The Development of Strategic Human Resource Management - Coursework Example

STRATEGIC HUMAN RESOURCE MANAGEMENT (A LITERATURE REVIEW) 15TH SEPTEMBER, 2008 INTRODUCTION People are the key source of a competitive advantage over the rivals in all sectors of different forms of business organizations. People are considered as “inimitable” because their skills, knowledge, aptitude cannot be imitated and the identity of an individual cannot be replaced by any other means of production, thus human resource management and the practices associated with it are being compelled to take up the specialization on a strategic front. It has been readily accepted by managers as an important tool for attaining success from a long term perspective. The corporate world unanimously accepts that Strategic human resource management is concerned with the relationship between an organization’s strategic management and the management of its human resources (Boxall 1996). The following literature review would enable us to better understand the development of human resource management and the extent to which an HRM function in an organization can be termed to be a strategic one. LITERATURE REVIEW In 1980s and 1990s a purely different field of Human resource Management emerged on the grounds that management of people gives an organization a competitive edge, this belief separated it from the traditional personnel management approach which emphasized only on the workforce rather than contributing in the overall cultural shift of the organization undertaken by HRM. However, in more recent years the focus has toggled to a broader concept of HRM and its relation to the strategy of the organization. SHRM in simple terms is a strategic approach to manage the human resources of an organization. The contemporary researches reveal that strategic human resource management has a has a very intense and positive impact on organizational performance HRM is concerned with the "people" facilitating in acquiring, developing, stimulating & retaining the employees, but when used strategically, it augments both effectiveness & efficiency levels of the performance of the organization. The role of human resource management is changing from legislator to a strategic partner (Ahluwalia S, 2008). Structural issues such as the recruitment and distribution of workers, management and motivational issues, private sector environment, all are areas of prime concern in SHRM (Fritzen A S, 2007). SHRM, initiatives are challenged at various levels of the organization. Encouraging a collaborative workplace requires full support of the top management towards the HRM policies at the corporate level, expertise of managers in both business and HR functional area, and a inculcating a culture acknowledging the importance of HR with a strategic perspective (Wei L Q, 2006). ENSURING UNDERPINNING OF HRM TO BUSINESS STRATEGY The conditions on which human resource function can be linked to strategic approach are whether the HR function facilitates development of highly skilled workforce along with cost-effective utilization of labor. One of the most important conditions for a successful human resource strategy is the linkage between the company’s business objectives and executive selection and development decisions because such linkages define the anticipated changes in business conditions and the modification required in the human resource team. Detecting the need of different executive competency in the dynamic business environment is the first and foremost condition required for a human resource function to be called as strategic. Empirical studies done in the past state a positive relationship between the use of SHRM and the financial results such as stock share price and employee productivity (Monnot J M, Colarelli M S, viewed on 15th Sep, 2008). Strategic human resource management should help in planning and assessment of environmental uncertainty and adaptation of the organization to external turbulences and discords. A successful SHRM highlights the Human Resource plans and the corresponding strategies formulated for the accomplishment of the organizational goals and objectives with a prompt responsiveness to the changing nature of the organization’s external environment. The long term strategy is confronted with unexpected events in the future; such extended goals of the organization are defined through SHRM that enable the adaptation of human resources towards the future contingency or unforeseen events. SHRM focuses on the organization’s potential capacity to counter attack the changes in the external environment through a systematic and pre planned deployment of human resources. The strategic approach to HRM is inevitable as strategic decisions are based on specific hypothesis under uncertain market conditions. The dynamic and complex environment influences the decision making of the organization (Prasad K, 2005). Strategic Planning focuses on the future- What should be? Identification of strategic needs is another condition required because it leads to positive outcomes of SHRM. Strategy implementation in human resource practices are directed towards maintaining feasibility of the organization and producing sustained competitive advantage in the markets or the industry in which the organization exists The strategically linked aspect to HRM includes both the aspects of organizational processes and the outcomes of the structured long term directions (Manning K, Worland D, 2005). The strategy of a firm displays its response to the dynamic market, whereby proper channelization of the human pool of varied skills is essential for the fulfillment of the strategic goals and enhancing positive behavioral outcome among the employees. It is important to fully integrate the human resource management into the business planning process. Researchers now believe that it is not enough to apply a mix of the best practices in the market however the current demand is to tailor the human resource needs so that it fits to the strategy of the organization, (Baron and Krepps, 1999). It is important for the success of SHRM implementation that HR department should build its own internal competencies to handle changes. SHRM links human resources vertically and horizontally both in consideration to the present and the future requirements. An important outcome of SHRM intervention is the development appraisal. SHRM aims to pursue the goal of securing employee commitment rather than applying coercive processes for justifying competence (Prasad K, 2005). Employee participation is critical condition required to link together strategy and HR practices. Linking of strategy and human resource can be revealed in all businesses through the choice that managers and staff of the firm make in order to carry on the day to day operations of the firm. Integrating human resources management (HRM) into the organization’s planning process requires human resources (HR) activities that support the mission accomplishment and forge strong relationship between HR and management (U.S. Office of Personnel Management, Sep, 1999). Human resources management strategic alignment integrates decisions about people with the targeted pre determined targets. It becomes essential for the human resource strategy to employ a data driven competency assessment process that assists the senior managers in decision making. Strategic HRM is concerned with longer-term issues and macro-concerns related to structure, quality, culture, values, and commitment and matching resources to future need (ABUQAYYAS A, 2007). In maximum of organizations people are now regarded to be the most important asset of all. The knowledge, skills and abilities have to be deployed and used to the optimum for maximum gains. However the results have not been successful in all the firms, human resource management in both private providers and in TAFE are regarded as an operational issue. Most of the managers still treat strategic involvement as one of implementation rather than strategic formulation .SHRM aims to develop total quality management helping in cost reduction and better production and objective based performance appraisal system by turning individual efforts into team efforts. But it cannot be ignored that conflict, confusion and chaos do prevail among the workforce when such collaborations and alignments are put to action (Merjanian, 1997) AUDIT CHECK LIST It is often observed that strategic human resource management are perceived to be present in the work system of an organization however, in reality such practices are not a predominant feature of the firm’s day to day operations. To ensure that SHRM exists in the business practice one needs to determine the extent to which an HRM function in an organization is strategic so that further changes could be incorporated and proper alignment or strategic fit between HR and managerial functions could be achieved. To verify and judge the extent of SHRM in a firm, following questions need to be analyzed: 1. Does the organization make use of employees to gain or keep a competitive advantage? SHRM aims to create a sustainable competitive edge by adopting both human resource and management coordination flexibility and strategic fit including both internal and external balances by fully utilizing its valuable human asset. The past studies have been able to correlate the increased quality of HR practices and increased business success. 2. Does the organization involve itself in aligning initiatives about how people are managed with organizational mission and objectives? Such linkage is related to the amount of contact that exists among the organization's strategic planners, the HR department, and the managers who are responsible for the execution of the plans. HR alignment with mission accomplishment helps in the anticipation of the customers’ needs, improves the agency’s ability to implement strategic business goals and facilitates resource allocation. 3. Does the organization compete on its human resource as its core competency factor? The capability of people to cope and manage in the ever changing and unpredictable environment is a vital element in the success of any business. The new business approach to SHRM is compelling businesses to take a greater interest in the utilization of their organizations' human resources and treating them as their ultimate proficiency and success factor (Rowden W R, 1999). Human resource in an organization is a unique capability that creates high value and differentiates the organization from its competition (Ahluwalia S, 2008). 4. Does one find any sort of congruence between human resource policies and organizational objectives? Good strategic human resource management would try to integrate organizational human resource functions into a strategic plan so that all organizational units operate in a coordinated fashion (Monnot J M, Colarelli M S, viewed on 15th Sep, 2008). 5. Does the organization exhibit some evidence to put to use HRM strategically with a view to enhancing their organizational performance? A critical strategic dimension to judge in an organization is whether SHRM is concerned with top managements attention and approach to HRM as it affects the firm performance level to a large extent. 6. Does the organization prefer a strategic approach to HRM for experiencing better performance outcomes? This is imperative because it helps to analyze the strengths, weaknesses, threats and opportunities facing organizations in the foreseeable future. Issues such as market position, inflexible organizational structures, newly discovered labour markets or highly competitive labour markets help to gain a sustainable and competitive edge over other rivals (Mani S S, 2007). 7. Does the organization exhibit some evidence of a strategic ‘alignment’ between business and HRM strategies? This is essential for monitoring the organization's long-term direction with organizational strategy. 8. What kind of linkage between HR and organizational strategy is displayed: Accommodative, Interactive or Fully Integrated? The results explore the extent to which the HR functions and strategy complement each other, a fully integrated approach reveals a high intervention between the top management and the HR division while interactive approach points towards a mediocre interference and decision making authority of the HR cell in the framing of the management future policies of the firm. 9. Does the HRM policy of the firm adopt a flexible arrangement for the utilization of the human resources available for the fulfillment of the organizational goal? An approach of people concern firmly believes that human resources are uniquely important for the sustained business success. An organization can increased its gains only when it adopts a flexible approach by using its people effectively, using their expertise to the optimum and ingenuity to meet clearly defined objectives (Kumar D, 2006). 10. Is there a significant HR’s role in the organization’s decision making strategy and policies? Human resource could enable the provision of skills and abilities to accomplish the overall organization’s objectives. HR’s intervention in the decision making helps in considering a more rational, broader and logical planning perspective. 11. Does the HR service provider work with line managers to organization’s strategic goals? Line managers are people who are in actual stage of implementation of the strategies, thus they are the most valuable source for extracting information which may lead to improved performances and elimination of unwanted and unproductive channels. The line managers may prove to be a useful path in the alignment of the HR and the strategically approach. 12. Does the Strategic human resource planning helps to concentrate individual effort into team effort? Strategic HRM is the overall framework which determines the shape and delivery of the individual strategies for the ultimate achievement of the organizational goals. Hence the individual efforts have to be converted into common group goals so that uniformity, clarity and synchronization of work could be realized. 13. Are the methods of selection, reward, promotion, as well as development in congruence with the business strategy? The audit result to this question may reveal the inconsistencies in the information system that is or may be generated in the organization’s current human resource system. 14. Are the managers committed to HR related issues beyond immediate and short term concerns, since these are related to their primary specialization? The development path of an employee is generally five to ten years, hence anticipating the long term human resource requirement of the organization is helpful and effective too (Barner W R, 2001) 15. Does the human resource strategy incorporate inputs from key organizational stakeholders? Generally the HR managers attempt to execute their own HR strategies which may lead to undesired results. Consent of board members, senior managers, and high potential managers avoids missing of key requirements. 16. Does the SHRM leads to internal career ladder? A career system is essential so as to for imparting individual attention to the strategic issues. A long term perspective with career as a prime focus induces organization commitment and loyalty. SHRM could enable individuals to invest in training and productivity enhancements for better future growth. CONCLUSION HR needs to work together to further SHRM ability to have an impact on decisions. Reporting relationships, managing advocates, culture, credibility and value help in binding a strong relationship between corporate HR and the top management. SHRM focuses on competitive advantage which requires additional consideration in regards to the increasingly global nature of competition, as revealed in the past researches (Patrick M., 2001). Importance of human resource makes the importance of human resources and makes SHRM processes all the more critical for the effectiveness, efficiency and sustainability and of the organization. It is been noticed that the traditional HR functions of staffing, recruiting, compensation, and benefits are losing hold as the essential components of HR practices , moreover new generation of value-added core SHRM functions comprising of career planning, executive development, training, succession planning, and organization development are taking the lead. 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