Strategic Human Resource Management - Essay Example

Strategic Human Resource Management Introduction Strategic human resource management has been a relatively new advancement in the field of workforce management and presents a completely contradictory approach to earlier autocratic style of business management while rejuvenating humanistic ideology of HRM. Although it is difficult to provide an exact definition of this new concept however research conducted by Waiganjo, Mukulu and Kahiri (2012) have explained SHRM to be the phenomenon which allows managers to have HRM practices aligned with their strategic business objectives. It is important to note that it is difficult to have a consistent HRM approach in the presence of workforce representing multiple demographic segments as compared to earlier uniform workforce. This periodic and apparently long-term change requires management to have flexibility in its practices in order to maintain a positive psychological contract with a diversified workforce comprising of people from different cultures, ages and genders. Therefore, it is essential to determine if SHRM approach and flexibility in its practices can present employers with effective and desired outcomes. Since there are multiple forms of flexible practices used by employers, it is also important to identify likely consequences of these flexible approaches in the light of SHRM. Hence, SHRM advocates integrating HRM functions and organisational goals in order to respond to requirements of external environment. Four major forms of flexibility offered by SHRM are changes in employment models of wage, function, numerical status i.e. contracts, and temporal state i.e. number and patterns of hours worked (Kalleberg, 2001). Different Forms of Flexibility There are various forms of flexible approach that govern current ideology of strategic human resource management. These flexible approaches entail practices regarding workplace, scheduling and compensation. Although a general perception of flexible HRM approach is viewed as employees working from remote locations however it is a more extensive phenomenon than that as not every job can be handled remotely. The term flexibility itself refers to organisation’s ability of adjusting its workforce numerically, functionally and financially in response to external environment and employees’ needs with reference to structure of the business (Wu, 2010, pp. 278-9). The concept of ‘flexible firm’ provided by Atkinson (1985) acts as a foundation behind workplace flexibility and its relation to strategic human resource management. A flexible firm or employer is able to change number of employees according to its needs and also alter source of acquiring potential talent i.e. permanent or temporary hiring, outsourcing or part-time/ remote work arrangements. Another major area concerning flexibility offered by SHRM is the alteration in organisational structure followed by work design. As organizations have transformed into humanistic employers, their organisational model has become more decentralised with reduced bureaucracy. Reduction in levels of management has made employees more accountable and participative in organisational decision making (Armstrong, 2009). Another important element of ensuring flexibility in organisational practices is training employees with reference to external environment. Updating organisational skills’ base is essential for acquiring necessary competitive edge over other firms. The concept of upgrading is also supported by Armstrong (2008) as he has considered adaptation to be an important element of employer’s flexibility and adoption of SHRM as a fundamental ideology. Armstrong (2008) and Purcell (2001) have further presented three concepts i.e. resource-based view, strategic fit and strategic flexibility to be the foundation of strategic human resource management which is also supported by Wei (2006). With resource-based view being the most important philosophy behind SHRM, training and developing employees provides an opportunity to employers for introducing unique characteristics into its workforce (Armstrong, 2008; Boxall and Purcell, 2008). Another important aspect of flexibility offered by SHRM is a suitable job design that ensures flexibility and commitment which also allows employees to have autonomy over their tasks while utilising their skills appropriately (Bhattacharya,Gibson and Doty, 2005). This form of flexibility is also known as temporal flexibility which also concerns number and patterns of hours spent by employee at work. Altering job design further facilitates integration of teams and provides a diversified pool of skills to the employers. In addition to that, Purcell (2001) also considered idea of work-life balance and changes in leadership approach to be an important part of flexibility offered by SHRM. On the contrary, Wright and Snell (1998) have been major advocates of behavioural flexibility. Adaptability in behaviour of management and employees facilitates an organisation to be mobilised with reference to anticipated future needs. The responsibility of introducing this behavioural flexibility rests with managers so that the change in organisational practices remains consistent with strategic objectives (Michie and Sheehan, 2005). Since work-based flexibility induces creativity and innovation in tasks and their performance, it is important that a collaboration-based approach is adopted by managers (Beltrán-Martín, Roca-Puig, Escrig-Tena, & Bou-Llusar, 2009; Boxall and Purcell, 2008). When factors influencing organisational approach towards flexibility are investigated, external environment emerges as a major contributor (Bhattacharya,Gibson and Doty, 2005). Same notion is also supported by configurational theory as it asserts on combining SHRM practices and competitive strategy since they are in a better state of complementing and reinforcing each other (Waigano, Mukulu and Kahiri, 2010, p. 66; Grant, 2008). Considering external factors provides direction to employers in employing right resources, improving performance and also achieving competitive advantage, such responsiveness to external environment also makes employers facilitate their workforce according to their needs. This is precisely the reason why freelancing, operating from remote locations, flexible shifts, contract-based tasks and alterations in major policies like compensation, leaves etc have been seen as a major part of flexible work arrangements offered by potential employers and market leaders. However, such change in working model also redefines the role of workforce since now they are more independent, capable and responsible under flexible working arrangements (Michie and Sheehan, 2005). In addition to that, flexibility in job roles and employees skills is also a likely outcome of flexibility offered by SHRM. However, success of these flexible HR programs depends on whether these policies cater to whole workforce or just a chosen segment (Lengnick-Hall, Lengnick-Hall, Andrade, and Drake, 2009). Furthermore, establishing benchmarks to measure performance also plays a vital role in success of flexible work arrangements. With women and ageing employees forming a major part of workforce and employees pursing for education along with work, comes the need for flexible time and place, compressed work schedule and job sharing. Where this approach appears amicable for employers as well as employees and results in positive psychological contract between, inappropriately designed policies and practices may actually hamper the effectiveness of flexibility offered by SHRM approach. Effects of SHRM on Psychological Contract Unlike earlier trend of lifetime employment with one employer, organisations can no longer offer or promise same status to their employees due to changing corporate and global dynamics. Therefore, informal agreements and relationships i.e. a psychological contract, among employer and employee has become integral for retention of potential talent. According to Armstrong (2009), “A psychological contract is a system of beliefs that encompasses the actions employees believe are expected of them and what response they expect in return from their employer and, reciprocally, the actions employers believe are expected of them and what response they expect in return from their employees (p. 277)”. “The second definition asserts that “the psychological contract is formulated only in the mind of the employee and is therefore about ‘individual beliefs, shaped by the organisation, regarding terms of an exchange between individuals and their organization (Rees and French, 2013)”. This psychological contract is significant in ensuring continuation of harmonious relationship between employee and employer. Its violation indicates breach of trust and absence of common values and goals (Armstrong, 2009; Schuler, Jackson, and Storey, 2001). Since the psychological contract does not have any explicit clauses in terms of rights and obligations of both parties, therefore it is highly vulnerable to circumstances and their effects. With flexible working conditions offered by SHRM approach, the importance and vulnerability of psychological contract among organisations and employees increases if an employer opts for strategic human resource management instead of traditional HRM practices (Schuler, Jackson, and Storey, 2001). Therefore, employers need to identify ways of motivating and retaining workforce working under flexible working arrangements. It is important to note that where SHRM advocates flexibility in human resource management, it may not always be welcomed by employees. Employees may perceive changes introduced by employers to be a forced change in their psychological contract especially when positions are made temporary from earlier permanent status. Hence, employees reinterpret their psychological contract with employers and also redefine their attachments while showing denial or reciprocation through compromised performances (Rees and French, 2013). Only a limited number of employees are able to renegotiate this contractual relationship with employers psychologically in order to have a win-win situation. Therefore, it can be asserted that employers need to communicate rationale of such flexibility introduced in work arrangements to employees and attempt to gain their support. Here, main concern is application of uniform practice as only making some of the employees temporary or offering beneficial work arrangements to only a limited segment can have a negative impact on rest of the workforce and their motivation to stay with a particular employer and provide quality performance. According to Turner (2013), value and personal preference for flexibility in employment tends to have a significant impact on types of contracts (in Rees and French, 2013). Hence, when employee has high value for flexible employment, it is likely to develop a positive and transactional relationship among employee and employer. Furthermore, employers need to consider influence of contextual factors for employees while introducing flexibility in HRM practices. These practices may remain congruent with strategic objectives but may not be able satisfy needs of the workforce in which case, the behavioural outcomes are expected to be adverse (Purcell, 2001). Effectiveness and Consequences of n SHRM Approach to Flexibility According to Turner (2013), flexibility in employers’ approach with reference to business and workplace management has emerged from emphasis on work-life balance, need for having competitive edge over other employers and legislative advocacy for different demographic segments (in Rees and French, 2013). One of the major consequences of SHRM approach and flexibility offered by it is work intensification experienced by those working under flexible arrangements (Rees and French, 2013; Schuler, Jackson, and Storey, 2001). Employees in flexible work arrangements tend to reciprocate their employers by exerting additional effort than those working in non-flexible arrangements which benefits organisations through better efficiency and effectiveness offered by an employee. However, such work intensification may also backfire when it is imposed by employer or circumstances. With needs of workforce being diversified and employers needing to include employees with different cultural, social and technological backgrounds, in their workforce, SHRM approach to flexibility is gaining more importance with every passing time. Where it allows employees to utilise their skills in a manner that they desire and also acquire a suitable work-life balance, it also has a significant value for employers as well. Due to employees operating from remote locations (which sometimes makes them bear operational business expenses) and in different timings with more autonomy coupled with responsibility, employers are in a better state of enjoying improved business performance and service delivery. Furthermore, higher service quality also encourages further business development with efficiency in operations resulting in reduced expenditures (lower operational, recruitment and retention costs) and higher profits. Although flexibility in organisational practices has significant benefits for employers, this regime is more effective for highly skilled labour or when market is operating at high employment level and jobs are abundant (Armstrong, 2009, p. 289-311). In circumstances facing economic downturns, flexible employment arrangements may not serve employers as well as employees. In addition to that, flexibility may not be suitable for all industries i.e. where employees of IT firm may operate from a remote location under flex-place regime, same option may not be available to employee of a commercial garment manufacturer. Thirdly, this regime may only be effective when employers, managers and employees have a suitable behaviour supporting flexibility in employment and management practices. According to Turner (2013), “the ability to manage complexity and uncertainty, adaptability, tolerance of ambiguity, openness, empathy, non-judgementalism, interest in others, and willingness to acquire new behaviours and attitudes” are some of the basic traits necessary for managers as well as employees working under flexible arrangements (in Rees and French, 2013). Lack of ability to handle pressure and exhaustive requirements of flexibility offered by SHRM may lead to managerial collapse. On a positive side, flexibility offered by SHRM approach provides management with an opportunity to analyse their business objectives and design practices and policies that can assists in achievement of these long-term goals. Furthermore, roles of employees and their job designs may also be customised in accordance with business objectives. Hence, employers and employees may share same ideology from the inception and work in a predetermined direction under a work model which offers maximum efficiency and effectiveness to all to the stakeholders. Conclusion Strategic human resource management has provided a new outlook to a managerial practice which focused on motivating employees and retaining them by satisfying their personal and professional needs. Where this approach satisfies employees completely, it facilitates employers only in terms of enhanced performance quality and better employee retention rate. On the other hand, advent of strategic HRM supports managers to devise work arrangements that caters to the need of new diversified work class but also provides economic and social benefits to organisations as well. SHRM has introduced various forms of flexibility that are reflected in employees’ compensation plans, contractual arrangements, their functions and job designs and also number of hours worked. As a result of these new regimes, employees are able to work from different locations or at employer’s workplace with flexible timings and better compensation. Employers are also able to retain potential talent by offering employment opportunities suiting employee’s personal needs which are reciprocated by higher level of performance and better commitment. However, it is important that this flexibility offered by strategic human resource management is handled carefully by business managers. Imposed flexibility or flexible work arrangements only favouring a specific segments may deteriorate otherwise positive psychological contract among employer and employees which would either result in withdrawal or compromised quality of performance by an employee. References Armstrong, M., 2008. Strategic Human Resource Management. London: Kogan Page. Armstrong, M., 2009. Armstrong’s Handbook of Human Resource Management Practice. London: Kogan Page. Bhattacharya, M., Gibson, D.E. and Doty, D. 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