Strategic Human Resources Management - Assignment Example

This paper explores the role of Strategic human resource management in organisation’s growth and implementation of human resource strategies. It highlights the various models proposed for Strategic HRM under different categories. The paper focuses on various factors that can contribute to the achievement of organisation’s vision through strategies related to customer satisfaction, employee motivation and business growth through these models. If further analyses the advantages and limitations of SHRM along with a few examples of organisations where these models have been successfully implemented. Introduction Strategic human resource management practices have enhanced company’s growth and profitability with its integration with business purposes. This field has received much attention in the recent years exclusively in the areas of the traditional HRM, organisational behaviour and industrial relations. The concept of Strategic Human Resource Management has been introduced to address many of limitations of the conventional HRM practices, and works on the philosophy of integration of HR strategy with business strategy. Achieving strategic integration is one of the policies described in the Harvard model by David Guest (1987, 1989a, 1989b, 1991) and it is the ability of the organisation to integrate HRM issues into its strategic plans, ensure that the various aspects of HRM cohere, and provide for the line managers to incorporate an HRM prospective into their decision making (Armstrong, M 2000; p 13). The difference between strategic HRM and human resource strategy comes from the intentions or the goals the organisation wants to arrive at. For instance, the long-term people issues that the organisation anticipates and puts in place suitable plans constitute strategic HRM whereas the HR strategies that need to be developed and/or changed like the suitable people required for the job, their training, reward and recognition programmes for their motivation, teamwork and stable employee relation programs etc. According to this, strategic HRM decisions are built into the strategic plan while HR strategies are derived from it. Schuler and Jackson (1987) have quoted few examples of human resource strategies associated with a few strategic outcomes associated with achieving competitive advantage for organisations to achieve, such as cost reduction, quality enhancement and Innovation. For example, strategic practices to achieve Quality Enhancement would require good recruitment and selection, comprehensive induction programmes, empowerment and high discretion jobs, high levels of training and development, harmonization, highly competitive pay and benefits packages, and a key role of performance appraisal. For example, Edward Jones, the financial services organization which is at the second position of the best 100 companies, has highly motivated employees who are result-driven. They are highly empowered and receive excellent training on the job and possess good communication system through which they are constantly updated with information (Sunday Times. 8 Mar 2009). In view of the fundamental aim of strategic HRM, to generate strategic capability by ensuring that the organisation has skilled, committed, and motivated employees, sustaining competitive advantage through strategic management, resource-based management has been given high importance in the strategic HRM perspective. However, the degree to which the concept of strategic HRM can be applied within organisations, and its form and content, will vary widely. Guest (1989b) explains that one of the key policy goals should be to ensure that HRM is fully integrated into strategic planning so that HRM policies cohere both across policy areas and across hierarchies, and HRM practices are used by line managers as part of their everyday work (Armstrong, M 2002; p.47). Models of Strategic human resource management: Strategic HRM models have been categorized into two broad groups, the general and the prescriptive approaches. The general approaches, defined by Delery and Doty (1996) and Richardson and Thompson (1999) include the ‘best practices,’ ‘best fit,’ and the ‘configurational’ approaches. Other approaches to strategic HRM considering models proposed by Armstrong, M (2000) are the high-commitment management model, the high-performance management model, and the high-involvement model. The ‘best practice’ approach involves adoption of best HRM practices to achieve superior organisational performances. The best known HRM practices adopted by successful organisations are Pfeffer’s (1994) practices such as employment security, selective hiring, self-managed teams, high compensation contingent on performance, training to provide a skilled and motivated workforce, reduction of status differentials, and sharing information. While these have been defined as universal best practices, many critics have challenged application of these practices in organisations with distinctive management practices. Hence, it is not possible to term certain practice as best practice because it may not work the same way in all organisations. In this view, Becker et al (1997) remark that organisational high-performance work systems should be tailored to match the organisation’s requirements for optimum results. What is important here is the knowledge and understanding of best practices. The high-commitment management model, as described by Wood (1996) states it is ‘a form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organisation are based on high levels of trust’ (qtd. by Armstrong, M; 2000; p 59). To achieve this, HR strategies, as described by Leopold, J, Harris L, and Watson, T (2005) should possess these components in their HRM: i) Organisational culture depicting shared values, emphasis on problem solving, customer focus. ii) Organisational structure with flat hierarchy, mutual (top-down/bottom-up) influence, decentralization, and flexible. iii) Work/job design with enriched jobs, multi-skilled individuals, delegation. iv) Performance expectations through stretch objectives, self controls, peer inspection, continuous improvements. v) Rewards according to performance, team performance. vi) Communication with two-way approach. vii) Employment relations that are mutual, individual, win/win, partnering performance. viii) Employee development through training, emphasis on continuous learning, succession planning. ix) HR department integrated into management and working with managers as partners, proactive and strategic decisions, staff movements within different functions. For instance, organization structure with a flat hierarchy fosters high commitment through stretch responsibilities and further delegation of work. Delegation directly demands for more commitment from the employees as they would own the work rather than taking it up as a mere responsibility. Also, flexibility at work will not impose any kind of restrictions or compulsions and employees will be more motivated under such circumstances than the usual conditions. In total, these components ensure more motivation, responsibility, challenge and recognition to the employees. High-performance management model is aimed at making an impact on the performance of the firm through its people in areas as productivity, quality and levels of customer service, growth, profits, and ultimately, the delivery of increased shareholder value. In this model, as described by Buchanan (1987), the management clearly defines goals, methods of working, standards for success; multi-skilling is encouraged; self-managed teams are established; supportive leadership is adopted; effective support is provided; effective communication and involvement is ensured; thorough training is provided; payment and rewards are team-based, high performance of individuals, and skill-based; sometimes ‘peer performance review’ is adopted (Armstrong, M 2000; p 61). Thirdly, the high-involvement management approach adopts treating employees as partners and they are highly empowered, with a strong emphasis on communication and involvement. The high-commitment approach emphasizes high trust, responsible autonomy, and employee involvement and is aimed at improving the overall performance of the organisation through generating commitment amongst the workforce. While, the performance management model defines practices aimed at achieving high performance of the organisation. As explained by Arthur (1994), the high-commitment model is focused to shape desired employee behaviour and attitudes by forging psychological links between organisational and employee goals (Heam, M & Michelson, G, 2006; p 293). The ‘best fit’ approach involves matching specific HR practices to the organisation’s overall business strategy, and relies on the fact that any particular practice cannot be used as a benchmark to be applied in all organisations, and should only be applied wherever the organisation deems it fits the requirement and produces the best outcome. For this, the organisations will have to analyze its business needs in its cultural, structural, technological, and process contexts. Three different models have been described in the best fit approach, life-cycle, competitive advantage, and strategic configuration. The life-cycle models cover start up, growth, maturity, and decline phases (Famham, D & Smith, P 2005; p 100). These focus on various stages of organisational growth. For instance, in the growth stage, once a business grows beyond a certain size, the emphasis would move to the development of more formal HR policies and procedures. In the maturity stage, as markets mature and margins decrease, and the performance of certain products of the organisations becomes still, the focus of the HR strategy may move to cost control. Finally, in the declination stage of a product or business, the emphasis shifts to rationalization, with downsizing and redundancy implications for the HR function. Tyson and Bournois (2005; p 201)have further added to this discussion that for the ‘best-fit’ model of HR strategy to work for the organisation, the actions of all employees should conform to the desired state in delivering against the business strategic goals. Internal and external pressures that alter this requirement demand frequent changes to the policies and demand high creativity and resourcefulness from HR and operations managers. The integration or strategic-fit model is regarded central to the concept of strategic HRM. This is also referred to as the matching model. According to this model, the HR strategy should be an integral part of the business strategy contributing to the business planning process. The strategic integration happens in two ways, the vertical and the horizontal. The HR strategy aligned to the business strategy is referred to as the vertical integration, and the integration between different elements of the people strategy is referred to as the horizontal strategy. Guest (1989b) explains that one of the key policy goals should be to ensure that HRM is fully integrated into strategic planning so that HRM policies cohere both across policy areas and across hierarchies, and HRM practices are used by line managers as part of their everyday work (Armstrong, M 2002; p.47). For example, strategic integration through mergers and acquisitions acquired at the BAE systems in which integration of HR team as strategic business partners was a major deciding factor of achieving their strategic goals of management of customer requirements through supply chain, achieve support of people and move to systems and integration (Pickard, J 2003; n.d.) The second type, i.e., the resource-based model of strategic HRM places emphasis on human resource legacy as a strategy for sustained competitive advantage. Adding to Beer et al’s strategic integration model of HRM, to achieve the ‘best-fit’ between external business strategy and the elements of internal HR strategy, Guest puts forward that strategic planning emphasizes quantitative aspects of finance, marketing, with less attention to qualitative dimensions of the post-industrial organisation such as values, culture, and power; this makes implementation of strategic business plans difficult if the human resource component is not a part of the strategic planning process. In this regard, Guest (1987) views that human resources are most variable, and difficult to understand and control of all management resources; effective utilization is likely to give organisations a significant competitive advantage. The human resource dimension must therefore be fully integrated into the strategic planning process (Bratton, J & Gold, J 2001; p 47). The resource based model focuses on strategic value of the workforce and to the issues of workplace learning. It is of the ‘soft’ type of HRM. According to Barney (1991), the four characteristics of human resources that are important are value, rarity, inimitability, and non-sustainability. This puts pressure on the learning aspect of managers and non-managers, especially in harnessing workers’ diverse knowledge and skills, and integrates diverse information technology. An example of the resource-based strategy that can be quoted that of the objectives of senior management aligned to reward employees for their performance and also for their time in Britannia introduced by Karen Moir. Its business strategy to maintain and improve its market position required high commitment and high involvement from its people. Hence, resource-based strategies oriented towards its people helped in achieving their business strategy (Persaud, J 2003; p129). Use of resource-based model in human resource strategic planning, the diagnostic approach may be viewed as one approach for producing desirable results that may be highly acceptable. Research and investigation have sometimes proven the differences between managers of ‘people’ and managers of ‘things.’ Managers of people with decisions mostly are linked with people are more likely to be stressed and work long hours, thus generating greater risk of stress-related illnesses. A diagnostic approach in resource planning is perceived as a process of learning issues underlying HR, behaviour of people, and limitations of resource planning. In this regard, quantitative and qualitative planning techniques used to identify and understand the causes of underlying issues help the organisation relate these complex factors to a whole process of management of the employee relationship. In modern times, loss of experienced staff is considered as loss of intellectual capital and to regain this intellectual capital is a huge cost for the organisation of time and money. The diagnostic approach can lead to the root causes of issues thereby identifying promising solutions for the issues. On the other hand, these promising solutions may bring about permanent changes or paradigm shifts in terms of organisational structure, job design, work practices, new policies etc. Analysis and Discussion: Analysis of the strategic models proposed by Armstrong (2000) explains that the central theme of high-commitment is self-managing worker and good organisational citizen. Thus, comparing all the three models, it is evident that the high-commitment model covers high-performance and high-involvement too. Management experts have deduced that culture of an organisation plays an important role in driving these models. For example, the high-involvement approach suits individuals who value responsibility, rewards, and are motivated by challenges. A classic case of high-involvement in today’s tough times is Denplan, where the employees feel their managers are open and honest, and share the company results and customer numbers. They are encouraged to recognize the efforts of their colleagues and have a high team spirit (Sunday Times. 8 Mar 2009). The life cycle model as a part of the ‘best fit’ has been criticized by Sparrow and Braun (2005) based on three grounds, focus on single independent variable such as product life cycle or the organisational life cycle in contrast to the multiple product life cycle nature of majority of the organisations; these models are based on descriptive approach rather than predictive; these models also have limitation in explaining how a multinational organisation can implement varying international policies and practices while also accounting for the contingencies of multiple host countries (Schuler, R & Jackson, S 2007; p 163). To address this, Beardwell explains that organisations need to have dual HR strategies which enable them to manage the present and also be prepared for the future. This entails an inherent capacity to flex and adapt to changes in the external context, which enables the business to change as a matter of course. This forms the resource-based, best-practice view and best fit approach (Fellman, V. 2008; p 44). Advantages of strategic HRM have been listed by many. Strategic HRM helps in identifying and analyzing external opportunities and threats that may be crucial to the company’s success. They provide a clear vision for the future and a business strategy to work upon. These practices help in providing competitive intelligence that may be useful in the strategic planning process, to recruit, retain and motivate people; to develop and retain highly competent people. These practices can be designed to address people development issues systematically. An important advantage is it helps in meeting the expectations of the customers effectively and achieve high productivity. Besides the advantages, implementation of Strategic HRM has always faced hindrances such as resistance from employees, interdepartmental conflict, low commitment, plans requiring external requirements, cost and time factors, diverse workforce with competitive skill sets, improper strategic assignments and leadership conflict over authority, ramifications of power relations, presence of active labour union, structural changes, etc. Economic and market pressures also influence the adoption of strategic HRM. Human resource planning effectively concentrates on staffing, budgeting, profitability for a period of time and it does not consider the long-term organisational goals such as new products, expansion, retrenchment etc. Planning for such goals is taken care of in strategic human resource management and has better advantages in terms of cost efficiency, effective operations, and being prepared for newer opportunities and challenges. One such strategic approach can be that of rightsizing organisation by eliminating some staff. While this can be very effective and result-driven approach, it is accompanied by changes in fundamental relationship between the organisation and its employees. Strategic HRM procedures require advanced information systems in order to achieve optimum results with limited resources. Though cost efficiency is achieved at the personnel end, investment in technology, training, and information systems become inevitable to carry out strategic practices (Rabin, J, Handbook of public personnel administration. p.652) Conclusions Considering the global competition in business and its complexity, strategic HRM and the issues around its implementation are critical to organizational sustainability and success. Strategic management of human resources plays a vital role in achieving competitive advantage through the more required innovation and creation of value. This is an activity to be achieved through mutual cooperation and understanding of all business units aligned to one goal. It is important that different strategic HRM practices implemented are in line with the organizational goals. Based on the nature of organization and its goals, one particular approach of implementing Strategic HRM cannot be kept constant. Through strategic HRM approach, organizations can also recognize their potential opportunities to gain the competitive edge in the market, and be prepared to convert those challenges to their own benefits. To achieve these, a broad and comprehensive understanding of different models of SHRM and factors influencing the business goals should be identified. Considering all influencing factors of business, appropriate strategies need to be decided. This would require a crucial assessment and careful thought before adoption of any of these approaches. The perspective of Strategic HRM that is focused on bringing forth high levels of commitment and motivation lead to studies that go beyond simply seeing the employee as high-performing object and seek to recognize their presence as subjects. According to Pfeffer (1994), a set of HR practices that have positive effect on organisational performance, irrespective of a firm’s particular business environment and strategy are high levels of employment security, selective hiring practices, and a focus on teams and decentralized decision making (Fisher, C, Schoenfeldt, L and Shaw, J. 2008; p 49). All of these can be achievable through the strategic practices of HRM. References Armstrong, M. Strategic Human Resource Management: A Guide to Action. Edition 2. Published by Kogan Page Publishers, 2000. http://books.google.co.in/books?id=qMmc_89e-l4C&printsec=frontcover&dq=Strategic+Human+REsourse+management#PPA13,M1 Armstrong, M. Strategic HRM: the key to improved business performance. Published by CIPD Publishing, 2002. http://books.google.co.in/books?id=zXG_lJ8BrMwC&pg=PA8&lpg=PA8&dq=Matching+model+Strategic+HRM&source=bl&ots=GLPMIu2dJ0&sig=K2SCIQ8HCy4f96LyUv9Y21yRTmo&hl=en&ei=u7H9SZaFE4qCkQWmwf2DBQ&sa=X&oi=book_result&ct=result&resnum=3#PPA49,M1 Bratton, J and Gold, J. Human Resource Management: Theory and Practice. Edition 2. Published by Routledge, 2001. http://books.google.co.in/books?id=vj-rVFUG4m8C&pg=PA64&dq=what+is+resource+based+model+in+SHRM#PPA44,M1 Famham, D and Smith, P. People management and development. CIPD, Edition 2. Published by CIPD Publishing, 2005. http://books.google.co.in/books?id=McUKe6HTThQC&pg=PA100&dq=Strategic+HRM+best+fit+life+cycle+model#PPA100,M1 Fisher, C, Schoenfeldt, L, and Shaw, J. Human Resource Management (2008 Edition). Published by Wiley-India, 2008. http://books.google.co.in/books?id=3Q0IDg9znMgC&pg=PA49&dq=Best+fit+models+Strategic+HRM Heam, M and Michelson, G. Rethinking work: time, space and discourse. Published by Cambridge University Press, 2006. http://books.google.co.in/books?id=qiABv_ixJYMC&pg=PA293&dq=comparison+high+performance,+high+involvement,+high+commitment Rabin, J et al., handbook of Public Personnel Administration, Public administration and Public Policy/58 http://books.google.co.in/books?id=51RmStBo6roC&pg=PA658&lpg=PA658&dq=Strategic+HRM+Shoop+1991&source=web&ots=MZUT7_dDw3&sig=_EzCUJTE7ykAcbkKt9Ua1IdHfyw&hl=en&sa=X&oi=book_result&resnum=3&ct=result#PPP1,M1 Sparrow, P. R and Braun, W. (2005).Ch. 8. Human Resource Strategy in International Context. In Handbook of research in International human resource management. Erlbhaum, 2005. By Schuler, R.S and Jackson, S.E In Strategic human resource management. Edition 2. Published by Wiley-Blackwell, 2007. http://books.google.co.in/books?id=mVP8wILJRO8C&pg=PA164&dq=life+cycle+model+Strategic+HRM&lr=#PPA162,M1 Tyson, S and Bournois, F. Top pay and performance: international and strategic approach. Published by Butterworth-Heinemann, 2005. http://books.google.co.in/books?id=QErF70JzEVIC&pg=PA200&lpg=PA200&dq=compare+best+fit+to+resource+based&source=bl&ots=6EHtaOR0u7&sig=THwYXnX5K7U8FgGSwl3-id_oAhM&hl=en&ei=z2H9Sc_vAabm6gOHoMCzAg&sa=X&oi=book_result&ct=result&resnum=9#PPA201,M1 Journals Fellman, V. Human Resource Management. Beardwell. Ch. 2. Understanding the business context. 28 February 2008. http://72.14.235.132/search?q=cache:BjSeIWjINHEJ:people.arcada.fi/~fellmanv/hrm/SHRM%25202.ppt+best+fit+life+cycle+model+SHRM&cd=2&hl=en&ct=clnk&gl=in Schuler, R.S and Jackson, S.E. (1987) ‘Linking competitive strategies with human resource management practices.’ Published by: Academy of Management, Vol 1, No. 3. (August) pp. 207-219. http://www.jstor.org/stable/4164753 News Articles Persaud, J. Mutual appreciation. 28 August 2003. Peoplemanagement.co.uk Pickard, J. effort. 24 July 2003. Peoplemanagement.co.uk Sunday Times, Best 100 Companies, Times Online. 8 Mar 2009. http://business.timesonline.co.uk/tol/business/career_and_jobs/best_100_companies/article5702590.ece Read More