Strategic HRM Approach - Case Study Example

Running Head: Strategic HRM Approach Strategic HRM Approach [Institute’s Strategic HRM Approach There is a major distinction between human resource management (HRM) and traditional personnel management. Recently, many companies have made it a focus in HRM to observe a strategic approach due to the numerous competitive advantages that it gives them. This essay will discuss this approach as well as these advantages, which make it such an attractive and feasible option for organizations. The discussion will initiate through some definitions and then move to the broad SHRM frameworks, and will then finally shed light upon the way strategic approaches are beneficial or organizations. HR experts and researchers (Armstrong, 2009) focus on multiple issues related to human resource management. First, they explored which factors lead an organization to adopt a strategic approach to HRM as well as the consequent formulation of this strategy. This also raises the question of which firms will be more likely to adopt a strategic approach than others are. For instance, do such firms have a specific set of external and internal characteristics and conditions? Secondly, the experts looked into the policies and practices that are characteristic of distinctive HR strategies. Is it reasonable to assume that there can exist, different sets of HR policies with the different models of HRM? Finally, an important issue that they have explored at length is the organizational performance that follows each of these sets of policies and practices. This brings in the question of whether HR strategy is important for organizations, and the answer that it is an essential factor for the HR staff to consider when refining organizational performance. The main aim of HRM in this respect is to recognize, select, and implement activities that the staff thinks will be helpful in selecting a direction and a course of action, which would in turn enhance the long-term performance of an organization. This will occur if the chosen actions help synchronize the internal capabilities and skills of the company with the growing demands of its external environment. There are three main organizational frameworks (Armstrong. 2009) related to the several broad approaches of strategic HRM. One is universal, which is the best practice according to experts (Ehnert, 2009), s it focuses on broader aspects of business environment instead of narrowing them down, thus enabling the firm to derive competitive advantage from their strategy, regardless of the circumstance. Then there is the contingent approach (Ehnert, 2009), designed based on specific business environments. This is a narrower approach as compared to the universal framework, but is beneficial to specific companies as it provides them with competitive advantage, which is ‘contingent’ upon their reactions to situations arising in their strategic environment. Lastly, there is the organization-specific framework, which is unique for the firm, which designs and implements it. This introduces the concept that the individual characteristics of a firm necessitate a unique approach, as its unique resources such as human capabilities will enable it to derive a certain type of competitive advantage through the correct strategy. To explore each of these frameworks further, paper looks at the examples below, which present an idea of how a strategic approach would be designed based upon the framework. If the organization chooses to operate according to a universal framework, they will design their strategy in the light of the ‘best’ practices, which they will then implement into the overall organizational structure. This collection of HRM practices, or rather, this ‘HRM bundle’ could include ‘high ground’ components such as the goals of employee loyalty and commitment to the organization, high quality operation, and product, functional flexibility in the company structure. One goal could even be to corroborate the corporate objectives of the organization with the human resource objectives (Ehnert, 2009). Such goals would help create an organizational environment where HRM would be assisting with the design of the strategy rather than just its implementation. Experts often justify this assumption by referring to the correlation such as that between employee motivation and customer satisfaction (Jackson, 2007). As for the contingent framework, it will be similar to the universal ‘best practice’ framework, except it takes into account the situational environment of the company, rather than a general picture. In this framework, the practitioners draw a strategy from the combination of the industry, the workforce structure, and the competitive environment of the company (Jackson, 2007). Finally, there is the organizational specific framework (Burton, 2006), which focuses on the uniqueness of the organization. This framework works under the repeatedly substantiated claim of HRM experts (Jackson, 2007) that human capital of an organization, which includes their knowledge and experience, is a valuable tool in giving the firm competitive advantage. These firms should be valuable enough to allow the firm to exploit market opportunities. Apart from this, they should be rare to find and difficult for other firms to imitate or replicate, which adds the real value of the asset. Finally, they should not be easily replaceable, because their set of characteristics should be a unique blend that is hard to find elsewhere. The complicated phenomena of synergy is also relevant to this creation of competitive advantage, as it is the result of the integration of different valuable assets and characteristics of different employees, which create a combination which is beneficial to the company and cannot be replicated by other firms due to its unique components. For these reasons, a firm derives great benefit from adopting a strategic HRM approach, rather than the traditional operations of personnel management. The policies and practices of this strategic approach should be maintained constantly, to earn the confidence of employees, while at the same time being flexible enough to adapt when change becomes necessary. In addition, management should position HRM in the hierarchy of the company in such a way that the highest levels have control over decisions. The following diagram (Baron, 2002) gives an example of such s a structure, where HRM is equal to other levels of management. Despite all this research and strategy formulation, it remains difficult to assign one solid definition to HRM and HR strategy. It is ambiguous which of these refers to a process or outcome. Some experts see strategic HRM as an outcome, which is visible in the competitive advantage that it provides to a company through its human capital (Storey, 2007). Others think of it as a process, however, which synchronizes the business strategy with the HR policies. One study explored multidivisional companies, to find that HR strategy is a product of decisions made at all three levels, as well as the quality of leadership, which the company is subject to (Gold, 2001). This section studies the relation between the business and HR strategies of an organization, where HR strategies are the HR policies and practices with relation to recruitment, selection, management, and motivation of workers (Gold, 2001). One structure/model of the ideal HR strategies, from the early 1990s is control-based (Storey, 2007), where the management monitors and controls the workers. Another model is the resource-based model (Burton, 2006) focuses more on the relationship between the employer and the employee, and the quality of maintenance of this relationship while the third approach is the integrative model, which is a combination of both the first and the second models. The Control-based Structure/Model This approach to modeling HR strategies relates to workplace control and to how the managers choose to monitor the performance of the workers. This model treats HR strategy as a tool to maintain the smooth functioning and productivity of the HR strategy to result in profitability (Mumford, 2008). It believes in ‘controlling’ behavior of employees in relation to tasks, office, and even their movement, to ensure their maximum effectiveness. The Resource-based Structure/Model This model takes a more humanistic approach to designing HR strategies, concentrating on the nature of reward-effort exchange while viewing the laborers as assets rather than expenses (Mumford, 2008). It recognizes the ability of human capital to provide the organization with an invaluable amount of knowledge and expertise, which no amount of machinery and technology can replace or substitute. The resource-based structure (Mumford, 2008) focuses on exploiting the resources and the capabilities of a company. The resources refer to both tangible assets such as machinery and labor, and intangible assets such as goodwill and expertise. If these resources are distinctive and valuable, they give the company an edge over others, whereas; the capabilities refer to the ability of the organization to use these resources effectively. Experts (Price, 2007)) believe that one must learn to differentiate between resources and capabilities in order to understand the significance of each for an organization. The Integrative Structure/Model Analysis has indicated that the integrative structure is the most suitable for an SRHM approach in the organization, and thus, the paper will include its discussion in detail. This model (Price, 2007) endeavors to integrate the idea of managerial control with that of reward-effort exchange. It sees the two approaches to lack the ability to work individually according to an HR strategy, and thus suggests a combination of ‘acquisition and development’ (Price, 2007) and the ‘locus of control’. Acquisition and development related to the firm’s ability to develop and train its own workers instead of having to recruit when in need of skilled labor. Whereas, locus of control related to the degree to which the workers are compliant with the rules of the management to which they are subject. This is an alternative approach to nurturing these workers and letting them develop social relationships and confidence in the process, which in turn will help them grow and be more productive. This structure towards HR and SHRM approaches is rooted in studies (Snell, 2009) that differentiated control strategies from commitment strategies (Snell, 2009). In particular, this structure calls for four branches of dominant HR strategy, which are “ideal: traditional, collaborative, commitment and paternalistic” (Snell, 2009). The commitment HR strategy relates to developing the worker’s abilities and control of their outcome. Meanwhile, the traditional HR strategy focuses on external recruitment of competencies and controls (Price, 2007). This ‘free agent’ strategy (Price, 2007) of is paralleled by the collaborative HR strategy, which suggests contracting work to external experts and basing evaluation solely on the quality of results. Lastly, the paternalistic structural strategy prefers to reward employees with opportunities and promotion when they comply with process-based controls. Each of these four paradigms indicates a separate set of beliefs, which HR managers hold and function accordingly. During the last decade, experts (Price, 2007) presented a similar four-cell grid. According to them, North American work organizations are most likely to implement the above-explained four HR strategies (Price, 2007). Experts (Snell, 2009) argue that the human resource strategy of a company is highly correlated to its competitive strategy. By this rule, the organization most likely to implement a traditional HR strategy will be the one who can closely monitor its labor and measure the transformation of input into output closely, and is thus most commonly adopted by firms with a routinized process of transformation that operate in a stable competitive environment. The managers of such an organization only employ technology when it is to assist them in decreasing the uncertainty of the productivity of the labor. They will reinforce specific behavior on the employees and insist that they work according to a smooth functioning work process. The attitude of the managers here will be characteristic of the proclamation “You are here to work, not to think” (Deb, 2006), which certain managers might make. This shows a strong influence of process based-control, which is apparent in the close monitoring of all operations involving employees to ensure that they are performing as expected and required of them. The name of this strategy includes the word ‘traditional’, and is thus mistakable for one relevant to only industrial worksites, whereas it has a much more widespread application in the world of business. References Armstrong, M. (2009). Armstrong’s Handbook of Human Resource Management Practice. Kogan Page Publishers. Baron, A. (2002). Strategic HRM. CIPD Publishing. Burton, R. M. (2006). Organizational Design. Springer. Deb, T. (2006). Strategic Approach to Human Resource Management. Atlantic Publishers. Ehnert, I. (2009). Sustainable Human Resource Management. Springer. Gold, J. (2001). Human Resource Management. Routledge. Jackson, S. E. (2007). Strategic Human Resource Management. Wiley-Blackwell. Mumford, M. D. (2008). Multi-level Issues in Creativity and Innovation. Emerald Group Publishing. Price, A. (2007). Human Resource Management in a Business Context. Cengage Learning. Snell, S. (2009). The SAGE Handbook of Human Resource Management. SAGE Publications. Storey, J. (2007). 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