior theory aims to explain and predict the behavior of individuals and teams in organizations, which, in turn, inform managers for decision making, and what steps they take on people management as well as the expected consequences. Some of the key ideas focus on the need to improve the working environment including the resources to stimulate new behavior in employees for them to cope with new demands, it includes the use of rewards to induce and promote positive work behavior, and punishments to control negative behavior.

Resource dependency theory:

 One of the challenges faced by managers during the economic recessions in the 1970s is how organizations can best acquire scarce resources and effectively utilize them to remain competitive in the market. Also, the ability to utilize one’s resources including (financial, technological, and labor), and acquire more from the external environment was one of the areas of concern in many organizations.

The more organizations were able to harness resources, the more competitive they became. Therefore, resources were seen as the essence of organizational power (Emerson 1962). However, overdependence on external resources appeared to be risky due to the uncertainties that cannot be controlled by the organization. Concerning useful labor, the emphasis shifted to seeing employees as scarce resources that should acquire effectively.

Institutional theory:

The word ‘institution’ means different things to different people depending on the Academic and professional orientation. However, it is a discipline that combines politics, law, psychology, public administration, and economics amongst other things, to explain why certain decisions are made or actions were taken and their impact on the organization. Commons defines ‘institutions’ as ‘collective action in control, liberation, and expansion of individual action’.

Collective action covers areas such as customs, law, and procedures. The main objective of the collective action is less or greater control of the acts of individuals; which results in either gains or losses in the process of executing joint transactions. Control is about prohibitions of certain acts in such a way that the control of one person or organization leads to the liberty of the others and hence better gains.

Transaction cost theory:

Transaction cost theory base on the economic view of the costs of conducting business transactions. The thesis is that companies will grow if the costs of exchanging resources in the company are cheaper in comparison to competitors. Such costs include bureaucratic employment structures, procedures and the enforcement of employment contracts. For that matter employment relationships that may lead to high costs of exchange, should minimize.

Comparative advantage theory:

The main architect of comparative advantage theory is the economist David Ricardo who talked of the specialization and division of labor among nations and firms. Ricardo postulated that nations should produce goods in which they have a domestic comparative advantage over others. Since then, organizations and nations have focused on strengthening internal capacity to have more advantages relative to competitors and hence to reduce production and distribution costs per unit. Improving internal capacities include having the best human resources that best utilize to produce cheaper and better quality goods and services.  

Human capital theory:

The human capital theory was initially well developed by Becker and it has grown in importance worldwide because it focuses on education and training as a source of capital. It is now widely acknowledged that one of the key explanations for the rapid development of Asian countries in the 1970s and 80s is the high investment in human capital.

Human capital theory fluctuations the equation that training and development are ‘costs the organization should try to minimize’ into training and development as ‘returnable investments’ which should be part of the organizational investment capital. Therefore, human resource training and development decisions and evaluations have to be done based on clearly developed capital investment models. 

Strategic contingency theory:

There is an increasing body of knowledge stipulating that since an organization operates and thrives in a complex environment, managers must adopt specific strategies that will maximize gains and minimize risks from the environment. In this premise, the theory contends that there is no one best strategy for managing people in organizations. Overall corporate strategy and the feedback from the environment will dictate the optimal strategies, policies, objectives, activities, and tasks in human resource management.

Organizational change theory:

Defines organizational transformation as the method by which organizations move from their present state to some desired future state to increase their effectiveness. Organizations change in response to many developments taking place in the internal and external environment such as technology, policies, laws, customer tests, fashions, and choices that influence peoples’ attitudes and behavior.