Strategic Human Resource Management and Organisation Value - Essay Example

Strategic Human Resource Management and Organisation Value 2008 Strategic Human Resource Management and Organisation Value Strategic human resource management is the key driving force of successful business in the modern world. The rapid shift from a product-oriented business strategy to a customer-focused and knowledge-based one has become the core tendency in modern business and non-business organizations (Nelson, Quick, & Campbell 2004). Over the past decades, the way in which people are managed, promoted and stimulated at workplace has become the primary area of interest in terms of assessing and improving organisational efficiency and marketability. Growing competitiveness in the market forces modern companies increasingly rely on skilled and motivated personnel then on technologies and products. In a situation when company’s past success does not provide a password to cloudless future organisations need to rely on stable assets and first of all on human resources The importance of strategic HRM has already been recognised by virtually any company which follows western standards of business. In modern organisational paradigm performance depends not only on hard and attenuating work of its personnel, but also on the “human side” of the employees, their competence, motivation, attitudes, communication and other variables with HRM being “...the core of company’s general efficiency and the basis for effective management” (Gunnigle, Morley, & Kelly, 2002: 12). In a similar vein Beardwell (2003: 15) believes that despite the visible simplicity, the area of strategic HRM is exceptionally complex due to potentially unpredictable nature of human resources. If a company fails to properly and effectively manage its human resources in the right areas of the business, at the right time and at the right cost, serious inefficiencies are likely to arise creating considerable operational difficulties and likely business failure (Beardwell, Claydon, & Holden 2003). And on the contrary, correctly designed and implemented strategic HRM program will inevitably add value to the organization. Strategic HRM is a general approach to the strategic management of human resources. In different contexts this approach varies depending on the intentions of the organisation regarding the direction of future development. The key concern of strategic HRM is long-term issues associated with every aspect of human resources. It can be defined as follows: “All those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business” (Schuler, 1992, p.19) or “The pattern of planned human resource deployments and activities intended to enable the forms to achieve its goals (Wright & McMahan, 1992, p.342). A good insight into the value of HR related programs is provided by Schuler (1990: 52-54). He emphasizes that the HR function had an opportunity to shift from being an “employee advocate” (associated with personnel management) to a “member of the management team”. Schuler’s (1990) view was that this required HR professionals to be concerned with the bottom line, profits, organisational effectiveness and business survival. In other words, human resource issues should be addressed as business issues. Storey (2001: 18-34) believes that emergence of HRM contributed greatly to an ever-greatest since industrial revolution shift in the principles of management. HRM encouraged both managers and employees to get rid of traditional patterns of interaction, outdated ideas of motivation, stereotypes, assessment and appraisal. Managers as well stop being the mentors and executioners and turned to be the members of business teams. Introduction of HRM principle has made modern companies more competitive, dynamic and people-friendly that consequently influenced their efficiency and marketability. Storey (2001: 18) argues that HRM caused what was subsequently called “a new managerialism” – a new look on organisation, the ways it functions and succeeds and the way its employees work. Regardless of global recognition of HRM, many managers are still sceptical toward its principles believing that it is either a set of vague principles or a reinterpretation of well-known motivation theories that add little value to business organisations. However, neither idea is true. HRM is not just a set of principles; instead it is an organisational science that helps to implement company’s general strategy in a most effective way (Bearwell, Claydon, & Holden, 2003). Strategic HRM can include numerous HR strategies based on different principles, but these strategies can not be equated to strategic HRM: it is the overall framework that is used to design and effectively deliver the individual strategies. Boxall and Purcell (2003) claim that that the main concern of strategic HRM is to describe how management of human resources within the organisation affects organisational performance. The most essential feature of strategic HRM that is the key in its ability to add value to organisations is that it relies on the principles of human resource management and at the same time incorporates the concept of strategy. While human resource management is concerned with managing human resources of the organisation, the aim of strategic HRM is to manage human resources in the way to align human resources, organisational goals, policies and actions. Modern business is first of all a competition of human resources. Excessive control diminishes people’s initiative, their level of creativity as well as openness to the new ideas and tendencies. Lack of employees’ initiative and people’s poor adaptation to the demands of environment may result in bankruptcy of a company. Hence, unconstrained demands on people, act as barriers to organisational and personal adaptation and change. Therewith, only correct and up to date human resource management strategy incorporating the principles of development, stimulation, adaptation and promotion of people is the warranty of success in the modern business environment. These days strategic HRM is a serious system of management which has broad objectives across the whole organisation and incorporates multiple principles such as selection and recruitment, assessment, adaptation, motivation and dismissal, and others (Storey, 2001). It is a paradigm that helps modern organisations improve their performance through focusing on its personnel and more effective utilization of human resources. History of modern organisations provides us with several examples of how different companies attempted to use HRM practices in order to achieve competitive advantage in the market. In other words, the concept of strategic HRM covers many aspects of organisational functioning and involves the elements of psychology, sociology, economy, marketing and even anthropology (Schuler, 1992). From organisational perspective strategic HRM management is an umbrella term which includes long-time development of a company (1), definition a step-by-step tactics of strategic objectives’ achievement (2), organisational planning (3), human research management (4) etc. In fact, strategic management includes both internal (organisational) and external (market’s) factors that influence company’s development. The aim of strategic HRM management hence, is to accommodate a company to the changing and tight market and establish a strong unity of people (a team) within company’s structure and achieve its competitive advantage. Evidently, effective implementation of strategic HRM programmes and practices is probably the key factor in ensuring the competitive advantage of companies over competitors in the modern market. The example of IBM that has been one of the pioneers in human resource management with its HRM strategy developed already in 1980s clearly shows how the strategic approach which focuses on selection, motivation and development of employees contributes to the company’s long-term success in the market. This helps IBM to be one of the leaders on the global market, promotes company’s marketability and competitiveness in terms of globally challenging business. On the other hand, failure to follow the HRM principles in strategic planning of the company’s future is likely to result in much less motivated and effective personnel and seriously undermine the company’s market position and value. Effective strategic HRM is the key to better organisational performance. References Beardwell, I., Claydon, T., & Holden, L. 2003, Human Resource Management: A Contemporary Approach (4th Edition), Financial Times Management. Boxall, P. and Purcell, J. 2003, Strategy and human resource management, Basingstoke: Palgrave Macmillan. Gunnigle, P., Morley, M. & Kelly, J. 2002, “Human Resource Management, Employee Relations and the Labour Market”, Employee Relations: The International Journal, Vol. 24, No. 4: 371-460. Nelson, D., Quick, L. & Campbell, J. 2004, Organizational Behavior: Foundations, Realities, and Challenges (4th ed.), Oklahoma State University. Schuler, R. S. 1990, “Repositioning the human resource function: transformation: or demise?” Academy of Management Executive, Vol. 4, No. 3: 49-60. Schuler, R.S. 1992, “Strategic human resource management: linking people with the needs of the business”, Organizational Dynamics, Vol. 21, No. 1, pp. 18-32. Storey, J. 2001, Human Resource Management: A Critical Text, Princeton: Thomson Learning. Wright, P. & McMahan, C. 1992, “Theoretical perspectives for strategic human resource management”, Journal of Management, Vol. 4, No. 6, pp. 341-368. Read More