Strategic HRM and Sustained Competitive Advantage - Coursework Example

STRATEGIC HUMAN RESOURCE MANAGEMENT Name Professor (Tutor) University Course Word Count City and State Date Contents TASK 1: Strategic Human Resource Management. 3 Introduction 3 Strategic Human Resource and the concepts of vertical alignment and horizontal integration. 3 Vertical alignment 4 Horizontal integration 4 Theoretical Models of SHRM 5 Best Practice 5 Best Fit 6 Resource Based View (RBV) 7 Performance Management 8 Rating Scales 8 360-degree feedback 8 Objective setting 9 Reward Management 9 Financial rewards 9 Non-financial rewards 9 Total rewards 10 Conclusion and Recommendations 10 TASK 2: Employment Relationships 10 Introduction 10 Theoretical Perspectives of Employment Relations 11 Unitarism 11 Pluralism 11 Marxism 12 Roles of Actors in Employment relationship 12 Changing Nature of Employment Relations 12 Employee Participation: Conclusion and Recommendations. 13 References 15 STRATEGIG HUMAN RESOURCE MANAGEMENT TASK 1: Strategic Human Resource Management. Introduction Human resource strategies are part of the business strategies and therefore it is not easy to distinguish them. However, business strategies form the larger part of strategies that can include growth, marketing, and management strategies while the human resource strategies only involve management strategies of the human resource sector, which is mainly employees. To ensure that a business is successful and is able to last long, strategic human resource management comes in handy. Several studies have proven that organizations that manage their human resource management strategically are able to gain a competitive advantage over its competitors in the specific market environment. Strategic Human Resource and the concepts of vertical alignment and horizontal integration. Strategic human resource management (SHRM) is concerned with the planning of uses and activities involved in human resource to aid the business in achieving its set objectives (Truss et al., 2012). Over the past two decades, there has been the constant development of strategic human resource management. However, there is still no specific definition for SHRM but scholars point towards the definition above which is mainly strategies in human resource to help organizations meet their objectives. Through the combination of a business strategy and human resource, a firm is able to form SHRM, which is important in gaining a competitive advantage over its rivals. Schuler & MacMillan (1984) emphasized on the congruence between business strategies and human resource management practices. Two main types of congruence or fits relate to SHRM. They include vertical alignment and horizontal integration. Vertical alignment The concept of vertical fit puts emphasis on the important relationship between the strategic management processes and human resource management in an organization. For an organization to achieve a vertical fit, it is necessary to consider both the business strategy and formulation of HRM strategies. Strategies are always subject to change because of the influence of factors relating to external and internal market environments. Vertical fit is mainly achieved through ensuring that all human resources are directed towards the primary objective of a business. Vertical fit is the most commonly used fit in SHRM and is related to an approach that is contingency based. This characteristic makes it possible for vertical fit to be integrated into several management strategies HRM included. The fit between different strategies can disappear at one time because of different circumstances. If the fit is in existence exceptionally then the approach's flexibility will be influenced which is very critical in difficult market environments. achieving a proper vertical fit can also be affected by poorly defined strategies or strategies that are still undergoing the evolution process. It is, therefore, essential for human resource managers to have an understanding of the direction a business is heading before formulating strategies to be used in vertical alignment. Horizontal integration Horizontal integration is concerned with the requirements of high-level harmonization and coordination between the specific functions of HRM. A horizontal integration is reached when the different HRM strategies work together. To achieve a horizontal fit, several steps are required for organizations to follow: i. Proper analysis of the firm’s characteristics and needs. ii. An assessment of how these HRM strategies can aid in satisfying the firm’s demands and at the same time, work together with the characteristics of the business. iii. Point out specific behaviors and capabilities needed from the employees for them to contribute fully to the required strategic objectives and goals. iv. Perform an assessment of the HR strategies that are already in existence to find out their levels of effectiveness and the required change. v. To ensure that the strategies are coherent, an analysis of the scope that combines these strategies into one functioning unit is essential. vi. Finally, it is important to put in place programs that will aid in developing the strategies with a focus on the crucial relationships between them. Both the horizontal integration and vertical alignment are essential in achieving an effective SHRM practice. Therefore, it indicates that there is a strong bond between business strategy and HR strategy. HRM activities including development and training, recruitment and selection, and motivation of employees require consistency and harmonization in order to achieve successful SHRM. Theoretical Models of SHRM Since SHRM is applicable in nature, it was important to develop the application of theoretical models in the field, which are essential in understanding and predicting how HR practices influence the functionality of organizations. Before the last two decades, the SHRM field lacked strong theoretical models but this has improved. Some of the most common theoretical models and the basis of SHRM include the best practice model, best-fit model, and the resource-based view (RBV) (Truss et al., 2012). Best Practice The best practice model otherwise known as Universalist is founded on assumptions that there exist various best Human Resource Management practices. Pfeffer (1994) came up with a list of some of the best practices that can exist in an organization. These best practices include self-managed groups, job security, sharing information, status differentials reduction, selective hiring, high compensation based on output, and training and development to produce motivated, knowledgeable and skilled employees. All these practices are assumed to be appropriate for all businesses (Armstrong, 2009). However, this model has been criticized mainly because it does not consider organizational circumstances as all organizations are not the same. Many researchers and theorists believe that it is hard for a model like best practice to exist since organizations have different cultures, strategies, management techniques, working practices, infrastructure, and technology. It, therefore, becomes difficult to summarize the Universalist model as an appropriate model required in organizations. Best Fit Best-fit model is also known as the Contingency model. This approach focuses on the issue of HR strategies being contingent to the circumstances and practices of an organization. The best fit model has to be emphasized by authors such as Schuler & MacMillan (1984) who focused on the congruence between business strategies and human resource management practices. Contingency can be perceived as either horizontal integration or vertical alignment between the business strategy and HR strategy of an organization. Best fit models come with several sub-models including competitive strategies, strategic configuration, and the life cycle model (Delery, 1998). The life cycle model focuses on theories supporting organizations' development through several stages namely start-up stage, growth stage, maturity stage, and finally, the decline stage. Strategic configuration proposes that if organizations implement the strategic configuration policy then they have a high probability of being effective (Delery & Doty, 1996). According to Miles and Snow (1978), these configurations can be of three types including analyzers, defenders, and prospectors. Competitive strategies are those that aid an organization in gaining a competitive advantage and they include cost leadership, quality, and innovation (Porter, 1985). The best-fit model, however, has its own disadvantages including its lack of accounting for change or static nature, its neglect of institutional forces in HRM, and the dangers posed by contingent determinism. Resource Based View (RBV) The resource-based view of Strategic HRM is the model that has received a lot of attention from scholars. This model entails a mixture of theories whose main aim is to find out about resources that can give an organization a sustainable competitive advantage. Examples of these resources include machinery and technology, employment of talented and skilled people, and brand names just to mention a few. Barney (1991) defines a sustainable competitive advantage as a replication of practices including implementation of strategies that create value and it exists only after the advantage ceases. The competitive advantage in firms is deemed to exist when an organization's resources are heterogeneous and immobile. Heterogeneity of the resources refers to how the resources including human, physical, and organizational capital are different across the organization. Immobility of organizational resources means the inability of organizations that compete to acquire resources from each other. Barney (1991) also states that, for a resource to provide a business with a competitive advantage, it has to fulfill the following criteria. i. It has to be unique compared the organization’s competitors whether current or potential. ii. It must provide the firm with positive value. iii. It cannot be substituted with a different or similar resource by competing organizations iv. It cannot be imitated imperfectly. If an organization possesses resources that satisfy the above requirements then it can be able to gain a competitive advantage over its competitors. The Resource Based View (RBV) model, therefore, provides an organization with a human resource advantage by the creation of a practical justification for organizational HR practices and policies. Some of the policies and practices include management of talent, knowledge, and human capital, learning, training, and development. Performance Management Performance management is the process through which an organization is able to determine standards, set goals, assign work, evaluate the work, and give rewards. The aim of performance management is to improve the overall performance of the organization by ensuring employees achieve their individual goals and those of the organization. Several performance management techniques that can be used in organizations they include rating scales, objective setting, self-appraisal, competency based appraisal, and 360-degree feedback. Rating Scales Rating scales entails providing reviewers with job characteristics and qualities, which will aid in evaluating the employees. The reviewer uses these characteristics and qualities to rate the level of employee performances. Some of the qualities and characteristics include cooperation, initiative, judgment, work quality, work quantity, acceptance of change, and the ability and urge to learn new responsibilities. 360-degree feedback 360-degree feedback is also known as multi-rater or multisource feedback. Peers, customers, supervisors, suppliers and other interested stakeholders, provide the feedback. Results from 360-degree feedback are most commonly used for training and development purposes, though some use them for administrative decisions, such as pay or promotion (Toegel & Conger, 2003). Objective setting Objective setting practice is based on assessing employees depending on whether the set individual and company objectives have been satisfied. It is related to the management by objective schemes where the overall organizational performance is determined by the crucial relationship between the individual, departmental, and organizational goals. Studies have shown that objective setting is the most popular performance management system. Reward Management Reward management entails managing reward systems whose main aim is to attract and retain talented employees who drive an organization toward its goals. Reward packages are offered to employees in return for their output and they can me financial, non-financial, or total. Financial rewards Financial rewards involves the use of cash to pay the employees whether directly or indirectly. Direct pay can be paid as basic or premium pay. Besides direct pay can also be paid in relation to the performances of the employees. Performance related direct pay include commissions, bonuses, gain sharing, profit sharing, share options, and merit pay. On the other hand, indirect pay can be specific to a certain organization (pensions, health insurance, canteen, subsidized products, and employee assistance programs) or statutory (maternity leave, holiday pay, parental leave, and carers leave). Non-financial rewards These types of rewards do not involve money whether offered to the employee directly or indirectly. Some of the important types of non-financial rewards include work-life balance, awards and recognition of top performers, career development, and job security. Total rewards Total rewards or costs includes the total labour costs incurred in an organization. It combines both financial and non-financial rewards making up a complete reward package. Conclusion and Recommendations Management can improve performance management in the organization through several ways. Some of the ways include coaching, adequate preparation and training, link performance management with recognition and rewarding, and information gathering and documentation. Training of managers that carry out performance reviews is important in ensuring that the managers are adequately prepared for the task. Training is important, as it will allow the organization to be successful in performance management through proper preparation. It is also essential for performance managers in organizations to collect information from several sources, as this will improve the levels of objectivity. Documentation of this information is also essential since it would be used for future references and affect decision making concerning performances. Documentation can be done in a performance log. The company can also link performance management with rewarding and compensation as a method of improving performance management. This link will create a consistent process that is important in ensuring that performance management is effective. Coaching is a process that the company can use in ensuring that employees are supported in ensuring that they achieve both individual and organizational goals. Coaching can aid in improving the process of performance management in the organization. TASK 2: Employment Relationships Introduction Managing employment relationships is one of the most difficult tasks associated with managers since they always come in between the employees and the employers. The situation makes it hard since they are required to manage the perspectives and interests of both the employees and the employers. Effective management of employment relationships requires managers to: Understand the interests of both employees and employers. The way these interests are represented by their respective bodies. Understand the regulations that govern employment relationships. The nature of conflicts and their respective resolutions. Theoretical Perspectives of Employment Relations Several theoretical perspectives relating to employment relations exist. Alan Fox developed the employment relationship theoretical perspectives in the 1960s. These perspectives have been essential in the analysis of employment relations in organizations. The theoretical perspectives include Unitarism, Pluralism, and Marxism. Unitarism Unitarism bases its arguments on factors including the issue that employees and employers all have the same interests, values, and goals and therefore there should be no conflicts in organizations. Secondly, management is the only source of authority in the organization. Thirdly, trade unions are not required as they always bring trouble. Lastly, poor communication and personal issues are the main sources of conflicts. Human resource management aspects are classified as being unitary according to Storey (1992). Overall, management through the Unitarist perspective can either be authoritarian or paternalistic (Gunnigle et al., 2011).  Pluralism Pluralism is based on several scenarios including that organizations have groups with goals and interests that differ. Secondly, conflicts within organizations is a must and necessary. Thirdly, it accepts the need for trade unions to exist in order to represent employees. Finally, companies that go through negotiations with trade unions are founded on the pluralist theoretical perspective. Overall, this perspective provides management with the role of balancing the interests of employees and employers and establish conflict resolution mechanisms, for example, collective bargaining and dispute procedures. Marxism Marxism perspective explains that organizational conflicts mainly arise due to the different classes that exist in the society that is employees as proletariats and employers as capitalists. The capitalists, therefore, affect the employees negatively because of failure to control their production and the competition that exists between workers (Grint, 1991). Marxism perspective is generally founded on the relationship between employment relationship and conflict. Roles of Actors in Employment relationship It is important to consider the roles of actors in the employment relationship. Actors play the role of setting pay and conditions in nations, industries, and organizations. Actors can be the employer, trade unions, or employer organizations. Some organizations have the employer to set pay and conditions while there can also be a negotiation process between individual employees and the employer. Other organizations or countries have trade unions that represent the employees while employer organizations can represent the employer. Both the trade unions and the employer organizations come up with a collective agreement concerning pay and conditions in the organization. Changing Nature of Employment Relations Employment relations have been evolving and changing in nature over time. Some of the key ways that employment relations have changed is through unionization and collective bargaining and improved employment legislation. Previous regulation of employment relations for example in the United Kingdom was through voluntarism where trade unions and employers engaged in collective bargaining voluntarily. Pay and conditions were therefore collectively agreed upon collectively. The growth in employment legislation has however changed this perspective and it is, therefore, one of the most important improvements in employment relations. These legislations have provided employees with rights and employers with the need to fulfill these rights. Some of the important aspects of employment that have been affected by growing employment legislation include health and safety, parental leave, working time, equality, part-time or agency works, adoptive and maternity leaves, and minimum wage. These laws have benefited employees as they provide minimum standards and demands. However, employers can choose to provide benefits and compensations to employees that are above the minimum requirements. Several state bodies that govern these laws exist and these bodies provide a platform for employees to report any claims or mistreatments from the employer. The growth of legislation has been a great footpath for employment relations to take and further improvements on the legislation are projected to continue influencing employment relations in the future. Employee Participation: Conclusion and Recommendations. Employee participation is when employees influence the decision-making process in organizations. The employment relations within organizations can be improved by mechanisms of employee participation and employee voice through several ways. Overall, when employment relations are improved, organizations are able to gain a competitive advantage over its rivals in the same market environment or industry. Employee voice and participation can benefit the employee by ensuring they have a higher job satisfaction, provides them with better opportunities to improve skills, and job security. With these benefits, I believe that there will be fewer conflicts between the employee and the employer and therefore good employment relations. Moreover, leadership within the organization becomes effective with employee participation and voice. This is because every individual in the organization becomes a leader and therefore there is improved employment relationship within the organization. The level of trust and openness is also improved due to employee voice and participation. With improved trust, the organizational communication becomes effective. When there is effective communication within an organization, the probability of conflicts occurring is less. Besides, the employees and employers are able to work together effectively to achieve both individual and organizational goals. References Armstrong, M., 2003. A Handbook of Human Resource Management Practice, ninth edition, Kogan Page, London and Sterling, VA. Barney, J., 1991. ‘Firm resources and sustained competitive advantage,’ Journal of Management Studies, 17 (1), pp. 99–120. Delery, J. E., 1998. ‘Issues of fit in strategic human resource management: Implications for research,’ Human Resource Management Review, 8, pp.289-309. Delery, J. E. & Doty, D. H., 1996. ‘Modes of Theorizing in Strategic Human Resource Management: Test of Universalistic, Contingency, and Configurational Performance Predictions,’ Academy of Management Journal, 39, 802-835.  Grant, R. 1991. ‘The resource-based theory of competitive advantage: Implications for strategy formulation,’ California Management Review, summer: pp. 114-135. Gunnigle, P., Heraty, N., & Morley, M., 2011. Human resource management in Ireland. Dublin: Gill & Macmillan. Miles, R. E. & Snow, C. C., 1978. Organizational Strategy: Structure and Process, McGraw- Hill, New York. Pfeffer, J. 1994. Competitive Advantage Through People, Harvard Business School Press, Boston, MA. Porter, M. E., 1985. Competitive Advantage: Creating and sustaining superior performance, The Free Press, New York. Schuler, R. S. & MacMillan, I. 1984. ‘Gaining competitive advantage through human resource practices,’ Human Resource Management, 23, pp. 241-256. Storey, J., 1992. Developments in the management of human resources: An analytical review. Oxford: Blackwell. Toegel, G., & Conger, J., 2003. ‘360-degree feedback: time for reinvention,' Academy of Management Learning and Education, 2 (3), pp. 297-311. Truss, C., Mankin, D., & Kelliher, C., 2012. Strategic human resource management. Oxford: Oxford University Press. Read More