The Human Resources Strategy as a Source of Competitive Advantage - Essay Example

The Human Resources Strategy as a Source of Competitive Advantage Introduction HRM contributes to the attainment of an organisation's competitive advantage through the strategic implementation of a highly committed and competent workforce using an integrated range of cultural, structural, and personnel techniques (Storey, 1995). Effective HRM leads to an organisation's success by developing employees that contributes to the delivery of products and services bring customer satisfaction, business results, and shareholder value (Stone, 1998). The main purpose of HRM is to improve the productive contribution of people wherein the employees are being heard by the management and helping the employees to find new resources that enable them to successfully perform their jobs (Ulrich, 1997).      The role played by human resource functions is best explained by determining the key objectives that they seek to align strategies, develop effective policies, systems and activities which are significant to the firm’s overall success (Torrington, Hall & Taylor, 2002; Storey, 1995). HRM functions are critical in running an effective organisation. HRM as a Source of Competitive Advantage Organisations need to have competitive HRM functions in order to maintain a competent workforce and attain business objectives (Newman & Hodgetts, 1998). The HRM function includes planning, training and development, career development, performance appraisal, and employee relations. These functions help organisations to facilitate strategies that allow them to achieve efficiency and effectiveness (Stone, 1998). HRM functions must change in manner that it accomplishes new roles and new competencies. It also has to be transformed to deal creatively and practically with the emerging challenge.         Human Resource Planning.  This function deals with the demand and supply of labor. It involves the acquisition, development, and turnover of employees. However, the practice of HRM planning has not received the same level of interest from line managers as planning for material, equipment, and financial resources for the reason that managers tries to attain different business objectives/expertise (Dessler, 2000). The purpose of HRM planning is to ensure that a fixed number of employees with the appropriate skills are available for future vacancies (Gupta & Singhal, 1993). HRM planning process has four stages involving analyzing, forecasting, planning, and implementing (Noe, 2005). Analyzing deals with environmental factors, organisation direction, and internal and external workforce. Forecasting focuses on demand and supply of workforce.   Implementing deals with different changes in an organisation. These are strategic, process, operational change, and evaluation and feedback. HRM planning should systematically recognize what must be done to assure the availability of the human resources needed by an organisation to attain its strategic business objectives. Furthermore, HRM planning direct managers in understanding organisational goals by supporting actions and strategies initiated by the department in improving performance. Proper planning involves employment security such as employee retirement income security which is designed to give employees increased security for their retirement and pension plans (Byars & Rue, 2004). It also requires strategic development of job descriptions that are aligned to the objectives of the organisation. These would result to an efficient and effective organisation (Stone, 1998). Training and Development. Training and development are both concerned with changing employee behavior and job performance (Stone, 1998). Training is a planned effort by a company to modify, reform, and stimulate desired knowledge, skills, attitudes and behaviors through learning experiences that are critical for successful job performance (Stone, 1998; Noe, 2005). Training is an important activity in organisations. Newly hired and existing employees need to undergo training to acquire the necessary knowledge, skills, and attitudes to perform their jobs. It emphasizes immediate improvement in job performance via the procurement of specific skills (Stone, 1998; Torrington et al, 2002). On the other hand, development is future-oriented that involves learning that is not necessarily related to the employees’ current job. Development also involves preparation of employees to keep pace with the organisation as it changes and grows (Noe, 2005). Career Development. Career development is the total gathering of economic, sociological, psychological, educational, physical, and chance factors that combine to shape one’s career (Jackson, 1990). It is important to maintain a motivated and committed workforce. This is because job security today centers on being employable rather than being aligned with the goals of the organisation (Dessler, 2000). Employees must continue to develop their skills to ensure they possess the competencies that their profession demands (Jackson, 1990). The primary purpose of career development is to meet the current and future needs of the organisation and the individual at work, and this increasingly means developing employability (Torrington et al., 2002). Career development plays a major part in ensuring that the organisation has competitive and knowledgeable work force (Schuler, 1987). One way to have a competitive advantage is to have a proactive environment in career planning. Furthermore, effective career planning contributes to the success of an organisation because employees have an adequate development on their job (Storey, 1995).  Performance Appraisal. Performance appraisal involves measuring how well an individual employee is doing his or her job against a set of criteria. Performance management promotes the organisational and employee behavior and performance required to improve bottom line results and provides a strategic link by auditing the organisation’s employees in terms of their skills, abilities, knowledge and behaviors (Dessler, 2000). It generates information about how well the organisation’s human resources satisfy the needs of the organisation’s present and future business strategies (Storey, 1998). Performance appraisal is a key component in the organisation’s performance management system and strategic management process. Performance management involves the process of creating a work environment that enables employees to perform to the best of their abilities (Langdon, 2000). However, many performance appraisal systems in practice are short term and divorced from the organisation’s strategic business objectives (Stone, 1998). In short, performance management ensures that jobs are properly designed and that qualified personnel are hired, trained rewarded and motivated to achieve the organisational business objectives. Employee Participation Programs. Employee participation programs are workplace programs that embody quality initiatives, employee empowerment, continuous improvement and other similar change processes. These programs are unique opportunities for employers and employees to collectively learn and plan business processes that best suits the interests of every member in the organisation. Employee participation programs have diverse forms, ranging from teams that deal with specific problems for short periods to groups that meet for more extended periods. These include solutions to various operational problems or efforts to reduce resistance to management during organisational change. The programs contribute to organisational effectiveness by boosting employee commitment, autonomy, and control over their work leading to employee motivation, productivity, and satisfaction (Robbins, 2005). The alignment of HR practices produces interconnected and complimentary functions and eventually forming synergy that can contribute to increase productivity and corporate financial performance. HRM practices, when bundled, contribute to overall firm performance through motivating employees to adopt desired attitudes and behaviors (Bowen & Ostroff, 2004). Chang (2005) argues that employees perceived HR practice as a special and specific practice rather than in separate forms. Furthermore, individual’s overall attitudes towards each HRM practices can be characterized by an outline of the idea held about each HR practices (Fishbein, 1963).     Consequences of HRM Practices HRM practices have a tangible and various intangible organisational consequences. Prior researches have found support for the role of HRM practices in predicting organisational commitment (Davidson, 1998), job satisfaction, and procedural justice (Yeung & Berman, 1997).  Organisational commitment. Organisational commitment is the identification and involvement of employees to an organisation where they adhere to its goals and values, exert effort on its behalf and maintain a desire for organisation membership. Previous studies have shown that HRM practices are positively related to organisational commitment (Davidson, 1998). For example, Barlett (2001) found that training influences employee organisational commitment. Training involvement, access to training programs, and training support from managers and colleagues lead to higher affective organisational commitment. This is because employees perceive that the training provided by the organisation can only be efficiently used to the organisation. Applying these knowledge, skills and abilities to other organisations will not guarantee desirable outcomes. This will lead the employees to be committed to the organisation.       Procedural justice. Procedural justice is the fairness of methods and procedures by which decisions are made in the organisation. HRM practices and procedural justice are significantly related. For instance, Edrogan, Kraimer, and Liden (2001) found that perceived validity and knowledge of the performance criteria in appraisal systems creates procedural justice. According to Folger and Cropanzano (1998), process appraisal systems where employees are aware of the purpose and criteria for appraisal, given the chance to provide inputs during appraisal, and performance assessments are made based on objective information contributed to positive perceptions of procedural justice. Furthermore, two way communications between the appraiser and the appraisee’s willingness to discuss how ratings were made can influence the perception of fairness. Job satisfaction. Job satisfaction is a gratifying feeling that has resulted from the value of a person’s work. Previous studies have shown that HRM practices are positively related to job satisfaction. For example, employees who work in organisations that offer training to develop skills are more likely to report that they are satisfied. Employees are more satisfied when they perceive that organisation provides them full support (Bradley et al., 2004). Furthermore, HRM practices that could help employees adjust and find a good fit with the firm also contributes to job satisfaction (Stevens, Oddou, Furuya, Norihito, Bird & Mendenhall, 2006). For example, firms that provide job descriptions that are specific makes the employees adapt easily to their tasks. Job satisfaction is a consequence of effective HR strategy. It is a pleasurable emotional state resulting from the valuation of his or her work. Even though job satisfaction is a highly personal experience, there are a number of facets that seem to contribute the most to feelings of job satisfaction. Steijn (2002) stated that mentally challenging work, adequate compensation pay, career opportunity, the ready availability of promotions, people that are friendly, considerate, or good-natured superiors contribute to job satisfaction. For instance, the ready availability of promotions is positively related to job satisfaction. The promotion given enhances the perception of the employees that they are valued enough by the organisation (Garrido, Perez, & Anton, 2005). Previous studies have shown that compensation, opportunity for advancement, psychological climate, and leadership style are antecedents of job satisfaction (Testa, 1999). Compensation. The total monetary value an employee receives. Prior study has shown that compensation is related to job satisfaction. An example of which is when performance-related pay is in place, satisfaction is higher. Employees perceived that certain levels of performance are equal to specific amounts of compensation that satisfies them (Bradley et al., 2004). Opportunity. The total gathering of economic, sociological, psychological, educational, physical, and chance factors that combine to shape one’s career. Past research has shown that opportunities for advancement are significantly related to job satisfaction. For example, opportunities fulfill employees’ expectations of promotion in their work life.  It opens the possibility for career growth which makes them satisfied (Ting, 1997).   Psychological climate. An individual's interpretation of the environment in a way that is psychologically meaningful. Recent research on psychological climate supports the notion that satisfaction with organisational vision may affect overall job satisfaction. For example, an organisation that offers working conditions that employee’s value would lead to higher job satisfaction. The employee’s and organisation’s values should be aligned for the employee to have a positive perception towards his/her working environment which results to job satisfaction (Testa, 1999).   Leadership style. Leadership style refers to the influence exerted by a superior to the individual/group toward the achievement of goals. Transformational leadership has an impact on job satisfaction. Charismatic leaders get their effects by clearly stating an inspiring goal which clarifies a mission for followers and communicates values that have significance for them. Furthermore, individuals working under a charismatic leader had higher job satisfaction (Robbins, 2005). Past studies have shown that OCBs, turnover and performance are consequences of job satisfaction (Garrido et al., 2005). Turnover. It is defined as intentional and unintentional permanent withdrawal from the organisation. Previous studies have shown that satisfaction is inversely related to turnover. Furthermore, greater job satisfaction was expected to have a negative effect on the probability of quitting. For example, employees who are satisfied tend to stay and be maintained by the organisation. Satisfied employees will have lower rate of turnover for the reason that organisation has fulfilled the needs of their employees making them satisfied and in return employees will have the intention to remain with the organisation (Robbins, 2005). Organisational citizenship behaviors. OCBs are behaviors that are discretionary, indirectly recognized by the formal reward system, and that in the collective support the effective functioning of the organisation. Prior studies have shown that satisfied employees elicit OCBs. Job satisfaction has a positive relationship to OCBs.  For example, employees who are satisfied engage in OCBs (Bolino & Turnley, 2005). Futhermore employees who are given satsfying task will likely to exhibit OCBs. Satisfied employees find ways to exert more effort to accomplishing things that serve as a reciprocation to the organisation (Turnipseed, 1996).  Procedural justice. It focuses on the fairness of the decision making process. Positive and significant relationship between procedural justice and job satisfaction has been found by previous studies. For example, when employees are satisfied, it can be said that the policies and procedures are fair for the reason of the firm has an actual control over the process and outcomes of decisions. Furthermore, when employees feel that they are treated fairly they will likely to display OCBs (Bolino & Turnley, 2005). Conclusion The foregoing paragraphs show that the human resource strategy indeed can be a source of competitive advantage for an enterprise. Beginning from human resource planning, the organisation may be able to ensure with greater likelihood that a candidate will match a job and will be able to effectually contribute to the strategic goals of the enterprise. The retention strategies of the company may help in keeping key people who may drive strategy, enhancing their sense of commitment to the organisation through development. If employees feel satisfied, they will be less likely to leave the organisation, exhibit organisational citizenship beaviour, and have stronger sense of procedural justice and equity towards the organisation. All these will allow them to keep the resource which is at the foundation of all strategic initiatives – a motivated and empowered workforce. References       Barlett, H.S. (2001). The relationship between training and organizational commitment: A study in the care field. Human Resource Development Quarterly, 12, 335-352.       Bolino, M.C., Turnley, W.H. (2005). The personal costs of citizenship behavior: The relationship between individual initiative and role overload, job stress, and work-family conflict. Journal of Applied Psychology, 90, 740-748.        Bowen, D.E., & Ostroff, C. (2004). Understanding HRM-firm performance linkages: The role of the "strength" of the HRM system. The Academy of Management Review, 29, 203-221.       Bradley, S, Petrescu, A., and Simmons, R. (2004). The impacts of human resource management practices and pay inequality on workers' job satisfaction. Department Economics. The management school lancaster university, U.K.       Byars, L.L. and Rue, L.W. (2004): Human Resource Management (7th edition), McGraw-Hill, NY. Chang, E. (2005). Employees’ overall perception of HRM effectiveness. Human Relations, 58, 523-544.       Davidson, L. 1998. Cut away non-core HR. Workforce, January: 41-45.       Dessler, G. (2000). Human resource management (8th ed.). NJ: Prentice Hall.       Endrogan, B., Kraimer, M.L. & Liden, R.C. (2001). Procedural justice as a two dimensional construct: An examination in the performance appraisal context. Journal of Applied Behavioral Science, 37, 205-222.       Fishbein, M. (1963). An investigation of the relationships between beliefs about an object and the attitude toward that object. Human Relations, 16, 233–240.       Folger, R., & Cropanzano, R. (1998). Organizational Justice and Human Resources Management. Thousand Oaks, London: Sage Publications.       Garrido, M.J., Perez, P., & Anton, C. (2005). Determinants of sales managers job satisfaction: An analysis of industrial firms. International Journal of Human Resource Management 16, 1934-1954.       Gupta, A., & Singhal, A. (1993). Managing human resources for innovation and creativity. Research Technology Management, 36, 41-48.       Jackson, J.H. & Mathis, R.L. (1990). Human resource management (8th ed.). NY: West Publishing Company.       Langdon, D. (2000). Aligning performance: Improving people, systems, and organizations. CA: Jossey-Bass/Pfeiffer       Newman, D.R. & Hodgetts, R.M. (1998). Human resource management: A customer-oriented approach. NJ: Prentice Hall.          Noe, R., Mondy, R., & Premeaux, S. (1999). Human Resource Management (7th ed.) N.J: Prentice Hall       Noe, R. (2005). Human resource management (7th ed.). NJ: Prentice Hall.       Robbins, S.P. (2005). Organizational Behavior, Prentice-Hall, Upper Saddle River, NJ.       Stone, R. (1998). Human Resource Management (3rd ed.) Aus/Singopore : John Wiley and Sons.       Torrington, D., Hall, L., & Taylor, S. (2002). Human Resource Management. (5th ed.) London: Prentice Hall Europe       Schuler, R.S. (1987). Personnel and human resource management (3rd ed.). NY: West Publishing Company.        Steijn, B. (2002).  HRM and job satisfaction in the Dutch public sector. Public Personnel Policy, 4-7.       Stevens, M.J., Oddou, G., Furuya, N., Bird, A., Mendenhall, M. (2006).HR factors affecting repatriate job satisfaction and job attachment for Japanese managers. International Journal of Human Resource Management, 17, 831-841       Stone, R. (1998). Human resource management. John Wiley & Sons.       Storey, J. (1995). Human resource management: A critical text. International Thompsin Business Press.       Testa, M.R. (1999). Satisfaction with organizational vision, job satisfaction and service efforts: An empirical investigation. Leadership and Organization Development Journal, 20, 154-161.       Ting, Y. (1997). Determinants of job satisfaction on federal government employees. Public Personnel Management, 26, 314-334.       Torrington, D., Hall, L., & Taylor, S. (2002). Human Resource Management. (5th ed.) London: Prentice Hall Europe       Turnipseed, D. (1996). Organization citizenship behavior: An examination of the influence of the workplace. Leadership & Organization Development Journal, 17, 42-47.       Ulrich, D. (1997). Human resource champions: The next agenda for adding value and delivering results. President and Fellows of Harvard College.        Yeung, A & Berman, B. (1997). Adding value through human resources: Reorienting human resource measurement to drive business performance. Human Resource Management, 36, 321-335. Read More