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Organizations are affected by many factors, these factors may be economic, social work, organizational and environmental. These factors have an impact on the performance and profitability of the organization and hence the human resource managers should come up with policies that assist the organizations to iimprove performance and profitability when these challenges hit the organization(Armstrong & Taylor, 2014). . This paper analyses the organizational factors that affect the financial performance of the company and how the Human Resource Department should assist in mitigating the impact of these factors.

Organizational factors that affect the government


Liquidity of a company is measured by current ratio. Liquidity is an important factor because it affects the company’s profitability and performance in all ways. The recommended current ratio is 2:1 and it shows the company’s ability to convert the company’s assets to cash. The working capital affects the company’s ability to pay up its debts (Reiche, Stahl, Mendenhall & Oddou, 2106).For the company to avoid being insolvent its liquidity should be well managed and kept in normal levels. One of the ways that the human resource department can help in maintaining an optimum level of liquidity is by ensuring that there is an optimum number of staff so that the company can have enough money to run its operations.

Firm size

There is a negative relationship between financial profitability and the size of the firm. Big firms have resources and capability to make a profit in the long run as compared to small and medium sized firms. Therefore, for a manufacturing company the human resource department should ensure that there is maximum productivity from the staff(Albrecht, Bakker, Gruman, Macey, & Saks, 2015).. This may be by ensuring that they hire professional skills that are required for maximum productivity.

Other factors include personnel factors where the human resource department should ensure that there is a good working environment for the performance of the employees be at optimum levels. Employees should be properly motivated both financially and non-financially for example the human resource department should ensure that they give workers job security and wage incentive policies to become better performers(Bratton & Gold, 2017)..

There are other economic factors that affect the performance and profitability of an organization. The most important task of the enterprise is the constant search and implementation of labor productivity growth reserves, which are understood to mean the existing, yet not used, real opportunities for increasing labor productivity.The reserves of growth in labor productivity in an enterprise can be classified as follows: Increasing the technical level of production as a result of mechanization and automation of production; introduction of new types of equipment and technological processes; improvement of constructive properties of products; improving the quality of raw materials and the use of new structural materials (Collings, Wood & Szamosi, 2018).

1. improvement of management, organization of production and labor by raising labor standards and expanding service areas; reducing the number of workers who do not meet the standards; simplification of the management structure; mechanization of accounting and computing operations; increase the level of specialization of production;

2. structural changes in production due to changes in the specific weights of certain types of products; labor intensity of the production program; share of purchased semi-finished products and components; of new products(Brewster & Hegewisch, 2017). .

Increase in labor productivity

Can your employees work more efficiently, increase productivity? Of course yes. At the same time, effectively - this does not mean until the night, without raising your head. This means, at lower costs, achieving more significant results. Managing the performance of employees is a complex process, built on three "whales":

1.  measuring performance - that is, evaluating employees. In order to proceed purposefully, it is necessary to understand where we are now.

2. Development of staff based on the results of the evaluation.

3. Material encouragement of those who are most effective.

Acting in line with this approach, HR-studio "Time of people" constantly develops programs to increase labor productivity. In the first place - employees of selling units. To manage the effectiveness (effectiveness) of employees, you need to be able to measure and evaluate it.

1. Effectiveness - the degree to which the system achieves its objectives.

2. Economical - the extent to which the system uses available resources.

3. Quality – Degrees

Compliance with the system requirements, specifications and expectations.. Profitability - the ratio between gross revenues and total costs. . Productivity - the ratio of the number of products of the system and the number of costs for the production of the corresponding products. The quality of working life is how the persons involved in the system react to the socio-technical aspects of the system. The introduction of innovations - applied creativity. At the same time, one of the key indicators of the company's performance is the labor productivity indicator, which characterizes the share of output or services produced per unit of labor input, and, more simply, the ratio of the results obtained to the labor costs incurred(Marchington, Wilkinson, Donnelly & Kynighou, 2016). The increase in labor productivity in the enterprise is manifested in the form of: an increase in the mass of output created per unit of time, while its quality remains unchanged; an improvement in the quality of products with a constant mass produced per unit of time; a reduction in labor costs per unit of output; labor in the cost of production, reducing the time of production and circulation of goods, increasing the mass and the rate of profit.


1. Armstrong, M., & Taylor, S. (2014). Armstrong's handbook of human resource management practice. Kogan Page Publishers.
2. Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Behaviour Effectiveness: People and Performance2(1), 7-35.
3. Bratton, J., & Gold, J. (2017). Human resource management: theory and practice. Palgrave.
4. Brewster, C., & Hegewisch, A. (Eds.). (2017). Policy and practice in European human resource management: The Price Waterhouse Cranfield survey. Taylor & Francis.
5. Collings, D. G., Wood, G. T., & Szamosi, L. T. (2018). Human resource management: A critical approach. In Human Resource Management (pp. 1-23). Routledge.
6. Marchington, M., Wilkinson, A., Donnelly, R., & Kynighou, A. (2016). Human resource management at work. Kogan Page Publishers.
7. Reiche, B. S., Stahl, G. K., Mendenhall, M. E., & Oddou, G. R. (Eds.). (2016). Readings and cases in international human resource management. Taylor & Francis