Strategic Human Resource Practices and Concept of Fit - Essay Example

Running Header: Strategic Human Resource Management Student’s Name: Instructor’s Name: Course Name & Code: Date of Submission: Introduction Strategy is building or developing a sustainable competitive advantage that creates an excellent financial performance. Strategic Human Resource Management is defined as the link of human resources with strategic goals and objectives so as to improve the performance of the organization while nurturing flexibility and competitive advantage. Strategic Human Resource Management is the system that focuses on the performance of an organization other than performance of an individual while emphasizing the role of Human Resource management systems as the answers to problems facing the business other than segregating human resource management practices of an individual. SHRM is usually designed to enable organizations meet employees’ needs while promoting its goals. The design and implementation of strategic human resource management involves developing and putting into practice various human resource practices and strategies into action by involving employees and other organizational aspects. Fit can be described as the extent to which demands, requirements, structure and goals of one component are consistence with other component (Wright & Snell, 1998). It can also be referred to as the alignment of various interests of employees with those of the organization. In an organization, strategy should fit with three general theoretical variables that include employee skills, employee behaviors, and HRM practices. They should also be a fit between strategy of the organization and the behaviors exhibited by employees (Wright & Snell, 1998). The concept of fit ensures that an organization is able to get a return on investment when it commits itself to its employees. Concept of fit is a way of ensuring organization and employees through SHRM practices works together efficiently. Concept of fit is one of the crucial concepts in any organization and its strategy. Fit can be referred to as the consistency, contingency, or integration between organization variables and has considerable positive implication for performance. Coherence is the unity if various systems within the organization that involve SHRM and relations between employees performance and behavior. Coherence can also be referred to as the fit between specific mechanism of management and activity that is likely to create value through mobilization, attracting and retaining suitable employees. Consistency is the evenness and uniformity of activities of an organization that involves SHRM. Therefore, lack of consistency and coherence means that there is no uniformity and fitness between various strategic human resource management and other activities and aspects of organizations. Can little understanding of ‘fit’ concept lead to lack of consistency and cohesiveness when designing and implementing strategic human resource practices? Strategic Human Resource Practices and Concept of ‘fit’ Changes in social, economic, and technological aspects calls for the need of organizations to rely on strategic human resources management towards the accomplishment of their objectives. Organizations are able to accomplish their objectives when they develop and implement strategic human resource practices, procedures, and systems on basis of organizational needs and especially when a strategic perspective and human resource management is adopted. In order for an organization to be able to survive competition and improve its financial prospects, it must adopt strategic human resource management aspects. Therefore, failures by any organization to have effective strategic human resource practices can lead to ineffectiveness in operations and less gain financially. This calls for organizations to design and implement effective strategic human resource practices. However, organizations’ strategic human resource practices continue to lack coherence and consistency due to little understanding of the ‘fit’ concept (Becker & Huselid, 2006). Nevertheless, they are still some controversies on whether fit really play any part towards effective implementation of SHRM. They have been arguments concerning the need for fit within the organization as a way of ensuring the cohesiveness of the SHRM is realized. To some extent it may hold some water as some organization although few had in the past not utilized the concept of fit. However, these have changed with time as competition face changes and as competition and need to improve performance increases. It is crucial to note that most organizations do not require to fully aware of the concept of fit as a way of making the implementation of SHRM a success (Chenevert & Tremblay, 2009). However, it has to be taken into consideration for the benefit of the organization in terms of success. Although there have been not comprehensive understanding of whether organizations can survive current competitive environment without concept of fit. There are still chances that they perform and produce as expected in short and long run. Nevertheless, this requires a thorough analysis of the situation to know whether there is really a difference in the two scenarios and whether the adoption of one has more implications than the other. In order to realize whether understanding of fit concept is vital or not, it is worth to know what ‘fit’ entails. They are several types of fit that include institutional, internal, external, vertical, and horizontal fit. An external fit involves the structure of the unit, management practices and systems that must fit the stage of development of an organization. An internal fit on the other hand is the structure, systems, and management practices of a unit that complement and support one another. Vertical fit entails the positioning of HRM practices and the process of strategic management of the organization. Vertical fit is seen as directing human resources towards the main initiative of the organization. Horizontal fit on the other hand entails harmonizing among several practices of HRM. Horizontal fit is mainly utilized as an instrument for efficiently allocating human resources. It is crucial to note that fit and flexibility cannot be separated from one another. Institutional fit is the alignment between institutional environment and human resource management. It deals with how various organizational stakeholders influence the organization including trade unions, government, employees, professional associations, and works councils (Huselid 1995). In a clear understanding of ‘fit’, it is the contingency among various organizational aspects. It is the contingency among HR functions including HRM, society values among others and external environment. It is the contingency among the HR functions like HRM and differentiation and business strategy. It is the contingency among the HR functions such as work organization, values and HRM and organization development. It is also a contingency among HR activities such as compensation and hiring, compensation practices like incentives program and market policies. As a matter of fact, efficiency within an organization can be attained through proper organization of the work and extensive involvement and compensation of employees and other stakeholders. It is clear that lack of extensive involvement of workers and other aspects of organization such as HR activities, business strategy, external and internal environment may likely result to unpredictability and incoherent in designing and implementing SHRM (Chenevert & Tremblay, 2009). Strategic management challenge involves coping with change through continuous adaption towards achieving a fit between external environment and the organization. HRM plays a key role towards the implementation of strategies. Therefore, all efforts must be put in place towards ensuring that strategic HRM becomes designed, implemented and adopted within the organization. An effective strategic human resource practices ensures that organization’s performance fits with employees’ behaviors and skills towards addressing the immediate competitive needs (Huselid 1995). In ensuring that human resource management is effective and fits within the organization, then it must be parallel with the organization growth. A fit between employees and organization represents a quite attainable objective or goal. Good management of people within an organization has been realized to be a key determinant of the organization performance. There is always a notable positive relationship between company performance, employee attitudes, organizational culture, and strategic human resource management practices. Most organizations and managers find the need to focus towards the management of people as a way of influencing performance (Truss, 2001). Strategic human resource management becomes coherent and cohesive when employees are committed and satisfied. This is also significant in determining and improving the performance of any organization. Therefore, there is need for organizations and managers to understand the fit concept in order to improve the performance of their organizations as well as ensuring strategic human resource management practices are coherent and are achieved as expected. At US steel industry, J. B. Arthur carried several investigations in early 1990s. He examined high-commitment strategies with focus being on shaping behaviors of employees through creating a link between the goals of employees and organization, moderate participation of employee, high wages and general training of employees. This was compared to low commitment strategies or control strategies with low wages and little training. According to his research conclusions, the utilization of high commitment strategies resulted to higher productivity levels and quality. This can be achieved through clear understanding of fit that can enable an organization be able to design and implement strategic human resource management easily to eventually increase its productivity. This is when the employees’ needs are looked after to fit within the organization. According to Arthur, in situation where fit was demonstrated, productivity was higher by 25percent in comparison to where ‘fit’ was not demonstrated (Delery, 1998). It is clearly notable for when strategies fit with the organization’s culture, they become easily acceptable by workforce and management. Implementation of the SHRM tends to be smoother to implement. Intentions to change the culture or even adapting strategies that do not fit the culture of an organization, this is likely to lead to difficulties in the stage of implementation. Fit model recognizes how crucial employees are in the achievement of the organization (Erik & Kaarsemaker, 2006). Employees are the main determinants in the implementation of declared organizational strategy. Strategic human resource is mainly designed so as to fit organization’s strategy requirements. Strategies in organizations are crucial towards ensuring that what a company wants to accomplish is specified. However, unless such strategies are coherent and cohesive, they might not be useful to the organization. It worthy to note that for any strategic human resource practices to be effective, there is need for a close alignment between the workforce aspects like behaviors and the organizational strategy (Truss, 2001). In ensuring such an alignment is attained, the concept of fit must be taken into consideration and emphasized by any organization that wants to succeed. In taking into consideration the concept of fit, employees are likely to become highly motivated and committed hence making it easier to implement strategic human resource practices and putting them into action. This clearly indicates that when there is lack of understanding of fit when designing and implementing strategic human resource practices, this is likely to lead to ineffective and inconsistence SHRM. Best fit suggest the need for rewards system as a way of attracting and retaining employees. This is a major concern for many organizations as they try to hold on to qualified workforce. His will ensure a consistency in the productivity tactics and strategies of an organization. This makes it easier for strategic human resource practices to become effective. A firm that takes into consideration the concept of fit has employees who know that they are expected to performance accordingly (Huselid 1995). In an institutional fit perspective, failure by an organization to determine and conform to the expectations of stakeholders decreases the survival probability as well as losing its legitimacy. Organizations that ensure stakeholders fit within their system have high chances of surviving as they adjust towards making their ends met in short and long run. It makes its strategies to become coherent and consistence and even easier to be designed and implemented. It is worthy to take into account that organization require to focus on its resources from both internal and external environments in order for it to become successful in terms of competitive advantage. However, organization should take into account the concept of ‘fit’ by involving all employees and stakeholders as part of its resources in order for it to succeed (Catherine & Lynda, 1994)). It is also crucial for organizations to develop a special and valuable human capital pool through comprehensive understanding of fit as a way of ensuring its strategies are well adapted, cohesive and consistence. This is through a well managed human resource that can assist in adding value to an organization. However, mere implementation of human resource strategies without taking into consideration fitting of external and internal resources can lead to ineffectiveness. According to a two-wave survey strategy, a statistical analyzes done on 128 companies from Canada revealed that strategic human resource practices becomes coherent and cohesive when the concept of fit is taken into consideration. The research found that the strategies that supported good working conditions or use of incentives were sufficient enough to influence the performance of human resource (Becker et el 1997). It also revealed that strategic human resource practices were coherent and consistent in areas where human resource was involved extensively in all aspects of organization as well as its encouragement. Such has made those organizations become strong and in a better position in terms of their performance. Conclusion In conclusion, I believe that there is lack of cohesiveness and consistency in design and implementation of SHRM due to little understanding of ‘fit’ concept. Design and implementation of strategic human resource management continues to lack consistence and coherence due to little understanding of fit concept. The effectiveness of SHRM design and implementation depends on fit and the stage of development within an organization. Best ‘fit’ advocates believe that a return on investment can be realized by organizations if they entrust themselves to a long term relationship or fit with their employees. I believe that SHRM takes into account the fact that the key tools utilized by an organization to ensure its success and maintain a better competitive advantage are human resource management practices and policies. However, unless human resource practices are consistency, their benefits might only be in the short run. Therefore, there is need to ensure there is a fit between organization, employees, stakeholders and other resources as a way of ensuring consistency in the implementation of human resources (Ferris et el 1999). This is an assured way of maintaining its effectiveness. According to horizontal fit, there is need for alignment of HR practices into coherent systems of practices which sustain one another. Clear understanding of horizontal ‘fit’ will ensure that HRM practices are internally consistent and complementary to each other. Therefore, there is need to understand fit as a way of ensuring HRM practices work together as one system towards the achievement of organizational goals (Truss, 2001). This is an indication that lack of understanding of fit is likely to lead to ineffective achievement of objectives and eventual incoherence and inconsistency in the design and implementation of strategic human resource practices. References Becker, B. & Huselid, M. (2006). Strategic Human Resource Management: Where do we go from here? Journal of Management, 32(6), 899-922. Becker, B. et el. (1997). HR as a source of shareholder value: Research and Recommendations. 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