1.2 Understanding Organizations

Understanding Organizations

An organization is a social unit of people structured and managed to meet a need or pursue collective goals. As such, an organization is only as good as the people that make up that organization. The term human capital is frequently used to describe this extremely important organizational resource. To compete in today's dynamic and challenging economy, firms need knowledgeable, competent, and motivated people. There are basically two ways organizations can acquire the skilled human resources needed to be successful: they can hire them from outside or develop them from inside. This is sometimes referred to as the buy or build decision. This book is about the latter—the process of building human resource capabilities through training and development.

Even organizations that primarily pursue a buying (selection) strategy for obtaining the human resources they need will eventually be faced with the requirement of upgrading their existing human resource capabilities. For an organization to survive and prosper under rapidly changing environmental conditions, its employees must adapt by continually adding new knowledge, skills, and abilities to their repertoire. Further, organizations must maintain an internal pool of employees capable of moving into higher-level positions. It is through training and development programs that human resource departments are able to upgrade and add to the existing competencies and capabilities of an organization's internal labor pool. It is also through well-conceived training and development programs that, at least in part, an organization's reputation as being either a desirable or an undesirable place to work is established. This reputation, in turn, plays an important role in the ability of the organization to recruit and select top quality candidates in the first place.