The Strategic Role of the Human Resource Management - Term Paper Example

Introduction The Strategic role of the Human Resource Management in organizations has gained increased attention from academics and practitioners, especially during the last decade where the nature of HRM has been enlarged with strategic initiatives that underline the critical role of human resources in organizational performance and competitiveness (Beardwell and Claydon, 2007). Strategic Human Resource Management (SHRM) has dominated literature in the HR field and discipline due to the fact that organizations have acknowledged the value of the human capital and have understood the strategic role that the human resources can undertake in equipping firms with competitive advantage and therefore contributing to the improvements in performance. As Lengnick – Hall et al. (2009) indicate, SHRM has been highly emphasized within the context of integrating strategic initiatives on the Human Resources with the strategic posture of firms. This paper focuses on two fundamental constructs; the first one is the establishment of the positive relationship between knowledge of generic strategies and understanding the strategic initiatives and the second one is the link between generic approaches to strategies and SHRM. Understanding Generic Approaches to Strategies Conceptualizing and evaluating business and organizational strategies is a common perspective that scholars and practitioners undertake in their attempt to understand the competitive position of the firms as well as the forces that interact in the strategy decision making and formulation (…..). Whittington (2001) argues that it is imperative to have certain knowledge on strategies as it enables the better understanding of the strategic choices that organizations often make. O’ Farrell et al. (2006) further claim that knowledge on strategies actually influences organizational performance for three reasons; first, understanding strategies implies understanding of the context in which strategizing can take place, second, understanding strategies suggests that management has a clear view of the different forces that can have an impact on the strategic level of firms and third, understanding strategies increases the capabilities and skills of management towards strategic decision making. The Generic approaches to strategy are viewed by Whittington (2001) as four fundamental ‘movements’ which reflect different schools of thought regarding the strategic design, implementation and execution on the part of firms. The author distinguishes the generic approaches to the following perspectives: the classical, the evolutionary, the systemic and the processual. The Classical perspective underlines Porter’s (1985) theoretical underpinnings which suggest that strategies are formulated by management of organizations on the basis of the objective to maximize competitive advantage. Strategy in the Classical perspective emerges from planning to leverage opportunities from the external environment. As O’ Farrell et al. (2009) argue the classical approach underlines the importance of the management’s orientation towards achieving goals and objectives and emphasizes the rational decision making within the framework of strategy formulation. Moving on, the Evolutionary approach to strategy, departs from the rational perspective and asserts that markets and industries are highly dynamic (they are constantly and rapidly changing) and therefore careful planning on the part of management can add little to the competitiveness of firms. According to Whittington (2001) this approach resembles the ‘natural selection’ theory which suggests that survival of the strongest and fittest will eventually prevail. Ezzamel and Willmott (2004) argue that the evolutionary perspective views firms as subjects to the market forces and therefore management can act little upon those forces. Organizations in this approach should place emphasis on the fit between their strategies and the external environment. Therefore the evolutionary perspective underlines the external orientation of the strategy formulation. The Processual approach to strategy discredits both the rational perspective on planning and the survival orientation of firms (as the two previous approaches suggest); in turn, the processual perspective views firms as imperfect entities operating in imperfect markets. In that extend, as Whittington (2001) claims, organizations need not to strategize in order to achieve optimum levels because this is non – feasible. Firms instead need to ensure that they have developed proper processes to cope with the competitive environment. Organizational learning is highly emphasized under the processual approach as it brings about knowledge over the changing external environment (Ezzamel and Willmott, 2004). Finally the Systemic approach to strategy incorporates forces stemming from the social environment or the social system within which the strategy is designed, formulated and implemented. Whittington (2001) states that the systemic approach views strategy as a collective product of people’s social background and therefore the pursuit of collective objectives (organizational goals) may not be the target of the strategy. In a similar manner, Ezzamel and Willmot (2004) explain that the systemic perspective emphasizes the interactive background environment of management as a significant source of decision making with regards to strategy. In that sense, strategy may not be driven by market forces or internal capabilities, but simply from judgments on the competitive scheme. Having briefly discussed the four generic approaches to strategy, as proposed by Whittington (2001) it is important to provide a link between the knowledge over the strategies and the understanding of the strategic initiatives. Drawing from each of the generic approaches to strategy, one can understand the strategic posture that firms should have within the markets in which they operate. Each perspective leverages different influence factors and each attributes significance to different constructs as fundamental inputs to strategy formulation (Bowman and Helfat, 2001). The importance of knowledge on the generic approaches to strategy is also credited by Ezzamel and Willmott (2004) who claim that understanding of competitive advantage cannot be entirely conceptualized without understanding the strategic rents and the strategic intentions of firms. Whittington (2001) further comments that understanding the strategies provides an initialization of the strategic thinking on ‘how to act’. Therefore, the generic approaches to strategy and the overall theories of strategy formulation and implementation based on the strategic choices of firms are vital to substantially realizing the importance of strategy first of all, but also the alternatives to strategic actions. Generic Approaches to Strategy and Strategic Human Resource Management Prior to undertaking an analysis of the importance of knowledge about generic strategies to the understanding of the SHRM field, there should be a brief discussion of the relationship between those two constructs in a more general framework. Chadwick (2005) studies the vital role of strategy in the overall SHRM and concludes that realizing the context of SHRM is highly based on the understanding of the strategic rents of organizations. Particularly, the author stresses that given the fact that SHRM by definition involves to a great extend the strategic nature of the organizations (though with a different focus as the one implied by the business or competitive strategy), the understanding of strategy becomes imperative for grasping the potentials of the SHRM. The strategy of organizations has an impact on the composition of the firms with regards to the set of human resources and human capital; therefore understanding and acknowledging the strategy is critical for two reasons: first it allows the ‘matching’ between HR objectives and organizational objectives and second it enables the contextualization of the interaction between HR and strategy towards influencing organizational performance (Beardwell and Claydon, 2007; Way and Johnson, 2005). Strategic Human Resource Management is defined by Chadwick (2005) as the organizational approach to managing Human Resources within the lens of a system of strategic orientation of the firm. The underlining difference with the traditional HRM is highlighted by the fact that SHRM is very much pertinent to the effects and influences of the human resource management on the overall organizational performance. The organizational performance is viewed as a product of strategy. Way and Johnson (2005) further state that Strategic Human Resource Management is “the planned pattern of human resource (i.e. workforce) and human resource management (i.e. functional) deployments and activities intended to enable the organization meet goals and objectives” (p. 1). In that extend, SHRM is highly related to the strategic posture of organizations and as Beardwell and Claydon (2007) stress, it is driven by the strategy and it seeks to drive the strategy. Therefore, understanding the generic approaches to strategy becomes synonymous to understanding the context in which the direction of the Strategic Human Resource Management should be targeted. As Chadwick (2005) claims the SHRM aims at aligning the HR strategies with the organizational and business strategy of firms; thus it is impossible to think of SHRM unless previously understanding the underpinnings and the essential functions of the business/ corporate strategy. While the dominant view in the academic literature suggests a closer and interactive relationship between generic approach to strategies or generic strategic alternatives, Chadwick and Cappelli (1999) claim that this link is non-substantial and can in fact have adverse consequences. Particularly the authors posit that the Strategic dimension of HRM is not pertinent to the generic strategies’ justification of competitive performance of firms; SHRM within this context is perceived as the systematic attempt to measure organizational competitiveness through the set of human resources competitiveness’. Nevertheless, as the authors claim this is not the strategic role of HRM; rather its role entails to the appropriate rents of human resources incorporated in the strategic posture of organizations and the interactivity of those in the framework of competitiveness is then measured. The underlining argument for the inappropriate use of generic typologies is that Porter’s theory on the strategies does not actually reflect real life case strategic approaches to firms. While Porter advocates for three generic strategies, mutually exclusive there is empirical evidence suggesting the combination of such strategies (for example low cost and differentiation at the same time). Therefore, incompatibility of the generic strategies in real life context implies incompatibility to the SHRM field. In a similar tone, Chadwick (2005) stresses that the generic approaches to strategy - as proposed by Porter (1985) and Whittington (2001) – underpin the strategic choices of firms oriented by the external environment and focused on the market performance. This is differentiated from the SHRM discipline which is highly attached to the internal environment of the firm and attempts to leverage human resources in aligning capabilities, skills and competencies with the business strategic objectives. Both ….. and Lengnick-Hall et al. (2009) propose that knowledge and understanding of the Resource Based View and employment of its theoretical assumptions are more relevant and contributional to the Strategic dimension of Human Resource Management. Nevertheless, these arguments do not constitute the overall relationship between strategy and SHRM invalid; rather they entail to provide different recommendations on the generic strategies or on alterative views of strategy formulation. As Whittington (2001) notes it is imperative and enhancing to understand the driving forces of strategy whether these rely on the generic approaches or other underpinnings. Chadwick (2005) agrees that the generic approaches are indeed essential but offer limited scope; rather a wider perspective of strategy formulation and implementation can actually provide insights as to the effective SHRM and its incorporation and coordination with the business strategy. Having in mind the strategic orientation of organizations, the development of Strategic Human Resource Management initiatives, functions and policies enables a better alignment with the organizational objectives and goals (Way and Johnson, 2005). Knowledge of the strategies means understanding, and in turn understanding offers realization of potentials and opportunities stemming from leveraging the resource (human resource) competencies and dynamic capabilities (Chadwick and Cappelli, 1999). Liao (2005) comments, that, there is a very strong relationship between strategy, Strategic Human Resource Management and corporate performance. The author asserts that the first two in combination and interaction eventually influence the performance. Therefore, understanding the fundamental premises of the strategy and strategic implementation offers insights to the operationalization of the strategic dimension of the human resource management, which in turn constitute improvements in organizational performance feasible. Conclusions The knowledge on the generic approaches to strategy and its role to understanding the activities, practices and strategic initiatives of firms is an undeniable subject. The underpinnings of strategy allow the better understanding of both the context in which organizations operate and the strategic moves that are necessary to cope with the competitive environment. Knowledge on strategies however does not limit to the above constructs; strategies are essential in the overall development and implementation of the Strategic Human Resource Management. Realizing and understanding the generic approaches to strategy is imperative and provides a starting point for aligning, incorporating and integrating HR practices and strategies with the overall strategic orientation of the firms in an attempt to achieve organizational objectives and goals. In that respect, knowledge of strategies, application of the knowledge to the SHRM field and implementation of SHRM on the basis of the business strategy eventually influences corporate performance. List of References Beardwell, J. and Claydon, T. (2007). Human Resource Management: a contemporary approach. Fifth Edition. Essex: FT Prentice Hall Bowman, E.H. and Helfat, C.E. (2001). Does Corporate Strategy Matter? Strategic Management Journal, 22(1), pp. 1 - 23 Chadwick, C. (2005). The vital role of strategy in strategic human resource management education. Human Resource Management Review, 15(3), pp. 200-213 Chadwick, C. and Cappelli, P. (1999) Alternatives to Generic Strategy Typologies in Strategic Human Resource Management. Research in Personnel and Human Resources Management, 4, pp. 1 - 29 Ezzamel, M. and Willmott, H. (2004). Rethinking strategy: contemporary perspectives and debates. European Management Review, 1(1), pp. 43-48 Lengnick – Hall, M.L., Lengnick-Hall, C.A., Andrade, L.S. and Drake, B. (2009) Strategic human resource management: The evolution of the field. Human Resource Management Review, 19(3), pp. 64–85 Liao, Y.C. (2005). Business Strategy and Performance: the role of human resource management control. Personnel Review, 34(3), pp. 294-309 O’Farrell, P., Hitchens, D. and Moffat, L. (2006) Does strategy matter? An analysis of generic strategies and performance in business service firms. Business Strategy Review, 3(1), pp. 71-81 Way, S.A. and Johnson, D.E. (2005). Theorizing about the impact of strategic human resource management. Human Resource Management Review, 15(1), pp. 1-19 Whittington, R. (2001). What is Strategy - and does it matter? Second Edition. London: South-Western Cengage Learning Read More