Strategic HRM and High Performance - Essay Example

? Strategic HRM and High Performance Strategic HRM and High Performance The Human Resource Management concept first was emerged in 1980s and since then many models have been developing a positive relation between business performances and human resource management. (Armstrong 2011). Human Resource Management works as a catalyst between the long as well as short term successes of the organization by not only individual employees but also as collective contributions as a team. Due to increasingly developing technology and globalization there are a lot of political, economic and social pressures businesses face these days. Hence to survive in such a globally competitive environment organizations emphasize on attaining a competitive edge. An aligned strategy with HRM is a source to successful competitive edge businesses can achieve that focuses more on company’s resources than its costs. This is the reason that the role of HRM has been under the limelight recently as it serves as a competitive advantage to the companies it also has to deal with the challenging changes (Armstrong 2011). Unlike personnel management human resource management is linked to strategic level planning of the organization and execution of those plans in order to improve the organization’s overall performance. Human Resource Management is related to company’s vision, philosophies, practices, and policies that are influencing the management of people in a company. Strategic HR means aligning HR function with the company's strategies and then formulates and implements those strategies accordingly with the help of HR activities such as recruiting, selecting, training and rewarding personnel. (Armstrong 2011; Reilly 2012) There are few theoretical perspectives to the Strategic Human Resources Management. First approach is the Universalist approach .This approach refers to one best way of dealing human resource to improve business performance only. It is also known as the best practice human resource management. This approach states that there is only one way people can be managed in order to improve the performance of the organization. Regardless of differences amongst different organizations, differences like size of the organization, to which sector it belongs, all organizations can be managed in same way by identifying a set of best HRM practices, committing to them despite the practical difficulties and applying and implementing them. This approach also measures organizational success in terms of financial performance. Results from past experimentations reveals that this approach leads to high performance and it is becoming common to group or combine HR practices in order to create more coherent explanations of the HRM-performance link. (Gooderham, Cranfield, Ringdal, 2008 pg 7) Second theory is the Configurational theory that proposes that the relationship between HRM and performance involves complex interactions between bundles of HRM activities and outcomes. Once these complementary practices are bundled they produce high performance results and outputs than individual HRM practices. Firms have realized that rather than altering individual policies, their combinations are a better determinant and should be altered and worked upon to achieve better productivity. (Gooderham, Cranfield, Ringdal, 2008) There is a drawback of this approach as this approach has this assumption that HRM bundles and combinations are ideal and will give the same effective result under all circumstances. Secondly both universalistic approach and cofigurational approach are closely related approaches and it is problematic to differentiate between these two approaches at times. Groups of HR practices combined additively may clearly be universalistic but the identification of a configurational approach is sometimes problematic. (Gooderham, Cranfield, Ringdal,2008) Second, approach is the Contingency approach. Contingency approach is to create a positive impact on businesses by aligning HR policies and practices with the details of business strategy (Armstrong 2011) Integration of the organization has three basic aspects; firstly linking the Human resource policies with the strategic management processes of the organization. Secondly, making the managers realize the importance of Human resource and lastly, integrating workforce into the organization to boost commitment and create interest towards the same goal, the strategic goals. (Gooderham, Cranfield, Ringdal,2008 p. 48) There are few models that can be used to differentiate between the ideal types of HR strategies. Firstly there is control-based model, secondly, resource-based model and third model is integrative model. In control-based model, management attempts to monitor and control employee role performance. This model focuses on monitoring and controlling employee behavior to differentiate it from other HR strategies. This approach is derived from the study of labor process by industrial sociologists. This approach aims to have workplace control and especially on managerial level, this is done order to direct and monitor employee role performance. According to this approach, HR strategy and management structures are instruments and techniques designed to ensure a high level labor productivity and profitability by controlling all aspects of work. (John Bratton 2012 pg50) The second model, the resource- based model, is based on the nature of the employer–employee exchange in terms of more employee attitudes and behaviors and also in the quality of the manager–subordinate relationship. This model is aimed at the human resource reward-effort exchange strategy and secondly to what extent managers view their human resources as an asset and not as a variable cost. When an organization works upon its employees skills and provides them with better technology and other inanimate resources, high performance outputs are expected by the workers. Hence altogether, employees knowledge and expertise, and social relationships, has the potential to provide capabilities that cannot be substituted and serve as a source of competitive advantage. (John Bratton. 2012 pg51) Third approach is known as the integrative approach. This model combines resource-based and control-based theories. Bamberger and Meshoulam (2000) argues that neither of two one focusing on strategy’s underlying logic of managerial control, the other focusing on the reward–effort exchange , both these approaches do not provide a fully implementable framework. So he integrates the two main models of HR strategy. (John Bratton, 2012 pg 52) Regrettably, it is seen that in most of the organizations the managers are not good at performance management. They are not outspoken about their feedback regarding employees. Due to this reason they fail to evaluate their employees. They fear about the damaged relationship with those whom they rely on for their job to be done. On the other hand employees feel that their managers are reluctant in discussing their performance. In addition to that they do not provide much help in developing the skills of their employees. Whereas some employees feel that they are good at what they are doing or any feedback from their managers will affect their career. To overcome these innate challenges, managers are required to introduce such culture in their organizations where feedback and development of skills of their employees matter as well as there should be a well designed process. Nowadays many organizations are following the model of proficiency for the evaluation of their employees. These models generate effective knowledge, abilities, skills and characteristics which are considered the most effective in achieving an organization’s goals. Another advantage of such competency models is that they contain a full package of such factors which are associated with success, technical, leadership and interpersonal skills. Competency models are useful because they focus and communicate on such matters which are important for an organization as well as they play a vital role in the formation of integrated HR management systems which includes hiring of staff, their training, and their promotion and performance management. Competency models are useful because they focus and communicate on such matters which are important for an organization as well as they play a vital role in the formation of integrated HR management systems which includes hiring of staff, their training, and promotion and performance management. When an organization link the competency of their employees with their behavioral performance and expect them to perform according to their own behavior, then employees clearly understand that what is expected from them and perform accordingly. Whereas, managers also get the benefit of having a single evaluation criteria which encourages the employees to perform more efficiently and they believe the process to be more transparent. There are three ways of implementing the competency models. There should be a common competency model within an organization at the organizational level and further split it into its subsets e.g. professional jobs, managerial jobs and administrative jobs different departments such as technical, finance and management. Different type of competencies should be introduced in each department. But, we should define a common set of performance standard for each department. Competencies at individual level e.g. interpersonal skills, communication skills and essence of teamwork. (Ulrich 2011; Reilly 2012) The performance management system evaluates the employee’s decision making and his development. When this system is used for decision making, this evaluation results in the salary increment, employee’s promotion, transfers and reduction of work load. When it is used for development, this information is used for training sessions, different job experiences and other developmental activities. The research concludes that there are solid reasons and past experimented examples for companies to use the bundling model, that is to use HR polices collectively as they are more effective when they cluster and transform those policies collectively into a strategy. The research shows that only 20% of the companies are actually following this strategy but it may differ from industry to industry. In few industries it may go as high as 50 to 70%, for example in steel industry or automobile assembly plants. There are almost nine bundles or identifiable strategies there which are being used. Although some other strategies appear but they lack sufficient internal consistency to constitute real strategies The problem is that there is little consistency in the measures of human resource activities which are used to drive these strategies hence these bundles vary from study to study and are not consistent which is also a drawback of this approach. (Dyer & Reeves 1994) It is more effective to form bundles rather than using individual human resource activities as bundles are superior to them and facilitate positive changes in productivity. But even within bundles there is no equality some tend to be more effective than others and are superior to them, specifically when it comes to reducing the employee turnover rate and enhancing productivity of the employees, quality, and stock market performance. Strategies that are superior are labeled as innovative strategies, commitment strategies, and also as flexible or lean production strategies. (Dyer & Reeves, 1994) All these strategies incorporate a dimension of employee involvement, and majority of them involve careful selection, extensive training, and contingent compensation. It is possible, then, that culled and integrated they represent. There are few are those who argue with the general proposition that best results are achieved when human resource strategies are aligned with business strategies, not only with the business strategies but other elements of organizational contexts as well. (Dyer & Reeves 1994) Strategic HRM researchers have been focusing on the fact that certain human resource practices are vital for organizational success and that human resources should be managed strategically. There are a number of sample characteristics like research de- signs, practices examined, and organizational performance measures used and even then the exact size of the link between High Performance Work Practices (HPWP) and organizational performance cannot be estimated. As meta-analysis has been also used in order to reduce the effects of sampling and measurement error, the results still show and confirm the existence of a relationship, between these practices and the organizational performances and also offering the researchers a baseline estimate of the size of the link between two. The estimates show that organizations performance can increase and improve by 0.2 of a standardized unit if each unit increase in high performance work practices use. Can. Focus on high performance work practices will not only improve the size of the link between the organizational performance and HPWP but also it improves its quality that is context also matters. There is a long way for the future research and one of the changes would be to reach next level that would be a level beyond the service versus manufacturing designation here to look for other factors and to match these high performance work practices not only to context and theory but also strategy. (Armstrong 2011; Ulrich 2011) It is surprising to see that this proposition has received so little theoretical and empirical attention as well. There were only few relevant studies that supported the conventional wisdom and while other did not. Although this research has been taking place and there are works on human resource strategies band their effectiveness on the organizations, but it is still in its initial phase and has a long way to go as there are only few studies present to analyze this. (Dyer & Reeves- 1994) BibliographyTop of Form ARMSTRONG, M. (2011) Armstrong's handbook of strategic human resource management. 5th ed. London: Kogan Page. BRATTON, J. (2012). Human resource management: theory & practice. Basingstoke, Palgrave Macmillan.Bottom of FormTop of Form COMBS, J., LIU, Y., HALL, A., & KETCHEN, D. (2006). How much do high-performance work practices matter? A meta-analysis of their effects on organizational performance. Personnel Psychology. 59, 501-528. DYER, L., & REEVES, T. (1994). Human resource strategies and firm performance what do we know and where do we need to go? Ithaca, NY, Center for Advanced Human Resource Studies, Cornell University, ILR School.Bottom of FormTop of Form GOODERHAM, P., PARRY, E., & RINGDAL, K. (2008). The impact of bundles of strategic human resource management practices on the performance of European firms. The International Journal of Human Resource Management. 19, 2041--2056.Bottom of FormTop of Form REILLY, P. (2012) The practice of strategy. Strategic HR Review. Vol 11, No 3, pp129-135.    ULRICH, D. (2011) What's next for HR. Human Resources. April. pp58-60. Bottom of Form Read More