The Strengths and Limitations of the Universalist and the Contingency Approaches to HR Strategy - Essay Example

Critically examine the strengths and limitations of the ‘universalist’ and the ‘contingency’ approaches to HR Strategy. In doing so, explain under what conditions HR strategy may help a firm secure competitive advantage. Contents Contents 1 Introduction 2 Different approaches to human resource strategy 2 Critical analysis of various approaches 4 Human resource strategies and competitive advantage of the company 7 Conclusion 8 Reference 9 Introduction Every organization has certain vision mission, vision, goals and objectives. The vision and mission of the organization are attained with the help of the organizations goals or objectives. The vision and the mission state the ultimate reason for the survival of the organization. Thus the objectives and goal which are decided after considering the mission and objective of the organization are utmost important. Goal attainment is very important for the survival and the growth of the organization. To attain the goals of the organization the management takes various types of strategies. These strategies are implemented at the various level of the organization. The managerial strategies ranges consists of various corporate level strategies, business level strategies and the last but not the least the human resources strategies. Human resource is a very important and vital aspect of the organization. It is the human resources which ultimately implement the entire plan into action and drive the organization to achieve the goals of the organization. This paper deals with the two very important approaches of strategic human resource management are Universalist and Contingency theories. These two approaches to human resource strategies have been critical analyzed by assessing its strength and weakness in this paper. The relevance of the human resource strategies on achieving competitive advantage have been studied in this paper. Different approaches to human resource strategy Strategic human resource management is a vital part of organizational management. Management uses various manage the human resource efficiently and effectively. The different activities under human resource strategies are aimed at various actions at policies which can influence human resource management. The process of managing human resource includes hiring of the efficient and quality candidates, designing jobs, job description, job allocation, other human resource policies etc. All theses process directly affects the overall performance of the organization. The two important approaches of human resource strategy are Universalist and Contingency approaches. One of the most important and vital approach of the human resource strategies is the Universalist approach. The main aim of this approach is to identify and analyze the best human resource practices. This approach is based on four main principles. The first principle of this approach is that some of the human resource activities which are done in order to manage the human resource efficiently are most important ones and are universal for all organizations. This principle forms the basic premise of Universalist approach that the most important and vital human resource management activities are relevant and can be applied to all types of organizations. The second principle of this approach is that, all human resource management activities are not strategic and the ones which can enhance the financial performance of the enterprise can only be regarded as strategic and hence can be applied universally to all organizations. The third principle of this approach is that every activity done for managing the human resource has an impact on the performance of the enterprise (Allani, Arcand and Bayad, 2003, p.237). Thus Universalist approach is one of the most simple and easy approach to analyze the different strategies of managing human resource. The main logic behind the Universalist approach is that there is a direct relationship between the activities of managing the human resource which are universally important and relevant for every organization. Therefore this approach is also known as the best practice approach to human resource strategy. The Universalist approach focuses on how organizational performance can be related to the best universal policies of human resource in other words, analyzing and identifying the best practices of human resource management which are equally important for all organizations (Martin-Alcazar, Romero-Fernandez and Sanchez-Gardey, 2005, p.634). Apart from the Universalist approach to human resource strategy another important approach to strategic human resource management is the contingency approach of human resources strategy. As per this approach the strategies adopted to manage the human resource should be such which could enable the management to achieve competitive advantage. The organization generally adopts three main types of strategy to attain competitive advantage over other enterprises; these are cost reduction strategy, strategy of quality enhancement and innovation strategy (Redman and Wilkinson, 2002, p.22-23). When the organization wants to achieve competitive advantage through cost reduction strategy the management will try to maximize the efficiency of the human resource and would try to reduce the cost of human resource by practicing policies like job rotation etc. Quality enhancement could be done by hiring the best staffs, improving and developing the skills of the employees, encouraging the employees to participate in decision making etc. innovation could be brought by either though employee flexibility of problem solving ability of the employees. According to the contingency approach the organization can be effective and efficient when the human resource practices and policies are correlated with other organizational goals and objectives. The basic premise of this approach is that the human resource strategies can be effective and efficient only when they are made in such a way that it is fit with the other organizational strategies or other important contingencies of the organization. In this way the human recourse strategies could be aligned with the overall organizational objectives (Lem, 2011, p.11). Critical analysis of various approaches The Universalist as well as the Contingency approaches of strategic human resource management is important and vital. The Universalist approach of human resource strategy talks about the generalized policies and practices of human resource which are equally effective for all organizations. On the other hand the contingency approach of human resource strategy focuses on correlating and aligning the human resource strategy with the organizational strategies. In the previous discussion both the approaches of human resource strategy have been discussed. In this section both the approaches have been critically analyzed on the basis of strength and weakness of each approach. As mentioned in the earlier section, Universalist approach of human resource strategy focuses on identifying and analyzing the generalized policies and strategies which can be implemented and adopted by almost every enterprise. Thus the objective of the Universalist approach is to identify the best human resource practices applicable to all organizations which could increase the efficiency of the human resource activities. Thus the main strengths of Universalist approach are promoting commitment practices, practices which ensure high performance, identification of those human resource practices which enables the employees in decision making, practices which would benefit both the employer and employees, ensures improvement of relationship between labor and management etc (Oltra and Alegre, 2011, p.3). In a research it was found that generalized human resource policies as suggested by the Universalist approach, enable the management to maintain the organizational performance (Erdil and Gunsel, n.d, p.98). The universal principles and the policies which suitable and can be implemented to all organizations that is the ‘best practices’ can increase and improve the overall performance efficiency of the organization. Universal or generalized human resource policies like recruiting effective and efficient employees, providing training, motivating employees with the help of financial or other types of rewards, efficient and effective designing of the jobs, enabling employees to participate in decision making etc can increases the efficiency of employees which can in turn enhance the organizational effectiveness. Adopting the best practice as per the Universalist approach, the organization can not only enhance the efficiency and performance but also as per this approach the organization can also improve its adaptability. Apart from the major strength mentioned above this approach also enhance the cost effectiveness of the organization and also improves the job satisfaction level among the employees which in turn decreases the employee turnover. This approach also helps in achieving sustainable competitive advantage (Wilton, 2011, p.68). The Universalist approach has a number of strength but it also suffers from some limitations too. One of the major weaknesses of this approach is the underlying principle of this approach itself. The underlying principle of this approach is that there are certain best human resource practices which can be applied to all organizations, but certain organizations follow unique management practices in order to identify the competencies of the organization and its position against its competitors. In this case the generalized human resource policies would not serve the purpose and unique human resource practices and policies would be needed to attain the objective of the enterprise. Organizations are not homogeneous, they differ in terms of organizational culture, technology, and managerial style, practices etc, therefore one human resource policy or practice which is beneficial to one organization may not be beneficial to the other. Moreover as the organizations are not homogeneous in nature therefore generalized human resource practices may not be fit for achieving the organizational goals or objectives (Armstrong, 2010, p.44). The basic concept behind contingency approach to human resource strategy has been discussed in the earlier section. If Universalist approach focuses on a generalized strategy of managing human resources then contingency approach focuses on forming such type of human resource policies which would match with the organizational strategies. Thus the basic premise of the contingency approach is to align the human resource policies with that of the organizational strategies to attain competitive advantage. The main strength of this approach is that it enables the management to correlate the human resource activities and the policies with the organizational strategies which have been undertaken to attain the competitive advantage. This helps the organization in achieving the strategic organizational objectives. The contingency approach not only helps to relate the human resource strategies with that of the corporate strategies but also with the overall organizational strategies and also tries to match up the human resource strategies with the present human resource management framework of the organization (Ehnert, 2009, p.106). Contingency approach has much strength but it also suffers from some weaknesses too. Linking and correlating the human resource strategies with the overall organizational strategies that are the strategies related to operations, finance, competitive advantage is quite tough and complicated. In today’s competitive business environment, the organizational strategies keep changing. Thus, in such type of situation to align the HR policies with the organizational strategies, the human resource policies need to be changed every time which is quite difficult and cumbersome process. Hence, instead of forming new human resource strategy aligning the organizational strategies it would be better to have unique flexible human resource framework (Araimi, 2011, p.30-31). Another major criticism of this approach is that it limits the managerial creativity as the only activity of the manager remains only correlating the organizational strategies with the human resource policies (Ehnert, 2009, p.106). Moreover it would be very difficult to align all the human resource policies with all the contingencies. Alignment of human resource policies with one contingency may or may not match with the other contingency (Armstrong, 2010, p.45). In such a situation the approach won’t be fruitful in achieving the organizational objectives through contingency alignment. Human resource strategies and competitive advantage of the company In the above sections both the approaches of strategic human resource management has been discussed in detail. On analyzing both the approaches that is the universalist approach and the contingency approach, it can be said that both the approaches have many strengths which can contribute to the competitive advantage of the company but both the approaches also suffers from a number of weaknesses. Universalist approach on one hand helps to improve the organizational performance on the other hand the generalized policies of human resource cannot be fruitful in achieving the desired result for all types of organizations as the geographic differences, cultural differences and technological differences vary from organization to organization. In the same way the contingency approach also helps the management to correlate the human resource strategies with the organizational strategies but it is often not possible to align all the contingencies with the human resource policies with the every changing business environment. Thus by applying any single approach would not help the management to gain a competitive advantage over its competitors as both the approaches have flaws. Hence the organization can achieve competitive advantage if the human resources polices by combining both the approaches. In order to achieve competitive advantage the organization must combine both the approaches. Collaboration of both the approaches would help to eliminate the weakness of both the approaches to a certain level. The human resource policies which are formulated on combining both the approaches would have the advantages of best practice and best fit approach. The best practice would help the company to gain competitive advantage through the implementation of good human resource practices like employing efficient staffs, providing training which would sharpen the skills of the employees, performing performance appraisal, providing adequate compensation etc. All these generalized practices would increase employee satisfaction, decline employee turnover rate, improve the overall performance of the employees and enhance the organizational performance which is needed to attain the organizational objectives. Collaboration of best fit and best practices would also have the benefits of contingency approach like aligning the strategies regarding human resource with the organizational strategies which are the most important contingency of the organization. Thus if the human resource policies are formed on aligning the HR policies with the organizational strategies and also includes the standard practices which are needed to improve the overall organizational performance and efficiency then such type of HR policies would certainly enable the organization to achieve competitive advantage (Araimi, 2011, p.31). Thus in this type of condition that is the collaboration of Universalist and Contingency approach, the human resource policies can help the organization to achieve competitive advantage over the other firms. Conclusion Organizations form many types of strategic objectives from time to time. These strategic objectives are generally undertaken to achieve some sort of competitive advantage. The competitive advantage can be achieved by either reducing the cost of the organization or by improving the overall quality of resources of the organization or by making it more flexible or bringing any type of innovation in the organization. Human resource is an important aspect of the organization. The performance of the organization largely depends upon the performance of the employees. Human resource is involved in almost each and every activity of the organization. Thus it is very important to manage the human resource effectively and efficiently. Like managing finance and operations, human resource is also managed with the help of many strategies. Strategic human resource management deals with the managing of human resources through many strategies which would help in achieving the overall strategic objective of the organization. Management can form common human resource policies which would enhance the organizational performance that is on the basis of Universalist approach or it can customize the HR policies as per the strategic objectives of the organization that is through contingency approach. As human resource strategies are used to enable the organization to attain competitive advantage therefore in this regard it would be recommended that instead of focusing on any one approach the management should focus both the approaches and formulate the human resource policies and practices in such a way which would incorporate the strengths of both the approaches. Thus to conclude it could be said that the management should focus on collaborating all the possible ways and approaches in its policies and strategies which could enhance the competence of the organization. Reference Allani, N. Arcand, M. and Bayad, M. (2003). Impact of Strategic Human Resources Araimi, F. A. (2011). Power of Human Resources. USA: AuthorHouse. Armstrong, M. (2010). Armstrong's Essential Human Resource Management Practice: A Guide to People Management. India: Kogan Page Publishers. Ehnert, I. (2009). Sustainable Human Resource Management: A Conceptual and Exploratory Analysis from a Paradox Perspective. 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