Structural form that is most suitable for an SHRM approach - Essay Example

? Essay on structural form that is most suitable for an SHRM approach The changing face of the industrialized world has led to changing views of managing the workforce. The concepts governing human resource management have changed with changes in the industrialized world. As business operations have expanded from local to national and on to global markets, organizations are forced to operate in a fast-changing environment. Competition, technological advancement, legal requirements, host-country expectations and a changing customer profile place pressure on the internal systems and processes. The organizational structure has undergone changes with the changing environment. The earlier bureaucratic structure with its mono-cultural working community that suited a limited market has given way to a variety of structures that seek to garner the best way to harness talent in a wider area and manage market expectations across cultures. The factors that affected the HRM concepts at work were primarily availability and negotiating power of labor and workforce culture. As markets expanded companies faced a need to restructure internally in an effort to maintain flexibility by utilizing the right type of talent to manage the external environment. The central concept of HRM relates to ‘flexibility, responsiveness, ownership of organizational problems… empowerment… commitment’ (Salaman, 2001, p. 157). Connecting SHRM with strategy and structure Strategic Human Resource Management (SHRM) may be considered to be an umbrella term for a set of practices and processes designed to ensure the appropriate use of talent to suit business needs. HR academicians and writers have put forth visions on the models of SHRM, business strategy and structure. Strategy is seen to mould structure and thereby the practices towards managing human resources. Sinclair-Hunt and Simms (2005, p. 4) refer to the external environment as a guiding factor behind strategy. The environment might require quick responses which requires the use of proactive thought and vision; it may require short term responses that allow survival without greatly impacting the internal processes or it may call for the organization to ‘give in’. The demands of the environment determine the response which should ideally be aided by appropriate strategy and structure. Yet organizations struggle to develop an SHRM approach. Sims (2002, p. 34-36) points out that the linkage between SHRM and overall strategy must cross the first hurdle of drafting corporate strategy. Many times, organizations are hard put to define a larger strategy and prefer to focus on immediate events. The demand for continuing flexibility can make the creation of such a strategy a challenge in itself. Ferris, Rosen and Barnum (1995, p. 135) discuss how even the presence of a larger strategy does not lead to the linear creation of SHRM processes since by the time the implications are translated to HR processes, the environment has forced a change to strategy. Durai (2010, p.37-38) mentions the factors that interfere with the development of effective SHRM processes. Absence of support from top management in involving the HR practitioners making key decisions is a major factor. This often stems from the perception that HR is an administrative function Morton, Newall and Sparkes (2004, p. 52). The author believes it is incumbent for the HR department to highlight the business advantage it can provide while providing administrative efficiency. In the absence of a clear strategy is there no scope for a unified approach to the acquisition and management of talent? Strategic human resource management must be considered linked to the context of the business. An organization may not spell out strategy for a variety of reasons ranging from not seeing the need or not knowing how to not considering it relevant. The structure may continue to be hierarchical with speed provided by the adoption of technology. In such a case, business context guides the activities of the human resource function. For example, a competitor in the detergents sector will want specialized talent in the sector to be utilized effectively. Focused management of key talent acquisition and retention occurs in spite of the absence of strategic direction and appropriate structure. The company might find itself capable of competing in the new world arena despite the absence of strategic direction and a revised structure. Structure and SHRM Structure is the ‘network of vertical and horizontal interconnections among jobs’ (Noe, Hollenbeck, Gerhart and Wright, 2007, p. 138). These relations may be re-designed to ‘fit’ the competitive need of the organization. Ghuman and Ashwathappa (2010, p. 245) mentions two types of organization structure – mechanistic with a focus on hierarchy and clearly defined job scope. The functional structure based on occupational specialization and the divisional structure with different businesses grouped under strategic divisions fall under this type. These structures allow for efficiency and economy though different strategies may be seen to operate together. The other is the organic structure typified by a flat hierarchy to allow quick adaptation to environmental demands. Matrix organizations that call upon relevant talent to team up for a project is an example of this kind of organization. The virtual organization is yet another type that calls upon independent professionals for a job. Schuler and Jackson (2007, p. 24) have argued about the ‘contextual conditions and HRM’. Factors that affect the development of a suitable model include external pressures working on the organization, structure, size, life cycle and business strategy. Mabey, Salaman and Storey (1998, p. 70) proposed a model that considers the external environment and the strategies devised to control parts of it will determine the behaviors of the workforce. This model acknowledges limitations of ‘systems, structure and staff’ and providing the possibility of facilitating the ‘stretch to achieve’. This contingent model is dynamic’ and brings out the human capability for positive effect. This view takes a soft approach to HRM and values human capability. Technology has now brought in new paradigms for organizing business. Business structures have changed from historical bureaucracies to those based on ‘supply chains and processes’, the adoption of outsourcing as a means to reduce cost and focus on key business and the development of virtual organizations in which different units connect for completing a job. Organisations that continue to run with a hierarchical structure may utilize a temporary parallel structure to cope with business demand. New organizations are able to compete without the presence of a hierarchical structure and form part of a new mode of business enabled by communications technology. Salaman, Storey and Billsberry (2005, p. 193-204) quote authors who believe that modern networked organizations are suited to the HRM shift from administrative detail to effective management of intellectual property in the hands of talented resources. There is an inherent contradiction in the belief that the shift from conventional organizations to the technologically-enabled will lead to greater scope for SHRM. For one, the environment in which these businesses function are fast-changing as new technologies and designs quickly render yesterday’s model or process worthless. Organizations that face the immediate need for change in strategic direction do not commit to long-term strategic thinking which forms the mainstay for the development of SHRM processes. As employment goes global, attrition becomes a challenge. SHRM requires the presence of a stable workforce that helps determine its relevance. HR departments tend to develop a rigid approach in practices which leads to the strategic team utilizing them only for implementation and communication. Does the speed of response necessitated by the business environment work at odds with the slower more static pace of SHRM? Conventional wisdom on SHRM was written in a context of static business environments where the corporate office was expected to coordinate the efforts of related establishments and guide the strategic direction. This role has changed as the concept of a central body for decision making is replaced by empowered individuals who can take independent decisions. Strategic direction is needed at the point of business and is quickly obtained with the help of technology. In such a technologically-enabled environment where it is feasible to have powerful individuals in far-flung geographies associating together to drive business, SHRM needs to move from the conventional approach and adopt systems that allow access on a real-time basis. For example, the new way ahead for recruitment could be the maintenance of a ready database of talent for quick absorption into the system on a need-basis. Training can move from the earlier method of classrooms and on to independent training by accessing readymade material that is available in the training repository. Is there a need to fit SHRM with strategy and structure? Salaman and Asch (2003, p. 35-54) argue that the concept of fitting strategy and structure is an over-simplification. An organization that seeks to compete using different strategies say, manufacturing and innovativeness, is likely to find its existing structure based on manufacturing excellence unsuited to the strategy for innovation. The internal culture and predominant organizational structure may not support the changed structure that innovation demands. The requirements of strategic human management practices differ for the two types of structure to enable support for innovativeness. The existing practices and assumptions will not suit the two very disparate requirements. It becomes obvious that the adoption of strategy must be done considering the internal context and defining the structural and managerial adjustments required for managing both. Argyris (xx, p. 44) refers to Beer’s interventions that refer to lack of clarity with respect to strategic priority, leadership and management style and deficiencies in coordination, communication and competency as the main barriers to effective strategy and SHRM implementation. The absence of an attempt by the top management to partner with the workforce to produce desirable results and assumptions on top-down communication and decision making have a direct impact on employee engagement with the organizational goals. There exist contradictions within the connections between strategy, structure and human resource management models. Loosemore, Dainty and Lingard (2003, p. 43-45) discuss the relation between organization structure and SHRM stating that structures may be fluid to suit the needs of the business and the HRM challenge is appropriate job design. The authors point to the possibility that departments may have distinct forms. It is incumbent on the managers to understand the nature of the business and the need to work around the fluidity to provide suitable talent at the right time. McCourt and Elridge (2003, p. 21-24) envisioned three possible models for managing human resources, administrative, negotiator and architectural. The first was suited for bureaucratic organizations with clear hierarchies with the job limited to tracking attendance and timely wage payouts. The second was suited to the presence of a union and the emphasis on differences between workers and managers. The atmosphere was formal and limits were clearly set and adhered to. Communication followed vertical channels. The third model is suited to the presence of a culture that ‘emphasises excellence and initiative’ and upholds entrepreneurial values. The corporate environment here focuses on the free-flow of information across horizontal and vertical channels and talent is developed through effective training for appropriate deployment. The contradiction here was that large multinational companies that followed rigid structures with high control and command also worked out HR practices on the premise of lifelong employment. As a result, well-laid career plans, succession planning, relevant pay structures and focus on training and development were in existence. Long-term thinking and a lasting employee base allowed for the existence of advanced HRM practices and it is contended that globalization with its impact on lifetime employment and the introduction on subcontracting have actually reduced the place of HRM in the business context (Mabey, Salaman and Storey, 1998, p. 270). In the absence of a suitable structure, efforts to align human talent to organizational goals will face problems (Mabey, Salaman and Storey, 1998, p. 68). The authors contend that there are two visions of SHRM – one as a ‘one-size-fits-all’ that is believed to be applicable to all businesses regardless of context and the other, contingent approach which should support the organizational strategy. They argue that an ‘open’ approach that drives behavior to suit strategy will involve the right choice of ‘structural, cultural and personnel strategies’. Salaman, Storey and Billsberry (2005, p. 204) point out that the very nature of decisions in the newer organizations will be short-term and directed by immediate earnings rather than a long-term view. Strategic human resource management by its very nature requires a long-term view in order to develop practices suited to the acquisition and management of talent. New organizations are enabled by technology to contain cost, control manpower needs and function effectively. These organizations are typified by innovativeness and free flow of communication alongside quick decisions and action. Regardless of the nature of the organization, it is imperative that every line manager and the HR department are unified in their understanding of the business needs and the most appropriate response. Often, the actions towards managing people are affected by personal prejudices and preferences, the presence of fiefdoms and personal insecurity that comes in the way of good talent management practices. Despite the presence of a well-defined strategy and SHRM practices these are the internal forces that can derail the effort. Fombrun, Tichy and Devanne (1984) put forth a strategy framework that considers the human resource dimension as a part of the process of strategic decision making. The authors quote Chandler’s argument that structure follows strategy. Organizational growth is seen to be the precursor to the structural change from ‘functional to product to multidivisional forms’. The management of human resources emanated from the strategic direction. Armstrong (2000, p. 6) views this method of strategic allocation of human resources as a presentation of ‘workers as another key resource for management to exploit’. Gratton (1999, p. 41-44) sees this as a ‘hard model’ of HRM where HR policies are closely linked to strategic business objectives and humans are resources for utilization. The soft model which SHRM is more aligned with considers each unit of the workforce to be a willing resource – eager to learn and contribute to the benefit of the organization. This model emphasizes the development of ‘trust’ and training to enhance the skills of the resources (Gratton, 1999, p. 42). Hendry (1995, p. 22) refers to the soft factors as ‘important in improving product and service quality’. It must be remembered that an organization is present to achieve certain goals and is willing to invest in human talent with this intention. A workforce might possess a few individuals who are self-motivated and solution-oriented and capable of finding the right answers to issues. This is not likely to be true of all individuals in the business. Some portions of the workforce will do well under clear direction and clearly defined job limits. Organizations can tap talent when they use a mix of the soft and hard approach to HRM with a caveat that through all the efforts the prime aim is to ensure that goals are met. In the absence of a suitable structure, efforts to align human talent to organizational goals will face problems (Mabey, Salaman and Storey, 1998, p. 68). The authors contend that there exist two visions of SHRM – one as a ‘one-size-fits-all’ that is believed to be applicable to all businesses regardless of context and the other, contingent approach which should support the organizational strategy. They argue that an ‘open’ approach that drives behavior to suit strategy will involve the right choice of ‘structural, cultural and personnel strategies’. Salaman, Storey and Billsberry (2005, p. 204) point out that the very nature of decisions in the newer organizations will be short-term and directed by immediate earnings rather than a long-term view. Strategic human resource management by its very nature requires a long-term view in order to develop practices suited to the acquisition and management of talent. New organizations are enabled by technology to contain cost, control manpower needs and function effectively. These organizations are typified by innovativeness and free flow of communication alongside quick decisions and action. The notion that SHRM is designed in a manner that makes it somehow less able to cope with the pace of technology suggests two things: one that the HR function needs to add ‘technology’ to their processes in order to cope with the technology-savvy workforce and the other is to provide means for managers to manage their talent along established guidelines that allow flexibility within defined limits. The limitation of SHRM does not arise from the scope of activities that arise but from the notion that only specialized staff should be conducting the job. If we look at the option of line managers carrying out the HR functions independent of a central HR department with only administrative functions being outsourced to an external agency, we find that this is a viable format to work in. Conclusion The nature of organizations has changed. The concept of a fixed structure co-exists with flexibility, speed and innovativeness work with steady and long-term. Organization structures that have originally followed the hierarchical mode are flattening and special projects may be managed by temporary virtual teams that disband once the task is done. Just as different structures are coming into form to suit the business need, so also it is time to envision a new face of SHRM. A small unit may not see the need for a separate department, an increasing scale of operations will necessarily see administrative aspects of HR being outsourced or internally done by a committed resource. In the event of a larger scale, a series of processes must be designed and monitored to ensure that the individual units are aligned to the same goal. Thus, despite the changing nature of organizations there continues to be scope for human resource management. The increasing focus on talented resources leads to a consequent focus on ensuring that the talent is optimally utilized to provide business benefit. The relevance of SHRM continues though the presence of a full-fledged department may undergo change with the possibility of some tasks being outsourced and only key strategic tasks being maintained internally. Is there any particular structural form best suited to the development of SHRM? The current linkage between strategic human resource management and long-term thinking appears to curtail the very nature of SHRM and limit its utility to stable organizations that operate in stable environments thereby making an SHRM approach redundant. The conventional organization structure continues to operate despite the changing technologies. Centralized decision and strategizing continue though a larger degree of decentralization allows for speed. In cases where centralization operates, technology allows for speedy communication. Adaptation to change may seem to be relatively slow due to high capital investments. Here the conventional HR structure continues with the adoption of technology solutions to cater to the employees. Career plans, aspiration management, reward plans and training will be designed appropriate to business needs. The entire function or parts of it may well be outsourced despite the conventional nature of the company with a view to retaining focus on core service requirements. In the absence of a clear long-term strategy is there no scope for a unified approach to the acquisition and management of talent? In the case of a structure that operates on a talent-driven short-term focus it will still face a need for tracking performance, enabling communication, effective talent utilization and timely payment. Internal conflict management and resolution calls for the utlisation of SHRM practices that are either designed by an HR department or by the team members themselves. Though a separate HR department may not exist, the function of SHRM will be carried out regardless of the size of the team. Does the speed of response necessitated by the business environment work at odds with the slower pace required by SHRM? The speed of SHRM is determined by the speed of the organization. Some companies define service level agreements between the HR agency and the units. At times, the service of the HR department is impeded by factors external to the department. For example, decisions pending to be taken by line managers or the top management can alter the planned course of action. Speed of SHRM is interminably linked to the speed with which the component units of the organization conduct business. There is then no single suitable structure; rather an organization by virtue of the very presence of human resources must possess some form of SHRM to garner the benefit of effective talent utilization. In the absence of this approach organizations will find high-value talent being underutilized. Regardless of the complexities of the internal organization, the attitude of preferring to utilize and develop talent to gear up to future needs is the factor that drives organizational effectiveness. Strategic human resources management is the attitude of managing people, knowledge and skill to garner benefits - long and short term. The presence of long-term strategy allows for the development of detailed studies and design whereas short-term strategy requires a ready knowledge base of existing talent and the ability to quickly attract more if required. The strategic view of managing HR can continue despite the nature of the business if the intent and the clarity of the requirements and preferred processes to adopt is present. The need of organizations is to clarify the underlying philosophy behind the management of people as a part of the enterprise and drive the business accordingly. Once the notions of people management are clear it becomes possible to define methods for talent management, communication flow, conflict management and parameters for tracking performance. If these are thought through, the organization can communicate intent and identify suitable resources to undertake the task of SHRM or hire a suitable internal or external agency to manage this aspect of the business. Reference List 1. Argyris, Chris (1999). On Organizational Learning, chap. 1, p. 44-46. Second edition. Massachussetts. Blackwell Publishing. 2. Armstrong, Michael (2000). Strategic Human Resource Management, chap 1, p. 6. Second edition. London. Kogan Page. 3. Durai, Pravin (2010). Human Resource Management, chap. 1, p.37-38. Noida. Pearson Education. 4. Ferris, Gerald R., Rosen, Sherman D. & Barnum, Darold T. (1995). Handbook of Human Resource Management, chap. 8, p. 135. Massachussetts. Blackwell Business. 5. 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Schuler, Randall S. & Jackson, Susan E. (2007). Strategic Human Resource Management, chap. 2, p. 24. Second edition. MA. Blackwell Publishing. 18. Sims, Ronald R. (2002). Organizational Success through Effective Human Resource Management, chap. 2, p. 34-36. CT. Greenwood Publishing. 19. Sinclair-Hunt, Margaret & Simms, Helen (2005). Organizational Behavior and Change Management, chap.1, p. 4. Cambridge. Select Knowledge. Read More