Critically assess the strengths and weaknesses of the different models of Strategic Human Resource Management - Essay Example

? Critical Assessment of the Four Main Models of Strategic Human Resource Management Your ID Your Lecturer's 30th October, 2012 Background Strategic human resource management developed from the traditional personnel management unit of businesses (Thomson, 1999). The traditional personnel management was concerned with the management of employees. Personnel Management involved hiring the best employees, keeping employees productive, monitoring employees in their operations, payment, motivation and development of employees (Biz Bite Consulting Group, 2011). Personnel management was mainly focusebd on ensuring that workers made to provide the best results and this was done in a very isolated manner that was independent of central organizational goals and objectives (Becker and Gerhart, 1996: Thomson, 1999). This meant that employee matters were simply grouped under this aspect of the business and it enabled the business to remain in control of affairs in organisations. Also, personnel management involved a unit that ensured that employee matters were dealt with and employee challenges were revolved. It existed as a necessary unit but not a vital component that was manipulated by management to meet the overall goal of the organisation. Strategic human resource management, on the other hand, evolved to blend personnel management with the goals of the organisation (Thomson, 1999). In other words, the personnel management unit is designed and ran in such a way that it contributes directly to the long-term organisational plan and goals (Galbraith and Nathanson, 1978). This integration meant that the strategy of the organisation was integrated into the personnel department and this department was ran to meet organisational strategic goals. In linking the old personnel management unit of a business to the strategic units and levels of businesses, there are four main methods and approaches that are used to link the two systems. They are: 1. Universalistic Approach 2. Contingency Approach 3. Resource-based Approach and 4. Institutionalist Approach Each of these four approaches to strategic human resource management comes with various strengths and weaknesses. This paper examines each of the approaches and undertakes a critical analysis of all of them. This will involve an examination of the main theory that underlines the approach and an assessment of the merits and demerits of each approach. Universalistic Approach to Strategic Human Resource Management. The universalistic approach assumes that there is one best way of carrying carrying out the human resource management function strategically (Pfeffer, 1998). In other words, the management spend time to crystallize a system of managing people that they consider to be foolproof and appropriate to the organisation in all circumstances. The best way of doing human resource management becomes a universal set of rules that are used to run the human resource management unit as a strategic business unit that works to meet strategic goals of the organisation. There are three yardsticks that are used in defining the 'best way'. These yardsticks come up as a result of the need to define what is best and what will eventually become the universally accepted human resource management system. The first yardstick is a commitment based system which involves the choice of a strategic human resource management system that helps employees to become more committed (Guest, 1987). This way, the basis for choosing a system of implementation is to find out what best enhances employee commitment. The second yardstick is the concern for employee motivated system (Wood, 1999). I doing this, what is defined as the best human resource management system is judged by how sensitive it is to the needs of employees. The third model is quite opposite to the second model. This is a concern for work model. In other words, the universalistic approach is based on the ability of an HRM model to make employees provide the highest level of outcome and results for the organisation. In terms of evolution, the universalistic approach is based on a quest for the best way of improving human resource capacity based on one of the three stated yardsticks. In doing this, the universalistic approach involves an identification of the best ways of attaining a stated end and as an acceptable method comes up, it is generalized and applied throughout the organization (Becker & Gerhart, 1996). This evolution is based on the application of theories and as one theory begins to work, it is accepted, entrenched and encouraged to operate (Dyer, 1985). In real life, this occurs where the company gets a human resource department which is steeped by one theory or concept. In the UK, an example is Pricewaterhouse Coopers which maintains a human resource unit which is steeped in the concern for employee development. Also, the research identifies that the University of Kent uses the universalistic approach. Strengths of the Universalistic Approach The first advantage that the universalistic approach enjoys is that it promotes efficiency. In other words, it is based on the institution and encouragement of a system that has been tried and tested. This way, only the most efficient methods and systems find their way into a strategic human resource management function. Secondly, Syed and Jamal (2012) argue that the universalistic approach to strategic human resource management consolidates only the systems and methods that work. This means that as a business expands, the universalistic approach is just made to grow incrementally to handle other units that will be added. In other words, it forms the basis and system through which new systems and methods can be added based on how well they work. In this evolution, weaker systems and methods are rejected and they are discouraged. Also, employees get used to a given universalistic approach used by the organisation they work for. Through this, they adapt and become part of the organisation's human resource management system with little difficulty. Employees become more comfortable with the approach and they tend to work with it to attain the best results. This enables the employees to work efficiently without tensions that may come up with the development and evolution of the personnel department to a strategic human resource unit. Additionally, the universalistic approach helps strategic human resource management to be integrated easily into the culture of the organisation. This is because the focus of the organisation influences whether the firm will use a concern for employee, concern for production or commitment based model. With the choice at hand, the HR department can easily adjust and integrate into the culture of the organisation. This ensures that there is alignment between HR and other units of the business in question. Weaknesses of the Universalistic Approach The first drawback of the universalistic approach is that, it does not study the integration of other practices (Syed and Jamal, 2012). This is because it focuses on a single theme which is defined as the yardstick for best practices. Due to this, the approach is prone to neglecting other practices. Thus, if a firm chooses one of the three themes of defining the best practices, the other two are automatically neglected. For example, if a firm decides to focus on gaining employee commitment, what is 'best' will be what will help the employees to be more committed. This way, the concern for employees and the concern for production is naturally neglected. This limits the scope of HRM and it becomes less productive and less beneficial to the firm since other important themes of the HR department becomes neglected. In summary, this approach leads to so much focus on a theme that not be acceptable. The second drawback is that, the firm loses the opportunity to create a synergistic system. This argument is based on the premise that a human resource management system must be balanced in scope. This is because when there is a balanced scope, the system becomes more efficient and the different components work together to provide optimal results, which is often more than what a single basis would lead to. If the universalistic approach is limited in scope, the business loses the opportunity to get the best results from different activities and different components' overall results if they are blended. Basically, the scope of a universalistic approach could exclude important things which needs to work together to provide optimal results from human resource management for the whole organisation. The universalistic approach is based on the institution of various theories and concepts which becomes the framework within which HRM functions are carried out. The main demand for attaining this is the design and implementation. The design and implementation requires so many costs and other inputs which could be very expensive. There might be the need for external consultants and the payment of high bills to attain this end. Contingency Approach The contingency approach of strategic human resource management is about formulating a human resource management system on the basis of the features of the business: size, location, and elements of the community (Muafi, 2009). In other words, the status of the organization forms the basis for the creation of a human resource management system and structure. The contingency approach is based on the internal fit and the external fit (Michie and Sheehan, 2009). The internal fit includes the coherent and internal support packages that promoted synergy and horizontal fit (Michie and Sheehan, 2009). In other words, the contingency approach is concerned with the creation of a human resource management system that is based on the internal structures that will promote cohesion and synergy in the organisation. This is done through the examination of the strategic plan of the company. The realities on the ground becomes the basis for the formulation of a strategy that is applied throughout the people management function to create a strategic human resource management system. The contingency approach is quite common with franchises. Most franchises maintain distinct human resource management strategies which are designed along the lines of the strategy of the branch managers. From Henderson's explanation in the CIPD journal, he identifies that Harvard University uses this model of strategic human resource management. They support the best approaches in specific situations and environments. Strengths of the Contingency Approach The main advantage of the contingency approach to strategic human resource management is that it is based on the realities on the ground. It involves the examination of the strategic vision and objectives of an entity and the alignment of the human resource unit to these strategies based on the realities on the ground. Through this, the organisation gets internal fit and all the human resource management issues are modelled in order to get the best representation of the overall view of the company. Secondly, the contingency approach provides a strong system for the alignment of the different components as they are into the company's human resource management system. This is done through the conscious effort to identify important differences in the environment and also create a system for human resource matters to flourish. This is an advantage that it enjoys over the universalistic approach which does not really factor in variables that are outside its scope. On the contrary, the contingency approach just take all relevant factors and give it sufficient cognisance in creating a human resource management system. Human resource management systems based on the contingency approach creates a synergistic system where all the relevant units of the business are attained. This is because the different elements of the business are factored into the formulation and maintenance of a human resource system. Through this, the business ensures that all relevant issues and matters are considered in the creation of a strategic human resource management system. This ensures that the collective results of all the little benefits from all the factors considered leads to a robust human resource management system which brings optimal results to the company in question. Finally, the contingency approach to strategic human resource management evolves. Instead of the other methods like the universalistic system which requires a lot of formulation and modelling, the contingency approach evolves. Due to this, the relevant factors come together and give the best results. Also, there are no conscious costs that are incurred because of the natural nature that the evolution takes. This means that the company saves on administrative costs on modelling a system and monitoring it. All relevant changes are factored into the system. Weaknesses of the Contingency Approach Lengnick-Hall et al (2009) identify that there is a limited integration of established theories and concepts in human resource management in the contingency approach. In other words, the use of processes and definitions that have worked in the past are not factored into the creation of a human resource management model under the contingency approach. Instead, only the realities are used and this leads to the identification of relevant models and approaches. This is more or less a fire-fighting approach which can prove to be void of important concepts and theories which are necessary or may come up to resolve problems and issues in the future. The contingency approach builds HRM strategy on the strategy of the organisation. This means that if the organisation's strategy is wrong or prone to issues, then the firm's human resource management systems and strategy will also be problematic. This is because it reflects what has been chosen by top management and this could be problematic and lead to the rolling out of old mistakes and issues. Boxall and Purcell (2003) identify that although the contingency approach argues for the changes in human resource management practices, in reality, human resource management practices change slowly. This means that although a system might exist to examine and promote changes, the actual change will occur slowly and this means that the effectiveness of this approach is quite problematic. If it is slow, then there is a good chance that its efficiency is also questionable because it cannot respond to problems in a timely manner. The contingency approach is based on observation and responses to new trends. The spate and the extent of monitoring changes comes with a lot of subjective manners that cannot be easily quantified. This means that the success of the contingency approach is based on the subjective judgement and this can be affected by arbitrary decisions as well as incompetency exhibited by the people in charge of human resource management in an organisation. Resource-Based Approach. Resources enable businesses to grow and thrive. Resources determine profitability and competitive advantage as well as survival of a business. This means that a firm's success is based on how well it uses its available resources (Dunford et al, 2001). Most businesses use their resources in the best way possible. Under the resource-based model, the human resource department is a strategic business unit that is supposed to use the people for the best results that will lead to optimum returns to the business (Mahoney, 2009). Thus, the human resource is seen as a strategic resource so the idea is to create an almost autonomous unit that ensures that human resource is used as well as possible. An example is the case of banks who run human capital units. These entities view human resources as an investment that must yield returns. Due to that, they have to ensure that they are yielding the right returns. Tamkin's journal written for the Institute for Employment Studies suggests that the resource based approach is used by firms that produce top-notch products like Microsoft and Apple [in recent times] (2004). These companies have specialized functions and they need rare skills. Hence, they have to use the HR department as a strategic unit to attain this end. Strengths of the Resource-based Approach The main advantage of this approach to strategic human resource management is that it creates the avenue for the optimal use of resources (Mahoney, 1992). This is because this approach enables the business to attain competitive advantage through the optimal use of resources. Paauwe and Boslie (2002) identify that the resource-based model of strategic human resource management encourages businesses to build up competency and sure the survival of the business into the near future. This means that the resource-based approach to human resource management is one that helps an organisation to model its human resource management system in a manner that will make it some kind of value creating unit in the entity. Also, Mahoney and Pandian identify that the human resource managers of an entity become independent in their operations (1992). This is because they are given the right and the autonomy to make decisions and also put their competency to use in order to attain the best results as they operate. The independence given to these human resource managers enables them to become more empowered and this allows them to make a stronger impact on the company. Finally, the resource-based approach to strategic human resource management allows the business to set up the best human resource management system possible. This is because the system is about separating the HR managers and allowing them to decide which system is best. This way, the HR manager is allowed to make choices and take decisions that are best and most propitious at any given point in time. This creates an environment where HR is at its best by all standards. Weaknesses of the Resource Based Approach Karami (2004) identifies that policies for the use of resources come with gaps. In other words, there will be a proposed policy to attain a given end. However, in reality, the results of the policy would not be what was planned. Applying this to the resource approach of SHRM, it can be said that the HR unit will come up with policies and propositions of how to use human resources and get the best results. However, in reality, there are some challenges that might make it difficult to attain this end full and wholly. This means that the system is inherently weakened by the failures to attain given goals. The resource based approach means that managers need to show that they are competent. This means that managers will often spend time covering up their failures when they do not attain optimal results (Dunford et al, 2001). This is likely to stand in the way of the need to show some degree of transparency and this can make it difficult to evaluate the human resource management unit. Also, managers of the human resource unit have a considerable degree of autonomy under this model. This means that the managers' work can be divergent to the needs and expectations of the corporate strategy. In other words, the goals and the plans that they come up with might be counter to the main strategy. Also, line managers might not give these managers the kind of cooperation they need. This means that HR strategy cannot be evenly integrated into the organisation. This model is vulnerable to the failure of appreciating external changes that are relevant to a business. This is because the HR managers might not factor in external changes that are relevant due to several reasons like the lack of experience or the isolation of the unit. Institutionalist Approach With this model of strategic human resource management, the human resource unit's operations and activities are based on the external environment and important institutions that define the external environment (Boselie et al, 2000). The social factors of the external environment are used to model and build the internal HR function. This includes sensitivity to society and institutions, management norms and practices as well as rules of employment (Paauwe and Bosile, 2003). The institutionalist approach is used by companies that have international links (Henderson, 2008). To this end, examples could be Tesco and British Airways which are expanding into different countries that have different rules and regulations. Strengths of the Institutionalist Approach. The main strength is that the HR function, as a strategic business unit is based on realistic planning and factors of practical concerns (Rovai, 2009). This means that important ideas and concepts are used as guidance and this enables the HR department to be productive and function well. Secondly, this is a fairly straightforward function and it enables the HR department to work quickly and efficiently without regards to tough theories and concepts (Rovai, 2009). The institutional approach to HR enables the business to work with regards to all major stakeholder needs (Boselie et al, 2000). Thus, the system enables the human resource unit to function without conflicts with major stakeholders. Also, the institutionalist approach is appropriate for businesses that operate in different jurisdictions (Rovai, 2009). This is because it takes a conscious effort eliminate tensions with external stakeholders. Weaknesses of Institutionalist Approach. According to Padelko and Harzig (2007), internal changes that this approach brings to the human resource department are limited. This is because it is just a reflection of what exists outside which dictates what the HR department must do. Secondly, the HR department can get into conflict with the corporate strategy if it is too responsive to the external environment (Boxall, 1992). Thirdly, a business can be under-productive due to adherence to this model. This is because it can be too sensitive to things that can make the HR department function ineffectively (Akhtar et al, 2008). Conclusion Strategic human resource management involves linking people management with corporate strategy. There are four approaches to strategic human resource management. Universalistic approach is based on the development of best practices. It promotes efficiency and integrates into the corporate culture. However, it is too focused and can be expensive to design. The Contingency approach relates to the creation of the best human resource system based on the strategic plan of a company and the realities on the ground. It is less expensive and enhances synergy. However, it replicates inefficiencies in the system and can reflect subjectivity of managers. Resource based approach views the people of the organisation as a resource base which must be optimised. HR is autonomous and it gives best results. It promotes competitive use of resources and builds competency. However, managers can fail to meet expectations and it could cause HR strategy to go against corporate strategy. The institutionalist approach involves arranging HR on the basis of the external environment. 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