Human Resources Management For Public And Nonprofit Organizations - Research Paper Example

Human Resources Management For Public And Nonprofit Organizations Table of Contents Human Resources Management For Public And Nonprofit Organizations 1 Table of Contents 1 The Influential Factors of Strategic Human Resource Management 4 Intensity of Inclusion of Human Resources within the Companies’ Overall Strategy 7 Strategic Human Resource Management: The Literature 8 Strategic Human Resource Management activities 14 Evidences from the Organisations 15 Conclusion 17 Reference 18 Bibliography 20 Introduction Back in the year 1656, the word ‘strategy’, which has been derived from the Greek noun strategus, was finally recognized by the stalwarts of English language. “The development and usage of the word suggests that it is composed of stratos (army) and agein (to lead)” (Bratton,n.d., p.38). In the field of management, the word ‘strategy’ has now been replaced with a more traditional term called ‘long term planning’. The term denotes a specific pattern of decisions and related actions undertaken by the higher echelon of the organisation to accomplish their goals. In 1995, Wheelen and Hunger defined the term strategic management as a set of managerial decisions that determine the long run performance of any organisation. In the year 2001, Hill and Jones had taken a similar view on strategy by defining it “an action a company takes to attain superior performance” (Bratton, n.d., p.39). Strategic management in any domain demands a continual adjustment of the three major independent poles of an organisation: the values of the senior management, the resources available and the environment. In the case of human resource management, the employees are its chief resource. The management of ‘human resource’ is required to align the organisational values with the internal and external environment of the company. In many texts, strategic management is often depicted as a cycle of numerous activities. The activities can be segmented into five different steps including mission and goals, environment analysis, strategic formulation, strategy implementation and strategy evaluation. Human resource plays a major role in the implementation of these strategies. Strategy implementation is an area of activity which focuses on the techniques, which are used by the managers to implement their strategies. More specifically, it refers to the activities that deal with the leadership style, organisation structure, information and control systems and the management of human resources. Influential management consultants and academics, for instance Champy and Kotter have emphasised that leadership is the most significant and difficult part of the strategic implementation process. An organisation has certain divisions that are concerned with the applied strategic issues. Conventional wisdom identifies various levels of strategy in the hierarchy: corporate, business and functional. At the functional level, strategy relates to the major functional operations within an organisation including research and development, manufacturing, marketing, finance and human resource (Spenford IT Ltd, n.d.). This strategic level is primarily concerned with maximizing the resource productivity and supporting competitive strategies at business level. Consistent to this, policies related to human resource management are framed to support business strategy goals. “Interest among academics and practitioners in linking the strategy concept to HRM can be explained from both the ‘rational choice’ and the ‘constituency-based’ perspective” (Bratton,n.d., p.45). There is a managerial logic in concentrating on the skill set of the people and the intellectual assets, which offer a major competitive advantage when the technological superiority, once achieved, erodes. While talking about the ‘constituency based’ perspective, the specialists have argued that the human resource academics and practitioners have embraced strategic human resource management as a means of securing due respect for the ‘Human Resource Management’ as a field of study. At the application level, this increases the responsibility of the HR managers and enables them to appear more ‘strategic’, thereby enhancing the status of the organisations. The Influential Factors of Strategic Human Resource Management In the wake of increasing competition, global recession, scarcity of the required talents and the recruitment and retention of the employees, organisations are implementing innovative ways for better management of their human resource. From the past few years, the significance of environmental and contextual factors has been acknowledged in shaping human resource strategies (Gratton, 2003). The conceptualization of the strategic approach for managing people can be well attributed to the rapid changes taking place in the macro and micro environment. The following image displays the environmental influences at a general level. Figure 1: The external context of Human Resource Management (Source: Gratton, 2003) The general influences operate in four main areas. These are changes at the societal level, changes in technology, structural changes in the economy and political changes. At the societal level, specifically changes in the demographics and the quality and education of the work force are significant in shaping the human resource management strategies. Changes in the technological environment, such as the profound use of information technology in the operating activities, structural changes of the economy, rapid shift from manufacturing to the service industry, inflation, changes in the balance of private and public sector have become more influential in recent days. Changes at the social and legal level, as in, the changes in the employment legislation can also have a major impact on the human resource strategies. The relevant business conditions, which have been experienced, also leave an impact on the formulation and enactment of human resource strategy. The nature of business condition is indebted to the ‘stakeholders’ of the organisation, who have the ability to influence the strategy depending on their power. Stakeholders include the competitors and suppliers of the organisation, the government, the environmentalists, the media, local community organisations and the consumers (Huselid et. al., 1997). There are several internal factors that have an impact on the strategy formulation and implementation. This includes aspects such as technology, management philosophy, style and organisational structure. Discussions on some of these internal factors are given below. Management Style and Philosophy Management style and philosophy is very much apparent from the level of individualistic decision making, significance of participative decision making and the importance of goals and objectives. The Work Environment The work environment is manifested from team dynamics, level of trust, commitment, risk taking abilities and morale of the employees. Administrative Heritage In this case, leadership style, philosophy and values of the founders, mission and vision of the organisation and success and failure help to shape up the strategies of the organisation’s human resource management. Organisational Structure The extent of centralization in the organisation, its formal communication, hierarchical structure and the structure of the project teams are influential to shape the strategies. Culture The shared vision among the employees, common understanding of organisational goals, common beliefs and attitudes are some of the cultural factors that determine the nature of human resource in an organisation. Intensity of Inclusion of Human Resources within the Companies’ Overall Strategy A number of HR management experts have championed to define the strategic role of HR professionals in accordance with the corporate strategies. However, a report presented in the conference of Board of Canada indicates that a major portion of human resource executives are of the opinion that they are not involved in the strategic planning of the organisation. A survey of 155 senior level HR executives have indicated that around 63 percent of the respondents feel that ‘HR is never, rarely and only sometimes’ a considerably major part of their corporate strategy. The rest of the respondents support the fact that HR plays an integral and significant role in the strategic planning process of the company. As per the researchers of the Conference Board, employees in those companies, which encourage the participation of human resource in the strategic planning, have an intensive understanding of their roles and functions. Brian Hackett, an HR specialist, has found a strong correlation between the companies which allows linking of human resources with the strategic processes and the intensity with which the companies’ employees understand the company’s goals and objectives (Kochan, 2004). Strategic Human Resource Management: The Literature The strategic human resource management is rooted in ‘manpower’ planning. The former affirms the significance of effective management of people as a source of competitive advantage. The management encourages the academics to develop a framework for focusing on the strategic role of the human resource function and to attach the word ‘strategic’ to the term ‘human resource management’. In spite of the increasing volume of research and scholarship, the appropriate meaning of ‘Strategic Human Resource Management’ and HR strategy will remain problematic. “Strategic HRM is an outcome: as organisational systems designed to achieve sustainable competitive advantage through people” (Bratton, n.d. , p.46). In some researches, SHRM is viewed as a process which links the HR practices to the business strategies. Similarly in the year 2000, Bamberger and Meshoulam have defined SHRM as the process “by which organisations seek to link the human, social, and intellectual capital of their members to the strategic needs of the firm” (Bratton,n.d., p.46). SHRM and HR strategy are required to be discussed with a focus on the relationship between the organisational strategy formulation and strategic HR formulation (Hatice & Harun, 2009). A range of business- HRM relationships have been classified in different respective of proactive –reactive continuum and environment -human resource –business strategy linkages. In the former orientation, HR professionals had a seat at the strategic decision table and were actively engrossed in strategy formulation. At the other end is a ‘reactive’ orientation, which looks at the HR function as being fully acquiescent to both the business level and organisation level strategies. Once the business strategy is formulated, strategies related to the human resource are implemented to support the respective competitive strategies. While talking about the reactive orientation of HR strategy, human resource is concerned with the challenges of matching the organisational philosophy, programs, policies, processes and practices. The matching of all the ‘five Ps’ will stimulate and reinforce the various behavioral roles appropriate for each of the competitive strategies. The significance of the environment as a determinant of the HR strategy has been incorporated into a number of models. Some concepts such as extending strategic management concepts and models like Bamberger and Phillips’ portrays the relation between three poles including the environment, business strategy and human resource strategy. In the hierarchy of the strategic decision making model, contact variables such as technology, markets, national government policies and trade unions influence the HR strategies. In the year 1994, Purcell and Ahstrand have argued that these models incorporating the contextual influences as a mediating component of HR policies tend to lack the precision that define the nature of environment linkages. In the late years of 1980s, significant contribution to research was made by Purcell in the field of business-HRM strategy. He has identified certain different orders of strategic decisions. The ‘first order’ decisions are concerned with the long term growth of the organisation. These upstream decisions lead to the second set of considerations (Inyang, 2010). For instance, a French company has acquired a company in the Southern England. In such a case, a ‘second order’ of consideration applies on the extent to which the new operation is required to be integrated with the existing operations or separate from the same. Different HR strategies are called ‘third order’ strategic decisions as they introduce the fundamental parameters to manage people in the workplace. In a significant study of ‘Human Resource Management’ in context of a multi divisional organisations, Purcell and Ahlstrand argued that the determinants of human resource strategy is determined by the decisions taken at all the three level and by the ability and leadership style of the local managers to follow the objectives in specific environmental contexts. Different strategic models and the conception of strategic choice may overstate the capability of the managers to make the decisions and act independent of the environmental contexts in their way to do business. Another part of the strategic human resource management debate concentrates on the integration or the match of business strategy with the HR strategy. The shift in the managerial thought calls for human resource function to be strategically integrated. This has been depicted in the HRM model of Beer and some more researchers. The integration of HR functions and the organisational strategies is quite evident from Devanna et al.’s work in 1984. In the model, the interrelation between the human resource management, corporate strategies and organisational structure follow and feed upon one another and are impacted by the environmental factors. The notion of the interrelation between the external competitive strategy and the internal strategy is a central ideology of a number of models in the arena of human resource management. The relationship between the business strategy and the HR strategy is assumed to be reactive in a sense that the HR strategy is acquiescent to the ‘product market logic’ and the organisational strategy. This corporate strategy is assumed as an independent variable focusing on the fact that human resource management cannot be conceptualized as the stand alone organisation issue. There is some conceptualization of the relation between the organisational design, product markets and approaches towards the people management. For instance, each of the competitive strategies involves a unique set of responses from the employees and a specific HR strategy that may develop and reinforce a unique pattern of behaviors. Therefore, HRM is seen to be strategic because of its relation with the business strategy and the internal consistency of this link. While examining the link between the organisation, business strategy and human resource strategy; HR management practices are used to design the work, select, train, develop, motivate, appraise and control the workers. The conceptual frameworks or the models offer the HR researchers the capability to compare and contrast various configurations or the clusters of human resource practices and ability to further develop and examine the theories. Since the early years of 1990s, a number of academics have proposed few models to differentiate between the appropriate types of human resource strategies. The first framework to model various types of HR strategies has its base on the nature of the workplace control and specifically on the behavior of the management to direct and monitor the employee role performance. According to this framework, management structure and human resource strategies are various instruments and techniques which are used to control all the aspects of work to attain a high level of employee productivity and the respective level of organisation profitability. The approach focuses on controlling and monitoring the employee behavior as the basis to distinguish various HR strategies. The starting point for this discussion can be apparent from the following discussion. To put simply, when organisations recruit people, they only have the talent and potential to perform. Managers must organize the space, movement, tasks and work time to ensure that each of the employees exercise his or her full capacity at workplace. However, the workers can have various interests regarding the pace of work, job security and engagement in trade unions or any other formal unions. So the strategies are required to be framed by taking all the considerations into account. In this model, ‘control’ has been a significant component in the human resource management process. “Control is not an end in itself, but a means to transform the capacity to work established by the wage relation into profitable production” (Bratton,n.d.,p.50). The choice of human resource strategies is governed by varied organisational forms such as size, age and structure, competitive pressures on the management, the organisation culture and the stability of the labor markets. The variations in the HR strategies are not random. However, they reflect two management logics. In the first logic, the focus is on efficiency and cost containment; while in the second case, the focus is on the actual results. While managing the employees at work, the intensity and direction of the control depend on the number of components of the management process. The approach of the managerial control is the logic underlying the HR strategies to be consistent with the firm’s competitive strategy. The second model, i.e. the ‘Resource based model’ is grounded in the nature of the ‘reward- effort exchange’ and in more specific sense, the base is on the intensity to which the managers view their human resources as an asset against the related variable cost. The sum of peoples’ knowledge and expertise, social relationships has the ability to provide non-substantial capabilities which serve as the source of competitive advantage (Fahy & Smithee, 1999). Sustainable competitive advantage can be achieved not only by the analysis of its environment, but also through the careful analysis of the skills and capabilities of its human resource. The resource based approach exploits the unique competencies of the work force within an organisation: the resource and capabilities of the human resource. In this framework, four characteristics of resources and capabilities such as value, inimitability, rarity and non-substitutability are significant to sustain the competitive advantages. In the year 2000, Bamberger and Meshoulam integrated two significant models of HR strategies; one focusing on the strategy’s underlying logic of managerial control and the other focusing on the reward-effort exchange. The model is based on the dimensions of HR strategy involving the ‘locus of control’ and ‘acquisition and development’. ‘Acquisition and development’ relate to the extent to which the HR strategy develops the internal human capital as compared to the external recruitment of the human capital. Locus of control is concerned with the degree at which the HR strategy focusing on the employee monitoring. The strategic human resource management is concerned with the link between the human resource management and the corporate strategies. The strategy can be based on various internal and external factors. However, now-a-days the organisations are recognizing the potential of human resource in the overall strategy formulation and implementation within an organisation. Strategic Human Resource Management activities While talking about the human resource management activities, the focus is mostly on the human resource management team of an office. However, now-a-days, the concentration is not only on the human resources of the organisation; however, the concept of ‘Strategic Human Resource Management’ is stretched to the process aligning the human resource functions with the strategic objectives of the organisation in order to enhance the performance. Over the last two decades, there has been a thoughtful shift in framing the role that people play in the success of the business. In this case, the growing view is that the management of people is a significant organisational capability and is required to be intensively integrated with the strategic aims of the business. A cornerstone of this concept of strategic human resource management is the development of integration or linkage between the overall strategic goals of the business and the human resource strategy and implementation. The processes and people in the organisation must be managed in a way to foster the overall strategies of the organisation. Strategic human resource management is to integrate the approaches to manage various human resource interventions, such as selection, training, development and recognition, so that each of these complements each other. In other word the process is to “create a set of interrelated practices with an ideological and philosophical underpinning” (Gratton, 2003, p.7). Thus there should be two types of integration: the vertical integration which would be among the human resource activities and the business strategies; and horizontal integration among the different human resource interventions. The strategic approach to human resource management concentrates on the delivery of business strategy and its effect on the performance at the root level. A number of conceptual attempts have been made to provide an insight into the nature of integration between the business strategy and strategic human resource management activities. At a broader level, the integration takes place when the human resource strategy is aligned with the organisation’s stage of development in the strategic orientation and in the management style. So, even business types affect the strategy framing in the field of human resource management. Start-up businesses require a different approach from the organisations in their declining stage. On the similar note, multi divisional companies have different strategic requirements from the ones with less complex organisational forms. The significant business strategies of innovation, cost reduction and quality enhancement require specific set of behavioral roles, which, eventually, suggest various human resource management policies as in job design, development, performance appraisal, recognition and participation. Evidences from the Organisations In the past decade, the North American people and as those in Europe had experienced a constant parade of management. In the year 1993, the three leading popular management techniques were mission statements, total quality management and customer satisfaction. After some 3 years, in the year 1996, the top three management techniques included strategic planning, mission statements and benchmarking. In a survey, which included American companies, around 89 percent reported using strategic planning in 1996. One business observer commented that strategic planning had always been around but it is suddenly drawing attention. Almost all the companies listed in Fortune magazine’s ‘100 best companies to work for’ have the required processes in place and have aligned the human resource management in accordance with the corporate strategies. For instance, one top ranking organisation, Edward Jones, offers full fledged training to all the employees. Another company, Vision Service provider shows honor to the co-workers who have passed away. Adobe system offers frequent job rotations and for enjoyment of the employees it offers Friday night beer bashes. J. M Smucker makes their employees taste new products. At an organization called Qualcomm, the sick days are based on an honor system; that is why 90 % of the staff looks forward to work. South West airlines and Wal-Mart have been consistently ranked as one of the best employers and high growth firms. Both of these firms give high priority to their relationships with their employees (Welbourne, 2003). The above examples are of some of the organisations which have applied strategic human resource management rather than simply reacting to the market conditions. Organisations like Air Canada failed to apply long term planning to manage its human resource. Air Canada has introduced a new low cost full service model for short fighting named as ‘Zip’ (Rosenthal et.al, 2007). However, they told their customers not to expect a low fare as of now as it thinks that the traditional fare is quite low in this market. The cost of Zip is at least 20 percent lower than the cost incurred in the Air Canada’s comparable mainline flights. To achieve the same, Air Canada has cut down the salary of the employees within the organisation. Zip’s employees were making less money as compared to its counterparts at Air Canada. The airline was offering a B-scale wages to its employees. Air Canada introduced Zip by hurting its employees. The situation went wrong as they played with the sentiments of those people who have worked so hard and for so long a time. The organisation did not establish its human resource management strategies in advance; rather they just reacted to the market condition, which failed to create the confidence among the employees. The organisation failed to include its human resource in its overall corporate strategy management Conclusion Liberalization and industrialization have resulted in increased pressure on the contemporary organisations. With the market becoming competitive day by day, the organisations are finding it difficult to survive and sustain in the market (Bandt & Haines, 2002). With the advancement in technology, cost reduction techniques and other strategy models, it is getting difficult to sustain the competitive advantage, once held (Krishnan & Singh, n.d.). That is why the organisations are relying increasingly on their human resource to ensure sustainable competitive advantage. Strategic human resource management emerged from the need to align the human resources to the overall corporate strategies. Debates have ranged on whether corporations should plan the human resource strategies beforehand or they should only react to market condition. 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