HRM as a Strategic Tool - Coursework Example

HRM is a Strategic Tool that gives an Organization a Competitive Advantage over their Rivals Name: Institution: Contents Contents 2 Introduction 3 Concepts of Human Resource Management and Competitive Advantage 3 Human Resource Management 3 Competitive Advantage 4 Study Question 4 Theories and Perspectives that Link Human Resource Performance to Organization Performance 4 AMO Theory 4 Universalistic Perspective 4 Contingency Perspective 5 Configuration Perspective 5 Resource Based View of the Firm 6 Ways through which Human Resource Management Practices can Enhance Competitive Advantage of Organization 6 Compensation 6 Performance Measurement 7 Compliance 7 Work-Life Balance 8 Recruitment 8 Conclusion 9 References 9 Introduction Human resource management has arguably become an important aspect in smaller and larger organizations across the world. The reason for this growth is the belief that human resource management enhances organization performance hence creating competitive advantage (Godard, 2004). The main aim of human resource involves creating and sustaining a workforce that help an organization to meet its objectives. According to conventional wisdom and theory, an organization workforce base is the most valuable resource (Godard, 2004). Human resource planning and development is therefore are important aspects for an organization to gain competitive advantage over other players in the industry (Guest et al, 2003). Planning and development of human resource help in improving the workforce of an organization (Godard, 2004). This study therefore aims to determine whether human resource management is a strategic tool that gives an organization a competitive advantage over other players in the industry or market. Concepts of Human Resource Management and Competitive Advantage Human Resource Management Human resource management is the process of hiring and developing employees so they become productive in an organization. Human resource management entails planning employee needs, conducting job analysis, orientation, recruitment, evaluation of performance, management of salaries and wages, training, communication with employees and resolving of disputes. Human resource management entails personnel management (Godard, 2004). Competitive Advantage Competitive advantage refers to an organization’s positioning in its competitive environment. According to Porter (1998) an organization can gain competitive advantage in the industry through differentiation strategy and cost leadership strategy. For an organization to compete effectively on cost, its human resource must address labor in order to come up with lower cost per unit production. According to Godard (2004), competitive advantage due to human resource requires investment in workforce through various practices for instance recruitment, compensation, training and performance measurement. Study Question Can human resource management be a strategic tool that gives an organization a competitive advantage over their rivals? Theories and Perspectives that Link Human Resource Performance to Organization Performance AMO Theory This theory states that organizational practices that have impact on the employee’s ability, motivation and opportunity to perform various tasks will influence organization performance (Holman et al, 2003). To gain competitive advantage in the industry an organization should engage in practices that help to improve the ability, motivation and opportunity of employees (Holman et al, 20003). This will help in improving the financial and market performance of the organization and therefore be able to stand out in the industry. Universalistic Perspective According to universalistic perspective human resource practices increases organization performance across all the employees under all the circumstances. Pfeffers (1998) human resources is in support of universalistic perspective where he holds that, selective hiring, employment security, high contingency pay, extensive sharing of information, reducing status barriers and distinction, decentralization of decision making and self-managed teams have a positive impact on the performance of an organization irrespective of other conditions and factors in organization. Scientists in support of this perspective argue that an organization should not adopt human resources practices in relation to specific organization context or particular strategy. According to this perspective, human resource practices adopted should have a positive impact to all employees in an organization and not in an individual employee (West et al, 2002). Contingency Perspective Scientist in support of the contingency theory argues that there exists a relationship between the dependent variables and independent variables, which varies across the various levels of contingency variables (Godard, 2004, Holman et al., 2003). According to this perspective business strategy of an organization is the most important variable in the in human resource management and organization performance (West et al, 2003). According to contingency perspective, organization’s human resource practices and activities should be in line with the business strategy or other contingencies. This practice will help in enhancing organization performance hence helping in gaining competitive advantage in the market (West et al, 2002). Configuration Perspective Configuration perspective focuses on the synergistic effects that activities or practice of human resources can bring in organization when put together and exercised in a coherent manner. Scientists in support of this perspective argue that grouping and exercising of human resource practices in coherent manner brings greater positive effect as compared to sum of every single practice (Buxall, &, 2003). According to Buxall, & Purcell, (2003), systems of innovative human resource practices has greater impact on the performance of organization employees as compared to changing of an individual practices. Resource Based View of the Firm Resource based view of the firm is another important theory that has been used to relate human resource management to the performance of an organization. This theory stresses on how an organization can achieve competitive advantage by possessing rare and valuable resources that competitors cannot easily copy (Guest et al, 2003)). Human resource based view of the firm when linked to human resource and performance of an organization, workforce is considered as a resource that is similar to other resources in an organization. The main objective of human resource practices is to create human capital and develop organization behavior that will enhance competitive advantage (Guest et al, 2003). Ways through which Human Resource Management Practices can Enhance Competitive Advantage of Organization The main objective of human resource regardless of the size is to create a workforce that is able to meet organization goals and objectives (Holman et al, 2003). According to conventional wisdom and theory, an organization workforce base is the most valuable resource (Buxall, &, Purcell, 2003). Human resource planning and development is therefore are important aspects for an organization to gain competitive advantage over other players in the industry. Human resource management practices that can help an organization enhance its performance and gain competitive advantage in the industry include recruitment, compensation, compliance, work-life balance and performance measurement (Gordad, 2004). Compensation Compensation is an important aspect that helps an organization to retain its workers for a given period. Salaries and wages are some of the compensation that makes an employee to stay in an organization (Marchington, &, Gruguli, 200). However, salaries and wages only cannot make an employee to stick in an organization for long, but employee belief that benefits and compensation is competitive and fair. Employees who believe an organization rewards their talents fairy and competitively will not easily leave that particular organization (Gordad, 2004). An organization to retain its workforce needs to be flexible in setting its wages and salaries. Human resource practices that entail compensation and benefits are able to determine areas within the compensation structure that need improvement to appeal employees (Gordad, 2004). From the perspective of employee retention, human resource that is able to create a sound compensation structure will help in appealing employees hence making it possible for an organization to gain a competitive advantage in the industry. Performance Measurement One of the objectives of human resource is to create a performance measurement system in an organization. Performance measurement systems help to periodically rate employee performance improvement plans, disciplinary warnings and annual evaluations (Godard, 2004). Organization should have systems that sometimes are able to engage individual workers at personal level. This will enable employees to realize how organization is interested in them thus enabling them to perform highly. Employees who perform highly give an organization competitive advantage since they are enthusiastic, productive and fully concentrate on the assigned duties and responsibilities. Human resource practices such as planning is important since it helps an organization to monitor its performance measurement system, train employees and be able to come up with a system that favors employer and employees (IRMA, 2017). Compliance Human resource in most organizations is responsible for the employment laws compliance (Gordad, 2004). Compliance to the employment laws is an important aspect since it helps an organization to save on settlement costs that may arise due to unfair employment practices and costs required to hire a lawyer to defend it from certain employment practices (IRMA, 2015). Human resource should ensure compliance to various labor laws since it would help the organization not to hit by legal consequences such as loss of reputation and litigation expenses. Work policies implemented should be consistent with the state, federal and local laws. Some of the policies include an organization’s commitment to equal employment opportunities, which helps to reduce liability for claims from applicants and employees (IRMA, 2015). Compliance when put into practice helps an organization to improve its reputation hence competitive advantage. Work-Life Balance Work-life balance is another human resource practice that should be adopted in an organization. Work life balance requires an organization to be flexible to various work arrangements compressed workweeks, telecommunicating and various alternative scheduling (Gordad, 2004). Giving workforce an opportunity to engage in Work-life balance enables them to be more productive and committed to their work hence helping in gaining competitive advantage. Human resource should launch these work-balance programs in an organization; however, they should take into consideration areas where employees work jointly to achieve a particular objective (Gordad, 2004). Recruitment Human resource as a department in an organization is usually involved in recruitment of employees. Planning in the human resource should be encouraged for the organization to stay at the top in terms of changes in the labor market and projections of landscape of various occupations (Godard, 2004). For instance, according to the United State bureau of labor statistics, between 2010 and 2020 registered nurse’s jobs will rise by 26%. Strategic planning such as engaging various students in various nursing institutions in some programs before graduation enables an organization to attract qualified personnel hence giving it a competitive advantage over other players in the industry (IRMA, 2017). Conclusion Various studies have shown that human resources management increases that performance of an organization. The theories outlined have provided enough evidence that relate human resource practices and activities to market and financial performance, employee behaviors and attitude and operational performance. Human resource practices such as recruitment, compensation, compliance, work-life balance and performance measurement have been found to have a direct line to employee performance and organizations competitive advantage. Based on the above evidences and theories it is possible to conclude that human resource management is a strategic tool that gives an organization a competitive advantage over their rivals. References Boxall P. &, Purcell J. Strategy and Human Resource Management. Basingstoke, Palgrave Macmillan. 2003. Godard J. ‘A critical assessment of the high performance paradigm’, British Journal of Guest D., Michie J., Conway, N. and Sheenan M. ‘Human resource management and performance’, British Journal of Industrial Relations, Vol. 41, No. 2, 2003. pp291–314. 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