Strategic Human Resource Management - Report Example

Introduction As the world turns into a more globalized environment, changes in the way a business is managed is essential to the survival of different business enterprises. The influx of competing products, changing market demands as well as deregulation of some products cause great pressure to different businesses. Business is said to have 4 functions. First is finance which primarily deals with the flow of cash as well as liquidity of the company. The second function is marketing, wherein product development as well as product promotion towards target market is the main objective. Third is operations where business processes are carried out. Lastly, there is human resource which is considered by most researchers as essential in the success of any business operation (Terry 1953). Strategic Human Resource Management Strategic human resource management is a process or an approach to addressing the competitive challenges an organisation faces. It is managing the strategies which involves planning and developing human resources for the company and integrates an organisation’s major goals and policies to these resources to achieve a competitive advantage (Price 1997). Moreover, strategic human resource management is a holistic process that combines human resource management with strategic management in the design of internally and externally consistent policies and practices that facilitate the achievement of organisational goals. Alignment with the organisation’s vision and mission is very important in the concept of strategic human resource management (Price 1997). Moreover, strategic human resource management involves strategic planning that starts at the top level. Top level planning means that strategies or plans made by the company begin at the highest levels; that is, the CEO or president of the company. Strategic planning translates the organisational objectives and strategies into actionable tasks (Price 1997). Approaches to Strategic Human Resource Management The Resource-based Approach This approach is based on the idea that business resources such as people, capital and technology are important in the success of a company. Hence in this approach, great emphasis on how these resources will be utilized is shown (Barney 1991). Moreover, this approach is directly linked to the study of economics wherein those accorded with superior resources can attain competitive advantage. However, the allocation of these resources is the main issue. According to Barney (1991), intangible resources are the best resources. Intangible resources are said to increase in value when used. This type of resource does not apply the law of diminishing returns but rather has increasing returns.This approach simply intends to integrate the external capabilities of a company as well as its internal abilities in gaining an edge towards its competitors. Aside from that, this approach unlike other approaches, focuses on the present resources that the company has and uses these resources in coming up with a strategy to utilize the latter in the best way possible (Barney 1991). High Commitment Management Many theorists believe that people are the most important resources of a company. Hence, many employers motivate employees to excel in their jobs through benefits and incentives. Managers also provide training to hone the skills of employees; hence contributing to the overall success of the company. Human resource is said to provide competitive advantage to the company. With proper motivation as well as effectually shaping employees’ attitudes and behaviors, the company can become productive as well as profit. In a study conducted by Zeidan (2006), the effect of HR practices on employee commitment was measured. Results showed that an employee’s perception of HR practices is directly linked to the perforamnce outcomes of the employee. However, the psychological contract or state of mind of a person also affects his perception of work which also affects the outcome of work. It is then important to change a person using his perception and his sense of equity as based on his psychological contract. High Involment Management Another approach in strategic human resource management is high involvement management. This approach is centered on the involvement as well as participation of the employees in the business. It was Ed Lawler who first used this term, associating it with idea that the level of involvement of an employee in a business might affect his performance. Some studies suggest that high involvement of an employee might motivate him to excel in performing the tasks that need to be accomplished. However, due to the diverse practices of conducting business, the positive relationship between high involvement and quality of performance is not as constructive as it should be (Wood 2002). In line with the concept of high involvement in management is the practice of decision making of an employee. According to Wood (2002), employees’ capacity to influence decisions made in the company is a measure of their level of involvement. Being able to have a say in the things planned and implemented in the company empowers the employees and increases their involvement in the activities of the enterprise. The most important thing in this approach is that top management should value employee relations and look at employees from a long term instead of a myopic perspective. High Performance Management Some theorists believe that commitment or participation of employees is not sufficient to attain success in the business. Thus, some developed the concept of high performance management. This concept is very straightforward. High performance management simply believes that excellent performance of employees is a factor in the success of a company. In this approach, high quality performance of an employee or the organisation as a whole will cause increases in productivity which will lead to a domino effect of success (Jenkins 2007). This approach is different from the traditional model of business organisation. This approach is focused in an organic and flexible model where managers create groups of employees who are empowered to make decisions as well as solve problems. This type of approach actually believes in the ability of each employee. However, this approach has not been perfected yet. Some companies who used this approach have not fully grasped its concept. It is believed that the execution not the theory of this approach is the main culprit in the unsuccessful use of this approach. Achieving Strategic Fit This approach is focused on the consumer’s demands and priorities and how it fits into the supply of the company. This approach talks about the resources available to the company and how these resources can be used in the different opportunities presented to the organisation. Resources like HR should be able to provide the necessary requirements to achieve the desired strategy and plan of the company. Lack of employee skills might hinder the growth and success of the company. Simply, this approach allows for and promotes such a perfect match. (Ross and Mobley 2005). An Example of HR Strategy Many businesses consider employees as their best asset, making HR’s function for company very crucial. Their functions are critical in allowing for the best pool of employees. One function of HR which is deemed extremely important is training and development which is vital for achievement of the strategic goals of the company. This is the part where skills and knowledge are instilled in employees. This function is called by some researchers as talent management wherein employees are driven to give out the best in every aspect of their job. Moreover, employees are also trained to grow not only as professionals but also as individuals. Performance management which is another function of HR, is where employers ensure that actions and outcomes of the employees are aligned to the mission and goals of the company. This is where the company gives direction to the employees in order to result in the success of the company. Rewards and recognition are also given to employees. This is tagged performance management wherein employees are given wages, incentives and benefits as rewards for a job well done. HR usually spearheads this activity and in so doing acknowledges the excellent contribution of the employee to the organisation in general. This can be used to attract and retain excellent employees and to maintain an edge towards competing companies. (Sherman et al 1998) The Universalistic Approach This approach according to Michie and Sheehan (2004) emphasizes the importance of some HR practices. This approach believes that some HR practices are more superior than others and can cause a higher rate of success. HR practices in this approach are seen at different levels. It is suggested that some policies that HR uses are better than other policies and these “better” policies create a positive impact on overall organisational performance. The Contingency Approach According to Schuler and Jackson (in Sparrow 1997), the adoption of HR practices is based on the organisation’s strategies. This approach emphasizes that company HR policies and practices are subject to change; however, these are always aligned with the business strategies of the company. It also states that managers using this approach focus on using management tactics that best suit the situation of the company. It is also in this approach that researchers emphasize the importance of “high road” business strategy in achieving high performance in human resource management as mentioned above. “High road” primarily focuses on product variation and differentiation and in this approach employees are seen to greatly contribute to this strategy. The Configurational Approach The configurational approach according to Kaufman (2007) upholds that HR practices and policies should be consistent internally and externally with the organisation’s characteristics. This approach gives importance to the compatibility of the organisation’s characteristics to the macro and micro levels of the organisation. The main idea of this approach is that HR practices are not an individual thing and are in fact contributory to a system. These practices are complimentary hence company’s needs to mix and match these practices to get the best results. Best Practice According to Mullins (2005) “Best Practice” approach emphasizes the universal success of some HR policies and practices. This approach believes that developing the skills of employees of the company as well as getting them involve in the company’s activity will cause for the success of the company. In this approach HR is seen to take an active role in honing the skills of the new recruits as well as the current employees and instilling in them the organisation’s business goal and strategies. Best Fit The “best fit” approach states that success is a relative matter. This means that success is primarily contextual based or circumstantial in nature and that no universal rule applies in the success of any HR practice. Fromthe perspective of HR, the “best fit” approach aligns the needs of the people to the needs of the organisation hence “fitting” them together and making one common goal. However, this approach upholds that any contribution by the employee to the company is dependent on the external and internal environment of the company. Changes in the company are believed to influence the performance of the employee (Golding in Beardwell 2004) Critique of Classifications According to Dr. Moideenkutty (in Businesstoday 2008), these different approaches are not really in conflict and in fact some may be complimentary such as configurational and contingency or configurational and universalistic. However, the universalistic and contingency approaches are generally in conflict because of the factors that each one asserts are critical to the success of the company. Approaches like universalistic, contingency and configurational are applied at different levels in the company. Usually, the universalistic approach is used wherein the best HRM practices are determined and used. However, as the company progresses, these practices are assessed to ensure their internal and external consistency with the company and factors from without, respectively. Conclusion It is important to know that human resource has come a long way from personnel management to human resource management and now strategic human resource management. However, despite the changes, there is one important thing to remember. That is, people are vital in the success of any business. This is the only unique edge that a company can have. Unlike technology and capital this is something that cannot be easily duplicated; hence it is important to use human resource as source of competitive advantage. In order to succeed, the strategic goals of the company should be instilled within each employee for him to take ownership and accountability for their delivery. Only then can the enterprise’s bottomlines be effectually attained. References Barney, J (1991). Resource Based View of the Firm Barney. Retrieved on 24 November 2008 from http://www.valuebasedmanagement.net/methods_barney_resource_based_view_firm.html Beardwell, I. et al. (2004) (4th Edition) Human Resource Management a Contemporary Approach Prentice Hall, Harlow Dr. Moideenkutty, U. (2008) High-Involvement Human Resource Management Practices and organisational Performance in the Sultanate of Oman. Businesstoday. March 2008 Retrieved on 26 November 2008 from http://www.apexstuff.com/bt/200803/HR.asp Jenkins, E. (2007) High Performance Management. VIP Innovations. Retrieved on 24 November 2008 from http://www.vipinnovations.com/human-capital-mangement-article.html. Kaufman, B. (2007). Theorizing Human Resource Management and the Firm’s Demand for HRM Practices. Andrew Young School of Policy Studies Research Paper Series. Retrieved on 26 November 2008 from http://aysps.gsu.edu/publications/2007/downloads/07-30%20Kaufman-ThorizingHumanResourceManagement.pdf. Michie, J. and Sheehan, M. (2004). Business Strategy, Human Resources, Labour Market Flexibility, and Competitive Advantage International Journal of Human Resource Management. 5(3). 663-686. Retrieved on 26 November 2008 from http://www.bbk.ac.uk/manop/research/docs/03_04_michie.pdf Mullins, L (2005) (7th Edition) Management and Organisational Behaviour Prentice Hall, Pearson Education, Edinburgh Price, A. (1997) Human Resource Management in a Business Context. International Thomson Business Press. Berkshire House London UK. Sparrow, P. (1997) Does national culture really matter? Predicting HRM preferences of Taiwanese employees. Employee Relations. 20(1). 26-56. Retrieved on 26 November 2008 from http://www.emu.edu.tr/tanova/IHRM/papers/10Does%20national%20%20culture%20matter%20HRM%20Taiwan.pdf Ross, W. and Mobley, F. (2005) Strategic Alignment: Applications of the Integrated Strategic Change Model. lecture presentation [power point slides]. Retrieved on 24 November 2008 from www.odnetwork.org/events/conferences/conf2005/followup/P8.ppt. Sherman, A et al (1998) Managing Human Resources. Ohio: Southwestern-College Publishing Inc. Terry, G (1953) Principles of Management. Richard D. Irwin Inc., Illinois Wood, S. (2002) High Involvement Management. Institiute of Work Psychology. Retrieved on 24 November 2008 from http://www.sheffield.ac.uk/content/1/c6/07/11/56/high_involvement_management.pdf. Zeidan, S. (2006) Worker;s Affective Commitment and their Willingness to Perform Discretionary Work Behavior: the impact of Commitment-Oriented Human Resources Management Practices. Journal of Business Systems, Governance and Ethics. 1(1). Retrieved on 24 November 2008 from http://www.jbsge.vu.edu.au/issues/vol1no1/zeidan.pdf. Read More