Strategic Character of Human Resources Management - Essay Example

?Human Resources Management, Management in Organisations March 29 Number: Word Count: 3,928 words [To what extent can Human Resource Management be truly strategic?] To what extent can Human Resource Management ever be truly Strategic? Introduction The evolution of businesses has been pushed to far greater heights because of the massive improvements in technology. These improvements have enabled faster communications and have even technically dismantled borders as well shortened distances. However, all of these comforts using technology have been used by various companies that has either found new ways for or improved upon production to capitalize on technology. But, despite new and advanced equipments, machineries or even computer programs, the human component remains a very important factor of production. Kaplan and Norton (2005) argue that it is important to measure other perspectives other than that of the traditional financial perspective but it is important to consider the customer, business process and of course the learning and growth perspectives. In fact, one of key importance of the learning and growth perspective is that it is supposed to prepare the company’s manpower to handle the new business processes that may result from the new, technologically advanced machines and equipments. II. Main Body Strategic Human Resource Management: The Demand The technical revolution has also brought in a new breed of workers that has been called the knowledge workers. These has brood has drastically changed the way things are done wherein even office hours and barriers have also been technically demolished. These knowledge workers are also not easy to retain. The problem is, when they leave, their contribution goes away with them. However, to succeed or maintain competitive advantages, companies are recognising the importance of these knowledge workers to ensure the success of their strategies (Serrat 2008; ADB 2010). Hence, management of human resources has been catapulted to assume a more proactive role in the inception of company strategies. Financial and marketing strategies will always be considered in the company’s strategic plans as well as that of the operations. However, the end of the industrial age and the beginning of the information age demands that human resources step up to ensure that whatever strategies the firm may propose across the functional areas, these will be properly implemented to ensure organizational success. Likewise, there is the challenge of different cultures brought about by globalization. As such, companies must be able to make human resources truly strategic to adapt to the demands of the business reality being faced by companies worldwide. Globalization: A growing Strategic HR concern Globalization has also been a big part as companies outsourced most of their operations, not to states but on the other parts of the globe. This is also a good thing though since the worldwide operation of businesses has weeded out low performing firms giving way to a more competitive business environment (Khatri & Nanyang 2000). These are very good for the customers since competition increases the quality of products and services that they receive. This has jacked up costs for the companies though as they push themselves to become better and avoid being boxed out not only by domestic but foreign competitors as well. This is the reality that must be faced by any company operating globally. Usually, companies open up operations mostly plant facilities to save on logistics by being closer to their customers. However, the companies are also increasing their back office operations outside their country’s borders. This has proven to be a very important strategy since the outsourcing move has dramatically driven down manpower costs for most companies. The problem is that these personnel from different countries come with different cultures and to succeed, it is important that companies be made aware that these employees are not just a simple static part of their production process but have increasingly been a dynamic driving force for the company to move forward. Hence, to enable firms to have these competitive advantages, they must be able to recruit the right persons and be able to train and retain them. This, however, is a very big challenge for HR practitioners. An added challenge here is for the HR practitioners to be able to do this on a global scale. Here, it is undeniable that people vary in different counties and the HR practitioner must be able to recognise and adjust to this reality. Though the knowledge workers mentioned earlier have a greater need for autonomy, some employees are just excellent followers and are not up to a drastic change in that boss-subordinate arrangement. In fact, it has been found out that most Chinese employees tend to shy away from being too much involved and would rather avoid additional duties. Also, Chinese employees tend to just take things the way they are and are not up to initiate changes (Chow, Huang, & Liu 2008). In this setting, the HR practitioner may not be able to utilize certain morale boosting, leadership generating programs such as Job Enrichment which empowers an employee by giving him additional slack in his work that will enable him to decide for himself how the work is accomplished in turn empowering and motivating him (George & Jones 2005). Hence, HR practitioners must know that what works in western countries might not necessarily work in the east when they go global. As strategies become more and more attuned to a company’s global presence, human resource management must also be considered since it is these people that will be making that company’s products or will deliver that company’s services. Multinational companies are increasing their presence in China. Hence, the strategists of these companies have come to realise the massive improvement in the Chinese economy that has been a result of about three decades of reforms. (Warner, 2008). The huge market of the most populated country in the world as well as cheap labor and a good platform to launch products to other Asian countries has made China an attractive market for multinationals. Another reason for the strategic shift is the strength shown by China and other BRIC and Asian economies during the “Great Recession”. At the time when the United States and major advanced economies are still reeling last 2010, these economies have recovered strongly (IMF WEO, Apr 2010). Among these economies, China’s was able to slow down marginally even during the height of the crisis and recover strongly afterwards because of its size (ADB, ADO 2010). More so, during the last quarter of 2010, the output of the industries in many developing economies has grown beyond ten percent of their rate prior to the crisis (World Bank, Jan. 2011). These are clear indications that China and Asia are the places to be. However, as a caveat, the cultures here are very different from those of the west which highlights the important strategic role that must be played by a company’s HR. Culture: Driving HR to be more Strategic The question of culture is of utmost importance to HR strategies especially since these will be calibrated into the corporate strategies. HR practitioners ought to be able to tackle this reality since the cultures of different countries impact the culture of companies in these organisations. In turn, this has a strong impact on the corporate strategy as well as those of the functional strategies which includes that of HR (Hamel & Pralahad 1996). The culture of the organisation greatly influences the environment inside the organisation. Thus, in culling out the necessary data and preparing a strategic HR plan, HR practitioners would do well to integrate the overarching beliefs of their manpower as well as the behaviours that they have and on how these people in their workforce go about their lives at work and do the tasks demanded of their respective jobs. HR practitioners should be able to attune their strategies and not disturb the harmony of this culture but instead strategise in such a way that they will strengthen it as the strong culture can improve the efficiency of the organisation (Hamel & Pralahad 1996). This is a very important consideration since a strategy’s success stresses the need for it to match the inherent organisation of the firm and at the same time have an understanding of the prevailing external factors (Castro-Christiansen & Higgs 2008). Hence, it is really important that human resource management take on a more strategic role. However? this need has also been articulated way back since the human resources is an integral part of the strategic planning process as this, along with operations, finance and marketing is one of the four functional areas of the firm. The role of HR has been recognised and it is indeed a key component whenever a firm is crafting its strategies. Despite of this, HR practitioners might not understand the strategic role that they have to play. It is quite understandable since most strategies have been about buying out other firms for expansion, innovating a product, sourcing out new technologies or cheaper alternatives for production and having an excellent bottomline. However, all these entail a significant account of human element and thus, it is important that the HR practitioner is able to join in strategizing (Ulrich, Brockbank, & Johnson 1995). As mentioned, the influx of knowledge workers has changed the business reality of the companies today which necessitates the strategic management of a company’s human resources. Hence, the technicians in IT companies are very crucial to the company’s success. Therefore, the strategies of the company must include a comprehensive HR strategy to ensure that these personnel are retained and are trained. A good example would be Brazilian technological companies that have multinational operations. Another member of the BRIC economies, Brazil tops Latin America in terms of exports of software. The growth of their exports was phenomenal increasing by over a hundred fold in a little over a decade comparing 1990 and early 2002 export figures (Fischer, Milfont, & Gouveia 2011). Thus, Brazil has already set out to globalize their operations. This sector, although dependent on technological advances, is also very dependent on the competence of people to make and run these programs that are increasingly sophisticated. Another sector that has benefited from the technical boom to enhance their facilities and improve their services is the hotel and travel industries. Nowadays, these companies have made it easier and safer for tourists to travel and see the world. However, despite technological advances, these companies are still very dependent on the inherent care and courtesy of the human touch to their operations. However, these businesses are facing challenges in communications capabilities as well as culture from BRIC economies which has HR professionals scratching their heads as hiring becomes more challenging, developing these talents become more difficult and are not as easy to train as well (Laitamaki, Laitamaki, & Ruuska 2007). Likewise, although it was mentioned that these economies are economically promising, these countries remain a strategic challenge for HR practitioners of multinational companies. China, with all its economic promise, is not a free market economy. The socialist government still has considerable clout in the businesses within the Chinese borders. This alone makes HR strategies of the democratic west practically insufficient to cater to the challenges posed by the Chinese workforce (Chow, Huang, & Liu 2008). Likewise, its growing prominence in the global economy has enable the Chinese government to flex its muscle making loose policy changes in its homeland more difficult hence necessitating the adherence of multinationals doing business in China to its culture. These challenges highlight the extent of the need for human resource management to be truly strategic. For the Brazilian multinationals, these companies tried to test the difference of centralization and autonomy to their different branches worldwide. However, due probably to the highly technical needs of IT manpower, having an international HR strategy to take in different capabilities worldwide, and these companies remain rooted to their own home grown talents rather than take in variations in talents that can be sourced worldwide. In effect, this has practically shot down the possibility of having an international HR strategy. Thus, this has effectively prevented these companies to amass differentiated competencies worldwide. Likewise, the culture issues remain very prevalent as this has contributed greatly since these Brazilian multinational IT companies prefer the comfort of their own culture (Muritiba, Campanario, & de Albuquerque 2010). Fortunately, aside from India, Brazil has one of the highest number of qualified IT professionals so this is not of much concern to their operations just yet. It is a different story however for the hospitality and travel companies. In this business, the customer relationship is key and the intangible service must be provided excellently since it is their business’ lifeline. Thus, HR professionals must go beyond their internal customers and touch on the external customers so that they will have a better understanding of what these customers want and need. By doing so, these HR practitioners are able to bring into line their strategies to be able to act and think like the customers (Ulrich and Brockbank 2005). Thus, these factors further stress the strategic importance of human resources management. The aforementioned human factors needed in the multinational IT companies as well as those of the Hospitality businesses and travel underlines the importance for the deepening of the extent of HR involvement in strategy formulation. Also, going back to the balanced scorecard model, the human resources form a key part of the BSC by addressing the Learning and Growth perspective. Hence, it is a pressing reality that strategy is growing a more social image (Hendry 2000; Jarzabkowski 2005; Johnson et. al 2007). This emerging social image is very important since a strategic alignment is important between the strategy of the firm and its HR programs and practices. In fact, it has been found out that merging the strategy and the HR system had a favorable implication on the operations of some Chinese firms. Furthermore, an improved HR system becomes an avenue for creating competitive advantage especially in the labor intensive emerging economies (Hamel & Pralahad 1996). With a strategically aligned HR program, firms are able to hire the right persons and be able to take advantage of the opportunities presented either by the developments on the external environment or through the exposure of the weaknesses of their competitors. Consequently, by strategising human resource management, the company is then able to fill in the physical or competency gaps that might be a breeding ground for weaknesses. The HR manager must not allow complacency among workers and encourage them to be more involved in their jobs by making them see and feel the impact of what they do on the overall achievement of the company’s strategies. Hence, if warranted, the re-calibration of workforce must be done. This may even include some fine tuning on the culture and guiding principles especially in the event of a significant shift or change. Also, the strategies that will be implemented by the company’s manpower can only be done after a comprehensive move by the HR department to educate and talk with the employees and be able to make them understand the strategic shift that is bound to happen. It does not stop there though especially if the affected personnel might need additional training and support. These all fall under the realm of human resources management. If done correctly, this will foster cooperation and even motivation culminating in a much needed boost to the company (Clark & Starkey 1988). These initiatives greatly impacts the implementation of the agreed upon corporate strategy which may spell the difference between the success and failure of the firm. Limits of SHRM A good example of a firm that has been able to utilize strategic human resource management is IBM wherein the company has remained quite agile despite its huge size. The company was able to achieve such a competitive advantage through the help of their human resources by having a significant insight into the future. Thus, the HR was able to plan well into the years ahead and project the future needs of the company in terms of manpower and skill. Furthermore, having the strategic set of mind in doing things, the human resources head was able to spearhead the globalization move of the company (Murrell, Forte-Trammel & Bing 2010). The success of this move has really helped the company. However, it is also important that the increasing role of HR must be properly coordinated with the company’s corporate planning division so that the strategies will be guided by an adequate analysis of the prevailing external and internal environmental forces. Though employees can provide the catalyst for a dramatic change in their respective corporations, it is very important that the actions of the company are guided by strategic analysis of the business environment. For companies that are labor intensive, enthusiastic employees are of strategic importance to the company. Therefore, to utilize this strength, human resources must actively support the corporate strategy so as to enable them to plan and execute ways on how to foster enthusiasm within their workforce. Empowerment is key as it provides a very promising environment necessary for enthusiasm to grow while at the same time providing a boost to the morale of the workforce (Heathfield, About.Com). It is therefore important for the HR personnel to view their policies as more than just rules and regulations governing their personnel. The policies being prepared by the human resources group can contribute greatly and even be strategic themselves if utilized properly. Having a healthy workforce is no coincidence. It is the result of careful planning and analysis to ensure that the employees that are qualified are hired, additional trainings are conducted and developments in the workforce are carefully thought of and executed. To maintain the strategic strength of the workforce, these employees must feel that there is fairness in the treatment of everybody as well as the feeling of being secured with their company. More so, employees perform better if they are proud of what they are doing and are much better if they are proud of the institution that they are laboring for (George & Jones 2005). There are many things that the HR can do to contribute to the overall corporate strategy. If warranted by the strategy, they assign teams that will foster stronger bonds as well as teamwork that can expedite a task at hand (George & Jones 2005). Possibly inline with financial strategies, the human resources group can work with the finance group to determine if giving incentives is possible to workers. Mere congratulations for a job well done is a good source of encouragement but not really as nice as a financial reward. Having something tangible to hold on to can really spur an employee to help in bring into reality the drafted corporate strategies (Ulrich, & Brockbank 2005). Salaries and benefits then become more than just HR tools but have become more strategic as competition become stiffer. As such, it has become of strategically important to get and hold on to prize employees. Basically, the benefits and the salaries are the ones dangled by the company’s HR to these employees. Performance bonuses are also up for grabs as these have remain a big part of employees’ pay slips especially for those that are technologically or professionally reliant (George & Jones 2005). This applies to the aforementioned example of the IT and hospitality industries. Also, the need for succession planning has been of strategic value to each and every company desiring for continuity. In Toyota, the Toyodas have ensured continuity as they train and pass on to their son the reins of power in the automobile manufacturing superpower. Hence, the likely successor is assigned to positions within the company that enable him to learn the ropes and be prepared to take over the company. This can also be done to the employees through job enrichment wherein control is handed down gradually until a significant amount of autonomy and responsibility is enjoyed by the employee (George & Jones 2005). This will enable the employees to improve on themselves and may someday be delegated to senior staff positions needed by the company. A company’s manpower cannot be easily bought and cannot be engineered overnight. However, no matter how much technological advances a company may have, the labor force of the company will continue to play an important role whether a company is labor intensive or not. However, the availability of cheap but satisfactory labor in Asia and most emerging and developing companies have greatly increased the globalization move of most companies. However, it also puts their HR group in a quandary on how to balance western and eastern culture as well as the underlying need to breach the language barrier that may be inherent in some countries such as those in the BRIC economies. In these countries, culture plays a very important role as it impacts HR strategies strongly. It is important that the HR practitioners ensure that the culture of the company is ready and is capable of adjusting to systemic changes necessary for the implementation of needed policies and programs (Nohria, Groysberg & Lee 2008). If such a fit is not in place, no amount of adjustments in pay or working conditions can make strategic human resources management feasible. However, being a functional area, human resources have always been a part of strategic planning along with the functional areas of finance, marketing and operations. Human resources and factors affecting the labor force must be analyzed so that the board can decide on what actions to make that will impact not only that of the manpower but also the whole company as well. Likewise, the HR practitioner must also be wary of how competitors go about human relations so that they will not be caught flat-footed and wake up the next day to the news that their top seller has just been pirated by the competition (Dess, Lumpkin, & Taylor 2005). These examples from the Brazilian IT Multinationals to hospitality businesses, IBM and even Toyota underline the need for human resources management to be strategic. As such, human resources must be integrated fully into the strategic plan. However, it is also stressed here that despite of the new literature pertaining to strategic human resources management, the involvement of human resources in strategic management is not an entirely new issue. Human resources have also been aptly incorporated into the learning and growth perspective of the balanced scorecard. The BSC recognises and highlights the importance of having a strong alliance with the employees to be able to make the strategy work. Also, the BSC recognises that employees are increasingly conscious of the contribution of their organisation to the world (Harvard Business School, 2002). Hence, these have further shown the importance of strategic human resource management. Conclusion Although this is not really a new concept, it is important for the human resources practitioners to be able to make a more extensive contribution to strategic management. The massive technological advancements, globalization and the influx of knowledge workers have necessitated a more proactive role for human resources to help strategic planners bring their plans to reality. Likewise, the balanced scorecard of Kaplan and Norton (2005) highlights the inherent need of the company to improve their manpower to help in the improvement of business processes that will hopefully flow into and translate into excellent customer service to the delight of the customer which in turn gives good financial returns for the finances of the company. Thus, strategic human resource management has gone through evolution which somehow brought the HR practitioners into the frontlines and face to face with the challenges being faced by the very personnel that they recruit. This strategic shift in doing human resources has been a strong demand to HR practitioners because of the simple fact that they need to increase not only the size but also the competency of their manpower to ensure that their competitive advantage over their competitor is not compromised (Hamel & Pralahad 1996). Wang and Shu (2008) stress the need for HR to link extensively with the business strategy since the congruence of these strategies greatly impacts productivity as well as organizational effectiveness. Thus, it is important for HR to play a more active role during strategic planning so that it may fully give its support and bring into line its strategies alongside the company’s strategic plans. It is important to remember that how the human resources department does its job impacts an individual which ripples through the employee’s performance ultimately impacting the organisation as a whole. References ADB 2010, Asian Development Outlook 2010. 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