Strategic HRM: An Overview - Research Paper Example

?Introduction Human resources have been considered as the most important component of an organization; thus, the effective management of these individuals is of paramount importance (Boxall and Purcer 2003). Human capital is characterized by the skills, abilities, and knowledgeof employees with which human resource management (HRM) refers to the activities associated with the management of relationships with respect to employment (Lin, Peng, and Kao 2008). Driven by increased competition, rapid technological changes, the trend of globalization, as well as other factors, organizations have been aiming to gain insight into the ways with which their human resources can be successfully managed for them to gain a competitive advantage (Gratton, Hailey, and Truss 2000). The notion that the human resources of an organization play a strategic function in their long-term success and survival has resulted to the establishment of strategic human resource management (SHRM). Strategic HRM enables firms to possess the ability to adapt to and become flexible with any competitive environment through the consistency of HRM regulations and practices (Kidwell and Fish 2007). Examples of such include employee recruitment and selection, reward systems, as well as training and development. The ability of an organization to establish HRM practices that are in congruence with their business strategies can be a significant source of long-term benefits (Andonova and Zulueta 2007). To apply HRM in the London Organizing Committee for the 2012 Olympic Games, it is very important that effective practices are incorporated as an estimate of 100,000 individuals will be involved in setting up the Games, particularly 3,000 staff members and 7,000 volunteers, with the rest being a large quantity of contractors. The LOCOG also has the responsibility for conducting test events prior to the Games with which staff members and volunteers are to undergo the proper training as well. Recruitment has also been an important issue as it is to be ensured that only those who are reliable, competent, and committed be selected to work. Due to the wide range of tasks required for LOCOG members to successfully perform, the need for strategic HRM is of paramount importance. Strategic HRM: An Overview According to Wright and McMahan (1992) defined strategic human resource management (SHRM) as the alignment of human resources with the organization’s business strategies with which HRM practices should be individually taken into consideration (vertical alignment). Beer, Spector, Lawrence, Mills, and Walton (1984), on the other hand, viewed HRM through a generalist approach that emphasizes the whole HRM system rather than considering these HR practices individually. This significantly resulted to the emphasis that various HR sub-functions can be aligned and be integrated with each other in order to address HRM goals (horizontal alignment). The incorporation of vertical and horizontal alignment has become a relevant process in understanding how HRM can help accomplish an organization’s strategic goals. Previously, however, human resources were only considered to have a minor role in the attainment of strategy, emphasizing the function that HRM has in strategy implementation. HRM models explained that human resources do not play a role in formulating or selecting an organization’s strategic goals. Seldom were human resources viewed as a strategic capacity with which favorable and competitive decisions can be drawn from (Lengnick-Hall and Lengnick-Hall 1988). Nonetheless, as the resource-based approach to HRM further developed over the years, researchers have strongly asserted that internal sources can lead to a firm’s competitive advantages especially when managed successfully. For example, it was concluded by Wright, McMahan, and McWilliams (1994) that although HR practices can be imitated by others, the human resources of a firm can be a significant source of competitive advantage. Moreover, according to Lado and Wilson (1994), HR practices that are integrated into an entire HR system can be considered as beneficial and difficult to be copied by others. Empirical studies have also confirmed the effectiveness of viewing human resources as an important component in the workplace through HRM; for instance, it was found out that a specific group of HRM practices led to an increased organizational performance and reduced levels of voluntary turnover (Arthur 1994). It was also asserted by MacDuffie (1995) that various sets of HRM practices can result to better employee performance and increased profitability. Delery and Doty (1996), who established one of the most widely applied frameworks on strategic HRM, concluded that HRM practices can have a significant impact on firm performance. HRM practices have a significant influence on organizational performance through their impact on the development, attitudes, and behaviors of employees. Such practices can determine which employees are recruited along with the level of competencies and motivation of such individuals, and the incentives and opportunities necessary for these employees to come up with more creative and favorable ways of accomplishing their jobs. Due to such relevance, recommendations have been made to further gain insight into how strategic HRM functions as well as the factors that are significantly associated with it (Paauwe and Boselie 2005). Recruitment Recruitment and selection is considered to be an important process of attracting people on a well-timed basis with which adequate numbers and suitable qualifications are necessary. To follow the early processes of selection, these applicants are likely to be selected for them to develop their interests within the organization. The use of effective techniques can allow any firm to recruit and select the most favorable candidates and be able to contribute to their professional development (Crawford 2004). Moreover, it has also been asserted that for organizations to establish and maintain a competitive advantage, appropriate staffing is required (Boxall 1996). Employee recruitment and selection refers to a critical HRM function with which a firm’s practices and decisions are incorporated. However, due to rapid technological advancements and other major trends such as globalization, great difficulties have been encountered for successful recruitment and selection (Rowley and Benson 2002). In order to be able to address the new challenges, it has been suggested that the practice of employee recruitment and selection be combined with the organization’s business strategies as recruitment and selection practices are directly drawn from the company’s goals and strategic objectives. By integrating business strategies, the process of employee recruitment can significantly contribute to the achievement of organizational mission and enhancement of performance. Over the previous decades, the amount of literature with regards to recruitment and selection has substantially increased. However, despite the considerable number of such studies, majority of these merely focused on the investigation of recruitment and selection practices and not on their association with performance and business strategies (Rodwell and Teo 2004). Although it has been widely recognized that integrating HRM with business strategies is an important step, only a small number of studies have been able to identify the impact of proper recruitment and selection on firm performance. The combination of HRM and business strategies can be attained by having the proper fit of human resources by means of various HRM practices such as recruitment and selection in congruence with the firm’s business needs. Thus, there has been an important need for companies to strategically integrate recruitment and selection practices with their business goals and strategies. Potential employees, however, can be ineffectively recruited through a number of possible occurrences such as poor planning, unattainable timelines, unknown problems, weak coordination, and lack of control. Therefore, it is required that such challenges be addressed in order to accomplish the strategic incorporation of recruitment and selection practices with business strategies (Budhwar 2000). Rewards Pay practice is considered to be an important HRM practice that is characterized by wages and other benefits. This practice plays an important role in developing positive attitudes and behaviors as high levels of pay and/or benefits that are similar to those of competitors can ensure that the organization can attract and retain highly skilled and reliable employees, although this may have an adverse consequence for the firm’s overall labor costs. Next, when pay is associated with performance, the organization can draw out certain activities and levels of performance from their employees (Noe, Hollenbeck, Gerhart, and Wright 2006). Pay systems play an important role in attracting potential employees in applying and being recruited for a job. Employees, however, have to maintain a high level of performance at work for them to demonstrate a good quality of work. Wages and benefits have also been shown to be related with significant outcomes such as work satisfaction; as asserted by Ting (1997), pay practice is highly associated with job satisfaction. Moreover, employees can either be satisfied with the pay itself or be satisfied with financial possibilities in the future. The correlation between the pay system and job satisfaction can also be utilized in increasing the motivation of employees and encouraging them to increase productivity and improve performance. For instance, the efficiency wage theories explain that providing a higher level of wages and benefits can increase the productivity of workers as wages can increase employees’ efforts as well as their loyalty and commitment to the organization. Higher wages can also reduce voluntary turnovers and costs for recruitment. In the study conducted by Steijin (2002), the job satisfaction of public workers was directly associated with pay practice, whereas Bradley, Petrescu, and Simmons (2004) concluded that pay inequality can reduce employees’ satisfaction with their job. Therefore, evidence suggests that companies carefully consider their pay system, as a means of effectively managing their employees, and its impact on these working individuals. Employee Appraisals Another HRM practice that can have a direct impact on employee attitudes and behaviors is the employee appraisal with which a collaborative approach has been shown to be more effective than a one-sided system. Transforming the process into a collaborative one can significantly enhance the evaluation; otherwise, a system with which the supervisor provides the appraisal for the employee without the latter’s input can greatly lead to conflict and offense (Nelson 2003). In situations like these wherein employees do not have a clear idea or knowledge of how supervisors arrive at their evaluations, the process may be considered by employees as subjective, unjustifiable or mistaken. A collaborative approach to employee appraisal allows both the supervisor and employee to be involved in assessing the performance of the latter with which various aspects that are of paramount importance can be discussed (e.g. job performance, attendance). This approach can demonstrate communication in such a way that the position which the employee has assumed and the responsibilities, expectations, and standards for success that go with it are elaborated. Moreover, the actual performance of the employee is compared to such criteria, allowing the both the supervisor and employee to suggest the areas that are in need of further improvements. An employee appraisal that is characterized by communication, shared feedback, and efforts to solve problems can significantly lead to the strengthening of relationships between the supervisor and employee, thereby helping increase the loyalty and commitment of employees to the organization. Performance-related criterion remains to be the most acceptable deciding factor that can influence changes in wages, opportunities for promotion, or turnover decisions. Consistent, unbiased, honest, and comprehensive performance reviews that only focus on work-related issues and not on personal factors (e.g. race, gender, religion) can reduce or prevent the occurrence of possible conflicts within the organization caused by appraisals. Therefore, making use of a collaborative system for employee appraisal that integrates justifiable standards and relates compensation with actual performance can significantly improve employee development, attitudes, and behaviors (Nelson 2003). Career Planning and Support The set of attitudes and behaviors linked to work-related experiences during the course of an individual’s employment plays an important function which HRM should be able to recognize. A career is characterized by both work-related attitudes and behaviors, and is likely to experience upward mobility, such as gaining more financial rewards, being provided with more responsibilities, and obtaining a higher level of recognition, power, status, and influence (Budhathoki 2004). Monetary rewards and benefits as well as job elevation are significant indicators of an individual’s career performance. Organizations have been seeking ways with which career performance can be enhanced as it is positively related with task accomplishment. Career performance can be referred to as the combined efforts of both the employee as well as the management. Managers have been focused on their employees attaining important work goals such as output and quality; thus, they have also been concerned with the employees’ levels of motivation. A person can be considered motivation when he places his best attempts in performing the job and accomplishing organizational goals. Individuals can only be motivated when their needs and desired are satisfied, thereby driving them to carry out their tasks. One means of ensuring high levels of motivation among employees is the support that firms provide for career development. In Maslow’s (1943) hierarchy theory of needs, after the individual satisfies lower-order needs (e.g. physiological, safety and security, social and esteem needs), there is the need to achieve the highest need of all, which is self-actualization that can be characterized by personal growth, self-fulfillment, risk taking, being assigned with challenging jobs, and maximizing potential. Thus, there is a need for managers to be able to implement programs that can support career development through such examples. Career planning should involve the identification of the ways with which desired results can be achieved; many organizations view such process as a means for protection instead of a response to the issues that are being linked to a career. Employees play an important role by identifying their aspirations and capabilities as well as the need for training and development appropriate in pursuing a certain path whereas organizations should be able to identify the possible opportunities and needs for the employees’ career development. Therefore, companies should be able to establish and implement career development programs that will enable their workers to maximize their potential, increasing the likelihood to retain the proficient and competent employees in the workplace. The relationship between human resource planning and career development is made evident as projects for HR planning seek competencies while career developments make sure that a supply of such competencies are made available. Ineffectiveness in placing the appropriate employees in the proper jobs can become an obstruction for these individuals to attain career development, hence the need for human resource managers to carefully consider their programs and plans for career development among employees. Conclusion The effective use of HRM practices can significantly lead to positive outcomes among working individuals such as increased productivity and improved performance. In order for the LOCOG to attract and retain favorable employees, the need for implementing strategic HRM policies and practices should be of great importance. Effective management of human resources can significantly provide benefits to both the organization and its employees. Activities such as recruitment and selection, performance appraisals, pay practices, and opportunities for career development programs have been shown to create a strong impact on employees and can play an important role for increasing their motivation. When individuals are highly motivated as their needs are satisfied, they can be expected to give their best efforts and accomplish all goals and objectives. Therefore, for the LOCOG to successfully achieve their tasks, they should be able to maintain a high level of motivation among their workers, especially through strategic HRM policies and practices. References: Andonova, V, and Zuleta, H 2007, The effect of enforcement on human resources practices, International Journal of Manpower, vol. 28, no. 5, pp. 344-353. Arthur, JB 1994, Effects of human resource systems on manufacturing performance and Turnover, Academy of Management Journal, vol. 37, no. 3, p.670. Bradley, S., Petrescu, A, and Simmons, R 2004, The impacts of human resource management practices and pay inequality on workers’ job satisfaction, Paper presented at the Western Economic Association 79th Annual Conference, Vancouver. Beer, M, Spector, M, Lawrence, PR, Mills, DQ, and Walton, RE 1984, Managing human assets, Free Press, New York. Boxall, PF 1996, The strategic HRM debate and the resource-based view of the firm, Human Resource Management Journal, vol. 6, no. 3, pp. 59-75. Boxall, P, and Purcell, J 2000, Strategic human resource management: Where have we come from and where should we be going? International Journal of Management Reviews, vol. 2, no. 2, p. 183. Budhathoki, KD 2004, Human Resource Management: Career Development, Journal of Nepalese Business Studies, vol. 1, no. 1, pp. 99-100. Budhwar, P 2000, Strategic integration and development of human resource management in UK manufacturing, British Journal of Management, vol. 11, no. 1, pp. 285-302. Crawford, RB 2004, Recruitment and selection, HR Research Paper No 30, HRDOC Store, London. Delery, JE, and Doty, DH 1996, Modes of theorizing in strategic human resource management: Tests of universalistic, contingency…, Academy of Management Journal, vol.39, no. 4, p. 802. Gratton, L, Hailey, VH, and Truss, C 2000, Strategic human resource management, Oxford University, New York. Kidwell, RE, and Fish, AJ 2007, High performance human resource practices in Australian family business: preliminary evidence from the wine industry, International Entrepreneurship and Management Journal, vol. 3, no. 1, pp. 1-14. Lado, AA, and Wilson, MC 1994, Human resource systems and sustained competitive advantage: A competency-based perspective, Academy of Management Review, vol. 19, no. 4, pp. 699-727. Lengnick-hall, CA, and Lengnick-hall, ML 1988, Strategic human resources management: A review of the literature and a proposed typology, Academy of Management Review, vol. 13, no. 3, p. 454. Lin, CH, Peng, CH, and Kao, D 2008, The innovativeness effect of market orientation and learning orientation on business performance, International Journal of Manpower, vol. 29, no. 8, pp. 752-772. Macduffie, JP 1995, Human resource bundles and manufacturing performance: Organizational logic and flexible, Industrial & Labor Relations Review, vol. 48, no. 2, p. 197. Maslow, AH 1943, A theory of human motivation, Psychological Review, vol. 50, no. 4, pp. 370-396. Noe, R, Hollenbeck, JR, Gerhart, B, and Wright, PM 2006, Human resources management: gaining a competitive advantage, McGraw- Hill/Irwin, New York. Paauwe, J, and Boselie, P 2005, Best practices... in spite of performance: Just a matter of imitation? International Journal of Human Resource Management, vol. 16, no. 6, pp. 987-1003. Rodwell, JJ, and Teo, ST 2004, Strategic HRM in for-profit and non-profit organisations in a knowledge-intensive industry, Public Management Review, vol. 6, no. 3, pp. 311-331. Rowley, C., and Benson, J 2002, Convergence and divergence in Asian human resource management, California Management Review, vol. 44, no. 1, pp. 90-109. Steijn, B 2002, HRM and job satisfaction in the Dutch public sector. Paper presented at the EGPA-Conference in Potsdam, study group on Public Personnel Policies. Ting, Y 1997, Determinants of job satisfaction of federal government employees, Public Personnel Management, vol. 26, no. 3, pp. 313-334. Wright, PM, and McMahan, GC 1992, Theoretical perspectives for strategic human resource Management, Journal of Management, vol. 18, no. 2, p. 295. Wright, PM, McMahan, GC, and McWilliams, A 1994, Human resources and sustained competitive advantage: A resource-based perspective, International Journal of Human Resource Management, vol. 5, no. 2, p. 301. Read More