HR Strategy for Achieving Competitive Advantage - Essay Example

?Human Resource Management HR STRATEGY FOR ACHIEVING COMPETITIVE ADVANTAGE Introduction Human resource (HR) strategies are approaches that are adopted in the organization for both developing and implementing employment practices; they are based on policies or specific guidelines for managers facilitating “empowerment, devolution and delegation” (Armstrong 2006: 147). Human resource strategies aim to establish corporate values, shape corporate culture and provide frameworks to promote consistent and equitable decisions on the management of employees. One of the important goals of human resource management in an organization is to promote employees’ motivation towards achieving increasing productivity, resulting in the company gaining a competitive advantage over its counterparts. Employee motivation is inducement or incentive which may be self-generated or from external forces, that promotes satisfaction and an urge towards improvement in performance. Productivity is defined as “the efficient as well as the effective use of resources to achieve outcomes” (Berman, Bowman, West & Van Wart 2005: 309). Productivity depends on the quality of human resources and their levels of performance. In contemporary organizations, there is growing emphasis on implementing high performance work practices based on all aspects of organizational operations. Thesis Statement: The purpose of this paper is to explain analytically how a firm’s Human Resource strategy could be its source of competitive advantage. HRM strategies implemented according to policies based on relevant theories on workforce motivation for achieving increased productivity outcomes will be examined. The HRM Strategy of Promoting Employee Motivation In studying employee motivation and human resource management strategies to improve motivation, the factors that affect how people behave at work should be taken into consideration. These factors encompass the fundamental characteristics of people which include: individual differences pertaining to competencies based on abilities, intelligence and skills; constructs or the conceptual framework of how people perceive their environment; expectations from own and others’ behaviours, values or what people believe to be important, and self-regulatory plans or goals and how they intended to achieve them (Armstrong 2006). Other important characteristics of people that impact employees’ behaviour at work are: their attitudes, their causes, manifestations and influences on behaviour; attribution theory or how other people are judged; orientation or approaches adopted to work; and roles played by employees to carry out their work (Armstrong 2006). Besides the employees’ personal characteristics, environmental variables include the type of work that individuals carry out; the culture, climate and organizational style in the organization; the social group within which individuals work; and the reference groups that individuals use for comparative purposes such as comparing conditions of work between various categories of employees. There is an increasing trend for human resources to be considered as the main differentiating factors contributing to a company’s competitive advantage. This underscores the belief that the knowledge and skills of employees is much more difficult to imitate, as compared to other resources. Thus, HRM believes employees to be valued assets, with the potential to ensure competitive advantage based on their commitment, adaptability and high quality skills. A study conducted by Pathak, Budhwar, Singh and Hannas (2005) examined the relationship between the implementation of HR best practices and employees’ positive psychological contract, higher commitment and greater motivation. The evidence indicates that employees experiencing a high number of best practices were more motivated as compared to those who experienced few best practices. Thus, best human resource management practices led to increased employees’ performance resulting in high levels of the company’s performance in the competitive business field. Motivation and Productivity To underscore the importance of human resources management in motivation and subsequent productivity, theories have been formulated on the content and process motivational models by various theorists such as “Abraham Maslow, Frederick Herzberg, Douglas McGregor, Victor Vroom, Lyman Porter, and Edward Lawler” (Petrick & Furr 1995: 10). Earlier, the “content” theories attempted to explain motivation at work in terms of the events, goals, needs and motivators, and “process” theories were concerned with behaviour at work resulting from employees’ choices; and how different kinds of events, conditions or outcomes motivate behaviour. Thus, the work of the theorists Maslow, Herzberg and others underlined managerial concern for employee satisfaction and motivation for improvement in performance and productivity, thereby raising the company’s bottomline and competitive edge (Lashley 2001). According to the needs-based theory of the process of motivation, it is initiated by the conscious or unconscious recognition of unsatisfied needs. These needs create wants or the desire to achieve or obtain something significant. Subsequently, goals are established and a behaviour pathway is selected to satisfy these needs and wants. The influence of expectations should also be taken into account (Armstrong 2006). HRM Strategy Raising Employees’ Intrinsic and Extrinsic Motivation Intrinsic Motivation: This policy is implemented by providing opportunities for developing skills and abilities, ensuring that the work is challenging and interesting and promoting opportunities for progress. This is based on the fact that people can motivate themselves by seeking, finding, and carrying out work that satisfies their needs, or at least leads them to expect that their goals will be achieved. This is composed of self-generated factors that influence people to behave in a particular way or to work towards a particular goal. According to Armstrong (2006: 253) these factors include “responsibility, which is feeling that the work is important and having control over one’s own resources; autonomy or the freedom to act; scope to use and develop skills and abilities; and interesting and challenging work and opportunities for advancement”. Extrinsic Motivation: People can be motivated by the management through methods such as rewards that incude increased pay, promotion, commendation, etc. “and punishments such as disciplinary action, withholding pay, or crticism” (Armstrong 2006: 254). Extrinsic motivation encompasses all the actions taken by the management to motivate people. Extrinsic motivators can have an immediate, short-term and powerful effect. The intrinsic motivators which are concerned with the quality of working life are inherent in employees and not imposed from outside, have the potential for a deeper and longer term effect. According to Banfield & Kay (2008), the above policy is based on Douglas McGregor’s model of managerial leadership assumptions known as Theory X and Theory Y. According to Theory X, employees dislike work, will avoid responsibility whenever possible, and need to be persuaded to perform. On the other hand, Theory Y believes that employees “do not dislike work, can become committed to meet organizational objectives, without coercive pressures, and will learn not only to accept but also to seek responsibility” (Petrick & Furr 1995: 11). In alignment with Theory X, HR professionals need to focus on incentives, penalties, close supervision and inspection to ensure productivity. In accordance with Theory Y, HRM should implement system improvements that require participation, delegation of responsibility and provision of appropriate resources to increase employee competency and productivity. It is evident that focusing on Theory Y would be beneficial to the company. Employee motivation is achieved through regular involvement with employees’ daily work life, by ensuring their commitment and by empowering them. The HRM Strategy of Involvement With Employees It is important for organizations to continuously improve their products and services, and increase their efficiency and scale of production in order to ensure their competitive advantage over other businesses in the twenty first century. The various factors that create the demand for greater productivity are: “rapid change, rising expectations, tides of reform, effective training, new missions, and pressure to do more with less” (Berman et al 2005: 309). Both efficiency and effectiveness in the use of resources are key to organizational progress. Efficiency allows companies to use less resources for greater productivity, and effectiveness is important for achieving improved service delivery. Management involvement is considered to be crucial for impacting employee attitude towards work and productivity. Initiatives to step up productivity invariably require HR managers to deal with inherent tensions. Resolution of tension require creative strategies such as fostering open organizations, promoting performance improvement, increase in employee motivation and raising workplace quality of life. The above strategy of HRM involvement with employees for promoting increased productivity through various strategies, is based on the theory of Hawthorne Effect. This theory states that productivity is a direct result of management involvement with workers, and their motivation is a key factor in productivity (Petrick & Furr 1995). Yusoff & Abdullah (2008: 9) state that “the ultimate source of competitive advantage for an organization is the quality of its human resource – competent, committed, flexible and empowered”. This can be achieved only through the management’s involvement with employees, providing them with continued support and motivation. An important area of focus is fueling changes in organizational culture to ensure highly self-motivated employees with the ability to work autonomously and responsibly. Corporate culture constitutes “the basic assumptions and beliefs of members of an organization, that operate unconsciously, and define an organization’s view of itself and its environment” (Swanson 2009: 109). The HRM Strategy of Empowerment This is the process of increasing employees’ responsibilities while holding them accountable for outcomes. The purpose of empowerment is to get employees to take responsibility for producing results rather than merely “following rules and regulations without producing tangible results” (Berman et al, 2005: 316). It includes various factors such as re-engineering and re-designing existing delivery processes to make them less error prone, more efficient, effective, and timely. Re-organization of the company’s operations to eliminate wastage of resources and personnel; and replacement of earlier methods of working with information technology are also reforms that empower the workforce. Replacement of old tasks with high technology equipment or new approaches would require staff training for new responsibilities. Any anxiety on the part of workers should be addressed by human resources personnel to help employees increase their skill sets, and when any jobs become obsolete the employees should be helped to find comparable jobs within the organization. Human resources management has to ensure that managers and employees are trained in empowerment processes in which what actually matters are “consequences” and “outcomes” rather than orders, or hierarchical command implementation systems. New standards of accountability on the part of the workforce are agreed upon with the employees’ union, by the HRM. Accountability will impact training, performance evaluation and pay, and HRM must give the detailed criteria by which employees will be held accountable. Employees’ compliance is necessary regarding proposed action, its consistence with the department’s mission, whether the plan is ethical and legal, is in the interest of all concerned in the organization, and is a reform for which they are willing to be held accountable. Employees may refuse empowerment if they fear arbitrary evaluation and performance appraisal standards (Berman et al 2005). The main objective in HRM’s initiatives of empowerment is to ensure that the needs of the employees should be in alignment with the needs of the organization, so that their motivation will result in beneficial outcomes. For this, the challenge of managing contending forces has to be successfully dealt with by the HRM. Yusoff & Abdullah (2008) believe that empowerment is a vital aspect of organizational change to meet the demands of the increasingly competitive global business environment. The HRM policy of empowerment is based on Frederick Herzberg’s motivation-maintenance model that separated motivational factors such as the “work itself, achievement, possibility for growth, responsibility, advancement and recognition” from maintenance or hygiene factors such as “status, job security, interpersonal relations, salary and working conditions” (Petrick & Furr 1995: 10). According to Herzberg, only the former positively motivated behaviour, while the latter could be demotivators if absent, but could never act as motivators. Herzberg applied his model to work situations, and promoted job enrichment by increasing the areas of responsibility of workers in order to increase motivation, rather than resort to pay increases. This is in alignment with empowerment of the workforce by HRM, supporting employee involvement and work redesign programmes. The HRM Strategy of Encouraging Commitment The external environment of companies has undergone extensive changes in the last decade. Increased international competition and globalization of businesses have created new requirements for higher financial results, greater profitability and more shareholder value. Though profitability outcomes have been positive, employees’ well-being and workability have been adversely affected by the restructuring and downsizing of companies and the increased constraints on the size of the workforce. Employees’ levels of motivation in the workplace is directly related to their commitment to their jobs which emerges from their sense of well-being and quality of life. Thus, well-being is a significant factor which impacts employees’ performance levels and consequently the company’s performance in the global market (Vanhala & Tuomi 2006). Evidence from research indicates that the human resource policy of “commitment” when studied against a control system, was useful in testing specific combinations of policies and practices in predicting differences in performance and turnover across a business organization. The units with commitment systems had higher productivity, lower wastage levels, and lower employee turnover than those with control systems. In addition, the relationship between turnover and manufacturing productivity was moderated by the human resource system of commitment. This indicates the importance of fostering commitment among employees in an organization, by fulfilling first their basic needs, and further more complex needs, in the hierarchy (Arthur 1994). This strategy of inducing commitment is based on the theory of Abraham Maslow’s hierarchy of needs fulfillment. Maslow stated that five innate, genetically determined needs existed in an ascending hierarchy: physiological, safety, belonging, esteem and self-actualization. Employee behaviour and motivation to perform work activities of a high standard, is based on whether the five fundamental needs of the individual have been fulfilled. This means that higher order needs such as esteem and self-actualization will influence motivation only if the lower order needs such as physiological, safety and belonging were satisfied to a large extent. For HRM, this would mean that additional empowerment or pressure for commitment would not motivate a hungry employee, since the latter is a basic need that the employee will be motivated to fulfill first (Marchington & Wilkinson 2005). Conclusion This paper has highlighted different HRM strategies based on company’s HR policies and grounded in various theories. These strategies help to increase employees’ motivation and consequently improve organizational performance and productivity. They include involvement with employees, encouraging their empowerment, and increasing their commitment. These can be achieved through changing organizational culture. Today there is a shift towards human resource management strategies based on high performance work practices, which is wider in scope, and includes not only motivation of employees for improving productivity, but also an in-depth implementation of managerial practices in all aspects of the organization for total quality outcomes. Human resource personnel who use high performance work practices by adopting best practices developed from research evidence gain a competitive advantage over the organization’s competitors, because they take into account the competencies and capabilities of employees based on a multidimensional view on performance. By effecting change in organizational culture and supporting worker creativity, both human resource and organizational development practitioners should together aim to achieve higher levels of proficiency in business activities and profits. Further, it is important to align HRM strategies for improving employee motivation with the organization’s goals. Lashley (2001) reiterates that focus on high performance work practices extends beyond the sphere of employee motivation to areas such as recruitment and selection, training, rewards, and other personnel management practices which are important for improving organizational performance. Bibliography Armstrong, M. (2006). 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