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The Human Resource System (HRS) is qualitatively different from the traditional Personnel Administration (PA). SME's however usually misrepresent PA functions as HR functions. The basic assumption underlying the traditional concept of personnel managemet was that people are motivated only by salary and comforts. PA therefore focussed on administration of salary and benefits and functioned independently. HRS on the other hand considers an organisation as a system comprising of various interdependent sub-systems, HRS being one of them. HRS realizes that human beings have their own needs, motivation and expectations, and that their contribution to the organisation is much more than any other resource.

HRS encompasses the highest level of human resource management activities including multiple human resource policies that are internally consistent in relation to a human resource objective.



Employee Commitment

An HRS focused on increasing employee commitment will recruit selectively, provide employees with intensive training, and offer a high level of compensation. For example, a small medical clinic serving local senior citizens may focus on recruiting and retaining caring staff to provide quality service. Recruiting will require conducting multiple interviews to make sure the personality of the applicant matches the requirements of the position. Once the right person is selected, intensive job training and goods compensation will be provided to increase employee satisfaction, job performance and organizational commitment.

Organizational Effectiveness

The human resource management system of a company has a significant impact on individual and organizational effectiveness. A good HRS brings consistency in human resource management practices and improves human relations in the company. An effective HRMS is focused on a strategic objective and works by improving employee knowledge, skills, motivation and contribution opportunities. Based on their overarching goal, human resource management systems contribute to organizational effectiveness in multiple ways.

Customer Service

Small businesses have typically limited market share. Providing excellent customer service is one strategy to defend market share. An HRMS focused on delivering good customer service includes improving the physical work environment, a supportive and collaborative spirit to cover possible mistakes, and use of appropriate service delivery technologies such as computers.

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