Strategic Human Resource Management for Small and Medium Enterprises - Implications for Firms and Policy - Essay Example

Running Header: Assignment 2 Name of Student: Name of Institution: Instructor’s Name: Subject course & Code: Date of Submission: Introduction In the recent past, much talk has been focused on strategic human resource management especially in management circles. Strategic human resource management is a branch of human resource management and has emerged from this parent discipline. It can be defined as the linking of the organization’s human resources with strategic goals and objectives in a bid to improve and foster business performance and develop organization culture whereby innovation, flexibility and competitive advantage are taken into much consideration. It entails accepting human resource management as a strategic partner in the formulation and the implementation of organization’s strategies through human resource activities. These activities rang from recruiting, selecting, rewarding and also training personnel. This essay is aimed at showing the importance of this branch of human resource management in relation to the global challenges of profitability, work life balance and increased global competition. In the context of globalization, older solutions and recipes used to resolve issues in a local context can no longer be used in a global environment. The last two decades have been characterized by increased internationalization of market integration, increased competition, rapid technological changes, cross cultural issues and new concepts of line and general management. Strategic human resource management is a very important aspect in the profitability of a firm or organization. Profitability is yielding gains or the ability to earn financial gains. Human resource dimensions can be identified as workplace organization, employee training, feedback systems and employee pay systems. All this have an impact on the profitability of an organization. As long as leaders are tied that humans are only employees, then human resource management cannot be strategic. The decisions leaders make should consider the effect they have on everyone and especially the employees. The true asset of an organization is human relationships and resources and assets should be controlled and taken of. This way, we find that control of the human asset would be important for long term business success (JSTOR 2003 pp. 110). It has been analyzed and the dimensions of human resource management have a great impact on the organizations performance and especially financially. A positive relationship has been established between employee training and organization’s performance. Companies that also provide their employees with job security enhance a long standing commitment to their workforce who are thereby motivated to develop the competencies required by the company. Employees who view their jobs as secure are more likely to be productive and focus in the company’s long term performance and will more likely strive for the performance that is desired by the company. Also, companies that promote employees from within the firm are likely to perform well since this feature motivates and inspires employees to work hard so as to be promoted. Internal promotion implies that a firm has taken time to invest in its employees and is therefore committed to them. Developing the competencies of employees fosters commitment, motivation, inspiration and this always translates into productivity and profitability (Carl & Ingmar 2000 pp. 316). Strategic human resource is important in achieving competitive advantage especially for the small market enterprises. It also helps small firms to successfully adapt to the new demands that they are confronted with. In the last decades for instance, the Dutch market especially small market enterprises gained from their abundance of their labor supply. This was also characterized by low wages, high unemployment levels and many newcomers in the front provided such enterprises with the flexible and cheap employees. However, in the last years things have been changing as a result of globalization and internalization. This has led to growing recruiting competition between organizations. According to Maryse and Erik (2002, pp. 455), each organization strives to attain a competitive advantage over the others and this ensures the strategic human resource management practices are applied. Strategic human resource has been of great importance on work life balance of the human resource. This is achieving that balance between work, family and personal time. Such balance is critical for organization’s success. The primary way firms can help attain work life balance is through work life programs and training. Achievement of such balance and enjoyment at work is critical in strategic human resource management. For instance, work life programs have become very popular in the U.S. They include child care, job sharing, leave, vacations, gym subsidies, telecommuting and in house services and others. This is becoming a popular trend in management as strategic human resource management is being given importance. Effective work life programs are an effective marketing method for attracting employees. Employees who are better able to balance the demands of their time are more satisfied and content. Basically, the more control employees have over when and how they work, the more they feel they have balance in their lives. Success seekers always put their careers as top priority but also try to gain success in other parts of their lives by being organized. Free spirits are those individuals who are not defined by their careers but work for pleasure and necessity and are not stressed by it. All in all, balance masters are competent and never allow their careers to dictate their lives. They opt for shorter hours to achieve the work life balance. Achieving effectiveness at work always involves gaining cooperation of colleagues. In the same way, achieving personal effectiveness outside work is also by applying cooperation of friends and relatives. Ensuring that employees achieve this balance will enhance productivity and will ensure that the firm achieves desired outcome. (David 2003, pp. 256). European countries and markets have also realized that in order to maintain strong economic position, social responsibility is as equally important as developing some competitive human resource programs. These entire programs are part of strategic human resource management. Effective work life programs that are developed as strategic human resource decisions often create a positive relationship between the employer and employee and this often results in mutual benefits. The right work life program is the one that offers a competitive advantage in recruiting, training, retention and customer service levels and consequently profitability is achieved (Sunal et al. 2002, pp. 7). Many companies are being compelled to expanding and thinking in global terms. The internet has contributed largely to this rising trend. Such globalization has led to increased competition and the implications of such a market on human resources are many. Boosting the productivity of a global labor force and formulating policies to compensate, train and reward such a labor present a major challenge to human resource m management. Such diversity presents a areal opportunity and change for managers. Focusing on such diversity in a positive manner will yield growth and prosperity. The competency of an organization’s workforce that entails training, skills and expertise in the recent past have made human capital more important than ever before. Strategic human resource systems will require that to maintain this knowledge workers, they are properly trained, motivated, rewarded, inspired and in such a way as to gain their commitment. This as usual translates into productivity and financial success. Levels of technology have increase with globalization and so has education levels of employees. Values and expectations of employees have in turn shifted. Employees expect that the electronics and telecommunication revolution will improve the quality of work life. Along with such changes are the mechanisms that have been put in place by companies especially the human resource department. They have come up with family-friendly programs that achieve a competitive advantage in the labor market. There have also been managerial changes which involve empowerment and delegation. Empowerment is giving substantial authority to employees to make decisions. It involves expressing confidence in employees to perform with minimum supervision. The breadth of such major change not only in management but in the entire organization calls for strategic human resource management. Regardless of companies’ size, mission, goals or objectives, all organizations strive to achieve their goals by combining their resources and aligning them with organization’s objectives and goals. However, no resources are as vital and of greater importance than the human resources. Organizations are increasingly recognizing the dramatic change that strategic human resources can have on the whole organization. Effective management of this resource is of critical importance to an organization’s success. Increased globalization has led to increased diversity and competition. This can work o the advantage of a firm or to its disadvantage. However, if strategic human resource management policies are applied, the organization is bound to make financial gains (Ronald 2002, pp. 341). In the Indian context for instance, the changing business environment that started with the process of liberalization led to the adoption of innovative strategic human resource management. Liberalization caused sudden and increased levels of competition for various Indian organizations. Among other things, it caused increased globalization and internationalization of domestic businesses and a revolutionary change was experienced as a result. The success of the strategic human resource management applied in India can be clearly seen. India in 2006 was the second fastest growing economy in the world. Along with strategic human resource management practice, most organizations have undertaken other organizational changes but the major one is focused to human resource. Firms like Hero Honda, Maruti, and Tata Motors among others have successfully adapted to the changing corporate scenario. The reasons that have helped such organizations are their ability to embrace, accept and adopt innovative strategic human resource management practices (Ashok 2007, pp. 812). Globalization also poses various challenges to human resource management. Most organizations operating across national boundaries are said to be operating global business which involve the flow of human and financial resources to different parts of the world. In the case of developing countries, globalization poses distinct challenge to various sectors including the government, private sector and such challenges must be addressed through strategic approaches to human resource management. Strategic human resource management involves integrating and adoption. It ensures that the strategies are fully integrated and are in line with organization goals and objectives of the firm. To overcome such challenges and to ensure that a firm attains competitive advantage over the other firms, the managers must evaluate their priorities and competencies and should acquire new professional and personal sets of competencies. Evidence has shown that the effect of strategic human resource management on performance depends on certain factors. For instance technological sophistication can affect a firm in form of training, performance appraisal and reward systems (Rambabu & Suryanarayana 2000, pp. 12). Conclusion In a nutshell, strategic human resources management is directly linked to performance and effective application of such policies will always lead to positive results. Building, developing, maintaining and continuously upgrading an organization’s human resource policies always leads to productivity and hence profitability. The employees also are able to achieve work life balance and hence feeling satisfied and content with their work. This fosters commitment and achievement of desired goals and objectives. This also leads to minimized cases of absenteeism, lower employee turnover and increased competitive advantage. Strategic human resource management practices are proactive and long term in nature. They view human resources as assets of the organization or investments and not as expenses. Their implementation is closely linked with organization performance. They are placed in such a way s to be consistent internal policies that are designed to ensure that the human resources act in the best interests of the organization. They also ensure that employees are well taken care of to gain their commitment and this making the benefits to be mutual and hence creating a win win situation. Globalization is a core factor that has contributed to the rise in strategic human resource policies. The factors affecting human resource management in global markets are culture, political systems and legal frameworks, human capital and economic systems. These factors determine the economic viability of building an operation in a foreign country. All in all, organizations must understand the factors that can determine the efficacy of various human resource practices and policies. It is also to put in place strategic human resource management practices so as to enhance productivity and implementation of organization goals and objectives. References Ashok, S. 2007, ‘What drives adoption of innovative SHRM practices in Indian Organizations’, The International Journal of Human Resource Management, vol. 7, no.3 pp. 809-815 Carl, F & Ingmar, B 2007, ‘The Effect of Human Resource Management Practices on MNC Subsidiary Performance in Russia,’ Journal on Human Resource Management in Russia, vol. 12 no. 3 pp. 307-320 David, C 2003, Managing the Work- Life Balance, CIPD Publishing, London. JSTOR, 2003, ‘Strategic Human Resource Management,’ Journal of Organizational Behavior, vol. 24, no. 5, pp. 106-120 Maryse, J & Erik, H 2006, ‘Strategic Human Resource Management for SMEs: Implications for Firms and Policy, Education+ Training Journal vol. 44, no. 8, pp. 451-463. Rambabu, P & Suryanarayana, 2000, A ‘Human Resources Imperative in Facing the Challenges of Globalization’ vol.13 no. 4 pp.5-15 Ronald, R 2002, Organizational Success through Effective Human Resource Management, Greenwood Publishing Group, Westport. Sunal et al. 2002, ‘Work-Life Balance’, A case of social responsibility or competitive advantage? Vol. 21 no. 3 Pp. 2-10. Read More