Final answer:
HRM creates value in an organization by making it more effective at executing its strategy through strategic staffing, investments in human capital, and employee retention by offering competitive compensation and professional development opportunities.
Step-by-step explanation:
How HRM Can Create Value in an Organization
Human Resource Management (HRM) creates value within an organization primarily by making the company better at executing its strategy. This involves a strategic approach to managing people, which is critical for any organization's long-term survival and growth. Rather than keeping pay as low as possible, HRM specializes and focuses on the retention of employees and the hiring practices to ensure optimal staffing levels. Moreover, HRM departments make thoughtful investments in human capital through training and development, a process that goes beyond simply hiring qualified candidates.
The efficiency wage theory supports the idea that appropriate compensation is key to employee productivity. Offering competitive wages can lead to a more motivated workforce, with employees striving harder and being more inclined to stay. This also reduces hiring and training costs associated with high employee turnover. Additionally, professionalizing HR functions can help reduce hiring bias and ensure a more diverse and inclusive workforce, which can provide a breadth of perspectives and innovation. In a nutshell, value is created in HRM by investing in the workforce strategically, paying attention to compensation, providing opportunities for development, and fostering an inclusive work environment.