Contemporary Issues Affecting Strategic Human Resource Management - Assignment Example

Human Resource Management of the of the Contents Introduction 3 Task 3 1 Definition of strategic human resource management 3 1.2Importance of human resource management 4 1.3 Framework of strategic human resource management 5 2.1Strategic human resource process 7 2.2Roles in strategic human resource management 8 2.3Development and implementation of human resource strategies 9 Task 2 10 Contemporary issues affecting strategic human resource management 10 Task 3 11 HR strategies for an organization 11 Application in an organization 12 Conclusion 13 Introduction The concept of strategic human resource management (SHRM) is a relatively new one that has gained importance in the last twenty five years. Broadly speaking strategic human resource management is a wider concept and it includes prescriptions, models, theories and critiques. SHRM is actually a combination of human resource management and strategic management. In other words human resource management is treated as a strategic, consistent and integrated process and it is associated with the concept of management which in turn focuses on long-term management of the business (Boxall and Purcell, 2003). It can be argued that the basic reason behind the introduction of SHRM is to provide a firm with competitive advantage. A considerable amount of research taken up by the researchers in the past has linked the concept of SHRM with the improvement of performance of the firm. Human beings are unique assets of an organization and they have different characteristics compared to financial or capital assets. Human resource managers are in charge of implementing the strategies and accomplishing goals set by strategies of an organization. The purpose of this paper is to analyse the various aspects of SHRM in organizations to understand the importance of the topic in the present era. The concept of SHRM, importance, framework, issues and strategies have been discussed in this paper. The idea is to develop a robust understanding about the topic by referring to secondary literature and empirical study that has been done in this field. Task 1 1.1 Definition of strategic human resource management In order to understand the definition of SHRM it is important to understand the concept of strategic management. Strategic management can be defined as a process where a set of decisions and actions are formulated to accomplish organizational goals and objectives. There are four broad groups of definitions of SHRM namely decision-focused, strategy-focused, implementation-focused and content-focused. There is not a singular definition of SHRM due to the difference in approaches adopted by researchers. According to the definition provided by Wright and McMahan (1992) SHRM has been defined as “pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals”. Another definition of SHRM was provided by Armstrong (2010) has defined SHRM as an approach which involves making plans about the organization regarding employment relationship with respect to recruitment, development, performance management and organizational strategies. A similar view was also expressed in the definition provided by Dessler (2009) who had stated that SHRM involves formulating and implementing human resource practices that injects competency and efficiency within individuals and equips them in achieving organizational goals. Based on these definitions it can be argued that SHRM is actually a mindset rather than a set of techniques. SHRM involves making strategic plans about the HR practices of the organization as well and increasing their effectiveness. In short SHRM relates to exercising strategic choice and marking strategic priorities and implementing those priorities in the management practices of human resource managers to ensure that the organizational goals are met. Human resource managers bridge the gap between the tasks needed to be performed by the organization and finding and attracting the appropriate talent pool that can perform these duties. 1.2Importance of human resource management Effective management of human resource management is extremely important for organizations to maintain their competitive advantage. In the present era of stiff competition corporations undergo dramatic changes and employees working with them also need to adapt themselves to these changes. Human resource management plays a critical role in effective deployment of information technology and ensuring that individuals are updating themselves according to changes (Ulrich, 2013). Therefore, researchers have agreed on the importance of human resource management as a critical factor that propels organizational excellence. Human resource management is not only important from the point of view of the organization but also important from the point of view of the employees and society. It helps the organization to maintain the adequate supply of manpower and foster the appropriate set of attitude and skills required to work. Human resource management helps employees to improve the quality of their lives and works positively to boost employee morale. Finally it helps the society to balance the demand and supply of manpower and increases the overall effectiveness of the workforce by proper training and development of employees (Berman, et al., 2012). Strategic management of human resources are important for an organization because critical issue or success factors that have long-term implications on an organization are dealt in this approach of human resource management. A number of researchers have taken up independent research works to highlight the importance of human resource management and improvement of organizational efficiency through improvement in employment skills (Farndale, Hope-Hailey and Kelliher, C., 2011). High performance management: This involves inclusion of effective ways in recruitment and selection process for improving the performance of firms (Jiang, et al., 2012.). High-Commitment management: This primarily is related to the concept of boosting the employee morale and creating an environment where the employees self-motivate themselves instead of being guided by formal rules (Hendry, 2012). High-Involvement commitment: Involving employees in major management decisions and decision-making process allows them to gain greater confidence in the organization they are working for and motivates them to last longer in the organization. Apart from improving the organizational talent, human resource management is also responsible for improving the organizational structure and work environment which in turn facilitates employees to work in teams. HR managers are also responsible for managing disputes between the employees and their managers for smooth functioning of the organization. Effective management of the human resource talent helps in identifying the actual needs of the organization from its employees. Clear identification of organizational needs is essential to accomplish goals. 1.3 Framework of strategic human resource management The framework of SHRM is a rather complex one that has multiple players and interaction between these players impacts final outcome. There is a lack of convergence among the researchers regarding a singular theoretical framework of human resource management. Broadly speaking there are many different theoretical frameworks for human resource management yet each of this framework have different dimensions and variables which makes it difficult to compare them. The Harvard Framework is a very popular framework of strategic human resource management. The basic idea that is that line managers have an important role to involve employees in the development of the organization by considering voluntary and non-voluntary factors. The following diagram shows the Harvard framework: Figure 1: Harvard Framework (Source: Price, 2011) The above diagram shows that situational factors, some of which are external and some of which are internal have a direct impact on the interest of the stakeholders. Human resource policies must take into account about the situational factors and stakeholders interest. Organizational outcome in turn have a long-term consequence on the well-being of the organization and employees together. Analysis of the existing literature reveals that there both internal and external environments influences the human resource management system. According to the aspirational framework of Jackson, Schuler and Jiang (2014) a comprehensive structure about SHRM were provided by reviewing the literature of past three decades. Parameters of external environment comprise industrial relations, market conditions, labour markets, national and regional cultures and legislations. Internal factors include strategic objectives, organizational culture, organizational biography and organizational structure. Interaction between internal and external factors produces impacts on the external stakeholders like owners, customers and society and impacts on internal stakeholders including employees and line mangers. Researchers have found that the impact of stakeholders is profoundly impacted by the way in which the organization designs its HRM. It has also been have found out that three aspects of external environment are very important that provides the basic framework of SHRM namely information technology, tangible assets and globalization. The external environment provides considerable challenges to the HRM. 2.1Strategic human resource process Strategic management process can be described as a step-by-step process that needs to be followed in a chronological manner in order to realize organizational goals. The following diagram provides the basic steps that need to be followed in the strategic human resource management process. Figure 2: Steps of strategic management (Source: Dessler, 2009) The seven stages in the strategic management process shows that the process begins with the definition of current business mission and ends with to the implementation of the strategy and evaluation of performance. Similar ideology also holds true for the strategic human resource process which can be described as a set of steps that needs to be followed for proper strategic human resource planning. HR strategic planning system comprises of four major steps namely setting the correct strategic decision, designing the proper human resource management systems, planning of the total workforce and generation of required human resources, investing in human resource development and performance and finally sustaining organizational performance (Dessler, 2009). Human resource planning process focuses on the staffing requirements of the organizations that are needed to accomplish organizational goals and objectives. It includes multiple aspects like consideration of staffing costs, staffing volume and productivity. In the first step the HR managers must take into consideration the organization’s external environment and goals. The HR policies, plans and procedures are designed according to the industry best practices (Prakashan, 2008). HR managers plans the ways in which the existing workforce can be trained according to the organizational needs and decides to allocate resources for their training and development accordingly. 2.2Roles in strategic human resource management The role of line managers is an integral one in determining the effectiveness of strategies that are implemented in the human resource management. The study conducted by McGovern, et al. (1997 cited in Hislop, 2003) had focused on the role of line managers in implementing effective human resource management practices. Their study had shown that the quality of human resource management differed widely between organizations due to the degree of involvement of the line mangers. The role of strategic managers has become very important in coordinating strategic management in human resources. The manager is responsible for putting the right candidate for the right job role, training the employees and retaining them in the long-run to improve organizational productivity and efficiency and finally to implement new technologies in the work environment. The roles of strategic mangers range from management of process to the management of people. Researchers have found out that manager of human resource management acts as strategic partners. Managers perform the duty of environmental scanning and reviews the strategic corporate reports to ensure that the milestones set by the organizations can be met by regulating the human resource. Also mangers also have to play the role of administrators and undertake proactive measures so that employees become more productive and efficient (Collins and Clark, 2003.). Researchers have found out that there is a positive correlation between the role of the human resource managers and increase in competency and commitment on part of the employees (Colbert, 2004). Managers have a role of strategic execution and strategic formulation of roles. Change management is another crucial role that needs to be performed by mangers as employees may resist to changes in the organization. Researchers have found out that managers also have a role to play in boosting the morale of the employees and encouraging them to perform better. 2.3Development and implementation of human resource strategies Development and implementation of HR strategies requires a dynamic interaction between the line managers and employees. Commitment, cooperation and involvement of employees all the members are required who are involved in designing the human resource strategies. In the strategic planning approach of human resource management implementation of strategies can be treated as the second stage in the planning process. Formulation or development of the strategy forms the first stage and evaluation of the strategy forms the third stage. In the strategy formulation stage the HR department is treated as a partner of the firm. Proponents of SHRM state that inclusion of the HR head in the strategy formulating stage strengthens the partnership between the HR management team and strategic team. In this case HR team can highlight the problems, competencies and advantages and limitations of existing HR related practices (Prakashan, 2008). An important aspect for success of strategies developed during the formulation stage is to guarantee adequate resources are allocated by the organization to enhance the productivity of the workplace. With the onset of implementation stage care is taken to align the resources and practices to HR strategies formulated in the development stage. Both vertical and horizontal linkages need to be worked upon during the implementation stage. Vertical linkage refers to training and development, career management, performance management and recruitment and selection practices. These practices are changed according to the new HR strategies developed by the organization. Horizontal linkage refers to the association between the HR departments for effective implementation of strategies (Hitt, et al., 2008). Implementation stage also includes the change management process like restructuring, mergers, acquisitions and automation of the HR systems for collection and dissemination of data. Task 2 Contemporary issues affecting strategic human resource management Identification There are quite a few challenges that are faced by organizations in developing and implementing effective SHRM practices. In the dynamic business environment of contemporary times the corporate environment is changing fast and there is a constant need to support corporate productivity and performance improvement of organizations. Changes in the organization need to be followed by rapid changes in the HR systems which can be expensive for the organization. The role of the employees is extremely important to ensure the success of strategies framed by the employers. Commitment on the part of the employees is essential for organizational success and ensuring that the strategies framed by the management are successful. High attrition rates of employees due to change in organization is often cited as a major factor which causes challenges for the HR management. Employees tend to leave organizations for better pay and career growth objectives thereby affecting organization productivity and efficiency. It has also been observed that human resource units are not always involved in the decision making process which makes it difficult to align the needs of the human resources with the strategic decisions of the organization (Boxall and Purcell, 2003). Analysis The roles of the human resource professionals is often very challenging because they have to acquire full-fledged understanding of the accounting, finance, production and sales to take part in the decision-making process of the strategic management. Fast evolution of technology in the contemporary world has created alternative competitive forces that have made it difficult for organizations to compete. Coordination of all the activities becomes a challenging task for the managers. Changes in the regulatory practices in the external environment, volatility in the stock market and greater scrutiny of the pay of executive employees also pose number of challenges on the HR managers. Researchers have found that line managers are often not equipped with required knowledge to execute strategies of HR. Many organizations still does not incorporate the HR team during the strategy formulation stage that creates problems in the later stages. In case of public sectors specifically it has been found that centralized system of control makes it very difficult to coordinate and integrate HR polices by the respective departments. Lack of transparency in the job roles has also been found to be a major problem for public enterprises (PWC, 2011). Task 3 HR strategies for an organization From studying the works of scholars in the past two decades have linked the adaptation of human resource strategies to the performance of the firms. A dominant theme in the performance aspect of the HR literature deals with adaptation and description of strategies that will lead to superior performance on the part of the firms. The research conducted by Wood and Albanese (1995) described a term called high performance management that has the potential to transform organizations and enhance competiveness. Research conducted by Paauwe and Richardson (1997) had summarized the main ways in which an organization can improve its effectiveness through management of human resources. Firstly, their research had pointed out human resource management has the ability to improve the skills and ability of the employees. Secondly, it can bring positive outlook about the work and provide them needed motivation. Thirdly, HRM also allows employees to expand their existing knowledge set and improve their productivity. Based on these factors a range of HR strategies can be applied by an organization to remain competitive: Recruitment strategy: Ensuring an effective recruitment strategy especially at a managerial level is extremely important for organizational success. Attracting talented employees is important for improving the quality of work done by the organization. Techniques like referral recruitment strategies, social recruitment strategies and creative recruitment strategies are often employed by HR managers to attract talented people. Applying specific personnel like acquisition manager, sourcing manager and director of personnel has been proven strategies to recruit improved talent. Training and Development: HR managers have an important role to play in the training and development of new employees and updating the skills of old employees. Analysing the role of the job and orienting employees forms a basic part of HR strategies. Change Management: Bringing innovative changes in the organization may often be met with resistance on the part of the employees. Strategic HR management also deals with pacifying the employees and orienting the goals of the employees with the broader organizational objectives to retain the employees in the organization. Management of employee relations: This function can be equated to the process of motivating the employees, recognizing their needs and appraising them for good performance. Such activities help in retaining employees and improve their commitment. Appraisal and feedback of employees by managers also provides employees with moral boost. Reward Management: High rewards and compensation for the performance of employees is also one of the strategies that have been adapted by HR strategists. Lucrative compensation packages can help in retaining talented employees in the organization. Application in an organization Application of strategic human resource management can have profound impact on organizational success. Effective recruitment, selection, training and rewards have the capacity to transform not only employee skills but also organizational productivity and efficiency. It has been observed majority of large companies in the recent era have integrated technology ad a major part in the HR strategies. Companies have been found to integrate their compartmental HR strategies into one single information system. Few organizations have been able to implement effective SHRM that has provided them with competitive advantage. The case of Dell can be treated as a classic case of devising successful HR strategy. The SHRM developed by Dell is quite an effective one and has resulted for the sustained development of the company. Dell has always been a cost-leader in the market as it has been able to provide quality products at a relatively low cost. The human resource managers of the company have been able to modify the policies and practices of Dell according to the strategic vision of the company which has provided Dell with competitive advantage in the long-run. Dell had successfully transformed its traditional human resource management system and replaced it by a web based technology. The human resource management system has a specific tool known as “Manager Tools” section that comprises more than 30 automated web based applications (Wright, 2008). These applications are able to search reports, recruitment and selection and automatic employee referrals. Following these strategies has allowed Dell to significantly lower its HRM costs which had previously involved physical involvement of the personnel. Dell has also developed an innovative intranet technology that has strengthened the system of horizontal linkage. The intranet allows effective communication within the departments and allows employees to check job positions, solves queries regarding compensation and monitor performance of the employees in a comprehensive manner. Implementing these strategies in the human resource management has helped Dell to pioneer in the electronic industry in the contemporary era. Conclusion Strategic human resource management is integral for critical success of an organization. It has been found that researchers and businesses have considered SHRM as a key way to maintain success of an organization. Different researchers have taken up the concept of SHRM from multiple dimensions and come up with different definitions and outlook about SHRM. Based on the studies that has been done in the context of SHRM it can be argued that inclusion of human resource management in the strategic decision-making process can indeed provide an organization with competitive advantage over its rivals. Though there is a dearth of empirical study in this regard yet the theoretical studies indicate there are multiple benefits that can be accrued to the organization by implementing SHRM. SHRM guarantees that the structure, style, organizational quality can be enhanced by aligning these strategies with the human resource needs of the organization. It has been found out that exclusion of HR team from the strategic management of the company can often alienate the needs of the HR department from the organizational goals. Additionally HR personnel must be knowledgeable about the all round development of the company for proposing effective solutions to the people management issues. This often becomes challenging for the HR personnel. Apart from these challenges the fast changing business environment also provides to be a challenge for the HR mangers. Despite these challenges implementing proper SHRM can lead to sustainable development of an organization. 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