Sustainable Human Resource Management - Case Study Example

Human Resource Management Introduction According to Hyman, the structure of markets determines an organisation’s strategic management choices. This point seems to connote that an organisation’s choices will solely depend on what is offered on the market. Yet, there are other factors that affect the choices that an organisation makes, such as its objectives and goals. This paper will therefore evaluate the relationship between HRM strategic choice, strategic management and the structure of markets. Secondly, strategic management often requires that HRM be aligned with its structures, which turns HRM into a ‘structural’ support function. For instance, Chandler’s (1962) idea was that structure follows strategy (Ehnert, 2009, p. 86). The key assumption here is that HRM must be aligned to a company’s strategy and organisation structure (Ehnert, 2009, p. 86). Synopsis The first section of this paper discusses the relationship between the structure of markets and the strategic decision made by an organisation. Importantly, it shows the link between strategic management and strategic choice. Notably, the paper argues that a firm’s choices may also affect the market structure. The second part of the paper is about the link between HRM and a company’s strategy and organisation. The paper suggests four recommendations on how HRM can align itself with strategic management through administrative, one-way, two-way, and integrative linkage. Part 1 The assertion that the structure of markets determines an organisation’s strategic management choices is true if the competitive edge in an industry depends on the ability to meet the needs of distinct and important sets of customers or different customer groups. In such a case, many companies develop a market structure that is conceptually similar to the product structure except that they pay attention to customer groups rather than product groups (Hill & Jones, 2007, p. 429). For a company that pursues a strategy based on increasing responsiveness to customers, it is important that the nature and requirements of each customer group be identified. This is followed by grouping the HR functions by customer or market segment, and another set of managers becomes responsible for developing the products that each group of customers wants by customising or tailoring products to the needs of each particular segment. A market structure brings employees and customer group managers together in response to the needs of the market. These people can then use their detailed knowledge to support various functions in the organisation (Hill & Jones, 2007, p. 429). The process of developing HR strategies encompasses generating strategic HRM options and then making then appropriate strategic choices. According to Cappelli (1999) [cited by Armstrong, 2006, p. 133], the choice of practice that an employer adopts relies on a number of factors at the organisational level, including their own business and production strategies, co-operative labour relations and support of HR policies. The process of coming up with HR strategies involves adoption of a conditional approach in generating strategic HRM options and then making the apposite strategic choices. These choices should be founded on the critical needs of the business (Armstrong, 2006, p. 134). Various aspects of organisations’ management such as HRM, finance, and research and development play a critical role when making strategic choices (Mitlacher, 2006, p. 72). This is proof that it is not only the market structure that determines the strategic choice of an organisation. For instance, an organisation that wants to have an influence by commanding a large market share should have highly selective recruitment instruments and offer remarkable working conditions so as to retain highly qualified staff. But it is worth noting the HR strategy and activities adopted should be in tandem with the organisation’s stage of development (Mitlacher, 2006, p. 72). There are numerous exemplars of organisations that make strategic choices. At Deloitte, the executive team developed a model referred to as the “Deloitte Greek temple” which is the framework for the business strategy (Kramar et al., 2010, p. 51). The people and performance team offer input in operational and strategic ideas. Their functions are to ensure that line professionals are responsible for managing their people, and to offer direction, training and support (Kramar et al., 2010, p. 51). In the same scope, the Kareena Private Hospital in Sydney developed a wellbeing balance program focused on six elements: involvement and engagement of staff; strong support and commitment from senior management teams and the executive; identification of specific high risk groups or issues to target; content that pertains to expressed workforce need and flexibility; close linkage with the hospital’s strategic plan and employee strategy; and minimal financial outlay at the outset and during delivery (Kramar et al., 2010, p. 68). Both cases above show that strategic choices should be focused on an organisation’s goals and how the organisation intends to achieve them. In both cases, the organisations have invested in strategies that focus on uplifting their workforce in line with their strategic goals. According to Kramar et al. (2010, p. 52), for the strategic management process to be successful, HR managers should have input into the strategic plan in regard to both the people-related issues and to the capacity of the workforce to implement particular strategic alternatives; have precise knowledge of the organisation’s strategic goals; understand the types of workforce skills, attitudes and behaviours that are required to support the plan; and develop programs to ensure that the workforce has those workforce skills, attitudes and behaviours. Part 2 It is inarguable that a good fit between HRM strategies and the business strategy or strategic purpose of a business tends to lead to superior outcomes (Armstrong, 2008, p. 34). That is, when the organisation’s practices support firm strategy, superior performance is anticipated. Therefore, the primary focus of strategic HRM should be to align HR with the strategies of the firm as suggested by Armstrong (2008, p. 34). According to Wood (2009, p. 47), there are four phases of integration between HRM and strategy if the process of strategy formation and role of the HR department is analysed, namely: administrative, one-way, two-way and integrative. The four phases form the basis of recommendations suggested in this paper for aligning HRM with strategic management. Administrative linkage This reflects the traditional and administrative role of the personnel management function (Wood, 2009, p. 47). In this regard, human resources are not viewed as assets, but as necessary costs to facilitate the success of the organisation and can be readily found in abundant supply in the labour market (Gual i Sole & Ricart i Costa, 2001, p. 54). In the contemporary business world, the administrative linkage can be considered controversial since human resources can be regarded one of the most value assets of an organisation. Additionally, the assumption that human resources are a cost to the organisation is not true since personnel is part of the organisation and determines how the organisation performs and interacts with its clients or customers. Moreover, it is not true that human resources can be found in abundance, as different organisations have different human resource needs – and may need to train some personnel specifically to meet their needs. It is therefore recommended that organisations should not regard human resources as costs but as assets that ensure that their wellbeing. In addition, management should be flexible in terms of how they perceive the available human resource pool in the market, as they may still need to train their personnel to have the knowledge, skills and abilities that align with the strategic aim of their organisation. One-way linkage This implies that business goals are considered first, and HRM has no impact on the formulation of strategy. According to this strategy, the HRM department will be involved in designing policies and practices to help implement strategy only after the strategy has been formulated (Wood, 2009, p. 47). Revisiting the point that human resources are an important asset, it is recommended that personnel at all levels of the organisation be involved in strategy formulation since these policies affect them and how they align with the goals of the organisation. Two-way linkage This involves a reciprocal relationship between strategy and HRM; that is, human resources are seen as important assets for the organisation (Wood, 2009, p. 47; Gual i Sole & Ricart i Costa, 2001, p. 54). This paper recommends this type of linkage since it appreciates the role the HRM in formulating and implementing strategy for organisational success. Integrative linkage This reflects a strong interaction between HRM and strategy, both formally and informally, and represents the strongest fit. This means that the company strategy and the HR strategy are designed jointly, and HRM has a significant influence on the organisation (Wood, 2009, p. 47). As it was mentioned earlier, organisations have different organisational needs, and the best way to understand them is to let the entire personnel participate in identifying them. Thus, integrative linkage is highly recommended for aligning HRM with strategy since when the HR component of the organisation is involved, it is likely to identify and address the issues that affect it more comprehensively. Conclusion It is clear from the discussion that while the structure of markets determines an organisation’s strategic management choices, the choices made by an organisation also determine the structure of the market. This shows how strategic management is related to strategic choice and market structure. The paper has also discussed how HRM choices are related with strategic management. Essentially, the paper has discussed various phases of the linkage between HRM and strategy and noted that integrative linkage is the best way to align HRM with strategy since it allows the HRM department to participate in the formulation and implementation of policies that affect the organisation. Recommendations It is recommended that organisations come up with measures that allow the integration of the HR department in the formulation of company strategy or strategic decision making. This is because the choices made affect the entire workforce, and it is only wise that they be involved in formulating policies that affect them. References Armstrong M 2008, Strategic Human Resource Management: A Guide to Action, 4th edn, Kogan Page Publishers, London. Armstrong, M 2006, A handbook of Human Resource Management Practice, 10th edn, Kogan Page Publishers, London. Ehnert, I 2009, Sustainable Human Resource Management: A Conceptual and Exploratory Analysis from a Paradox Perspective, Springer, New York. Gual i Sole, J & Ricart i Costa, J E 2001, Strategy, Organization and the Changing Nature of Work, Edward Elgar Publishing, Hill, CWL & Jones, G R 2007, Strategic Management: An Integrated Approach, 8th edn, Cengage Learning, New York. Kramar et al. 2010, ‘Strategic human resource management’ Mitlacher, L W 2006, ‘The organization of Human Resource Management in temporary work agencies—towards a comprehensive research agenda on temporary agency work in Germany, the Netherlands and the US,’ Human Resource Management Review, issue 16, pp. 67–81. Read More