Which Structural Form, if any, Is Most Suitable for an SHRM Approach - Report Example

Which structural form, if any, is most suitable for an SHRM approach? Introduction Strategic human resource management (SHRM) has enhanced organisations’ performance in many ways. Integration of SHRM with business management, human resource management, client management etc are a few of its applications. Its applicability has been high in areas of traditional HRM, organisational behaviour and industrial relations. This has exclusively helped in addressing many limitations of conventional HRM practices by integrating human resources strategy with business strategy. Strategic integration itself has received much attention due the significance it carries in making organisations adopt SHRM as an approach (Armstrong, 2000). Management theorists and researchers have emphasized the difference between, and importance of, strategic HRM and human resource strategy, in achieving organisational goals. Therefore, strategic HRM decisions are incorporated into the strategic plan from which HR strategies are derived. According to Price (2007), strategies are means used by organisations to achieve their objectives, in the form of decisions taken well in advance to meet the long-term goals of the organisation. Strategic HRM focuses on widespread aspects of organisation such as organisational culture, individual career development, having right people for the right job, etc. In relation to this, Mabey, Salaman and Storey (1998) have proposed four different perspectives: firstly, SHRM entails complex activities that are beyond the responsibilities of personnel or HRM managers and extend to all aspects of managing people including social and economic context of management of internal and external environments impacting the organisation and its people; secondly, it includes impact of strategies on business performance, and thus emphasizes on measurement of performance; thirdly, management styles are more defined and according to the existing people and goals; and lastly, development of organisational capability is encompassed through strategic knowledge management. Types/models Of SHRM and their implications Much work on SHRM field has resulted in various models and types of SHRM, which can be broadly classified into two groups, the general and prescriptive approaches. Delery and Doty (1996) and Richardson and Thompson (1999) have framed ‘best practices, ‘best fit’ and the ‘configurational’ approaches (cited by Armstrong, 2000); another perspective by Armstrong (2000) includes high-commitment, high-performance and high involvement models. In the ‘best practice’ approach, organisations adopt best HRM practices such as employment security, selective hiring, self-managed teams, and high compensation contingent on performance, training to provide a skilled and motivated workforce, reduction of status differentials, and sharing information. These are considered as best known practices, proposed by Pfeffer; however, application of these practices in all organisations may be a challenge. Becker et al. (1997) suggest that organisational systems should be tailored to match the organisation’s requirements for optimum results, with a thorough knowledge and understanding (cited by Armstrong, 2000; p.65). Through ‘best fit’ approach, organisations can adopt specific HR practices that match organisational strategies, based on requirement and nature of intended outcome. This would require organisations to analyse their business needs in cultural, structural, technological, and process contexts. Three different models have been described in the best fit approach, life-cycle, competitive advantage, and strategic configuration. Based on the life-cycle model, strategies matching organisational stages, namely, start up, growth, maturity, and decline phases (Famham, D & Smith, P 2005; p 100) can be formulated. For the ‘best-fit’ model of HR strategy to work for the organisation, the actions of all employees should conform to the desired state in delivering against the business strategic goals. Internal and external pressures that alter this requirement demand frequent changes to the policies and demand high creativity and resourcefulness from HR and operations managers (Storey, 2007). Wood (1996) describes the high-commitment management model as ‘a form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organisation are based on high levels of trust’ (cited by Armstrong, 2000; p 59). For this, components of HR strategy must include organisational culture, structure, job design, performance management, communication and employee relations, and learning and development aligned to the organisational strategy. In high-performance management model, Buchanan (1987) explains that clear goals, methods of working, and standards for success are set; multi-skilling is encouraged; self-managed teams are established; supportive leadership is adopted; effective support is provided; effective communication and involvement is ensured; thorough training is provided; payment and rewards are team-based, high performance of individuals, and skill-based; sometimes ‘peer performance review’ is adopted (Armstrong, 2000; p 61). For high-involvement approach, management should treat employees as partners, through empowerment, strong communication and involvement. This reinforces trust, responsibility, autonomy, and employee involvement. Arthur (1994) states, ‘the high-commitment model is focused to shape desired employee behaviour and attitudes by forging psychological links between organisational and employee goals (cited by Heam, & Michelson, 2006; p 293). Most important is the strategic-fit model or the matching model, in which HR strategy is formed as an integral part of business strategy involved in planning process. This strategic integration has to be vertical that includes HR and business strategy, and horizontal that includes HR strategy integration with human resources. According to Guest (1989), the critical point to be adhered to is that HRM should be fully integrated into strategic planning so that HRM policies cohere both across policy areas and across hierarchies, and HRM practices are used by line managers as part of their everyday work (Armstrong & Baron, 2002). The resource-based model focuses on organisational performance driven by human resources because the contemporary management is highly inclined towards values, culture, power and employee needs rather than strategic plans, budget and/or processes. Human resource management is a dynamic phenomenon, and its effectiveness determines organisational efficiency and competitiveness. The human resource dimension must therefore be fully integrated into the strategic planning process (Storey, 2007). In this model, diagnostic approach is highly recommended because when decisions are people oriented, rather than task oriented, effectiveness is greater. Moreover, this approach in resource planning is perceived as a process of learning issues underlying HR, behaviour of people, and limitations of resource planning. In this regard, quantitative and qualitative planning techniques used to identify and understand the causes of underlying issues help the organisation relate these complex factors to a whole process of management of the employee relationship. In modern times, loss of experienced staff is considered as loss of intellectual capital and to regain this intellectual capital is a huge cost for the organisation of time and money. The diagnostic approach can lead to the root causes of issues thereby identifying promising solutions for the issues. On the other hand, these promising solutions may bring about paradigm shifts in terms of organisational structure, job design, work practices, new policies etc (Bratton, 2001). As Bryson states, ‘strategic planning and management aspects have been embraced by organisations to improve their performance in terms of thinking, acting, and learning (2004; p.xiii). Integration of corporate strategy with human resource management is a complex process and the success of strategic HRM depends on successful integration process. Usually, board members of strategic management team are involved in strategy formation, after which the HRM policies are designed to implement those strategies. Without active participation from HRM function, process of aligning policies/practices to the strategies is extremely difficult and may be ineffective, requiring revisiting of policies/practices and potential chances of missing key elements. Moreover, HRM personnel have to ensure unbiased policy formation, considering human, financial and technological aspects of the organisation. In case of high-commitment, high-performance and high-involvement models, organisational culture plays a key role in making them successful. Life cycle models are not very adaptive to multinational organisations which have to consider cultural differences and their implications on management policies and practices (Schuler & Jackson, 2007). In such cases, dual HR strategies can help to manage present and future; thus flexibility and adaptability to changes should be the nature of strategic approach. This nature is possessed in resource-based, best-practice and best-fit approaches (Beardwell, 2004). Implementation of SHRM requires awareness of wider business functions at all management levels, and strategic decisions should be in line with job responsibilities at all levels. The process may initiate differing interests and outlooks of life, and can lead to a serious failure of communication. Also, in the absence of strategically planned change, these strategic decisions may get disturbed due to the historic role of independent actions that existed between the staff and management. Also, integration of strategy into HRM can be difficult for the personnel specialists who lack strategic skills needed to contribute to their organisation’s effectiveness. On these lines, Legge argued that ‘evidence shows that the integration of strategy and HRM is at best a lengthy, complex and iterative process and, at worst, that there is little evidence to suggest that widespread integration is achieved” (1995, p.124). Conclusions Overall, SHRM is meant to achieve sustainability in terms of performance and competitiveness at the organisational levels. Clearly, different models in SHRM are meant to identify and analyze opportunities of improving organisational performance; plan the future based on business strategies; and implement practices that help in gaining competitive advantage in terms of people, processes, technology and finance. However, integration of strategy into HRM has its own challenges, depending upon the nature of strategy, organisational culture, management style and organisational systems. Thus, any one structural form of SHRM cannot be deduced as best for SHRM approach. Organisations can benefit from these models by adopting them in accordance with situation; involvement of key people in strategy formulation can have an impact on success of SHRM; leadership at all levels has to be trained to adopt, implement and drive the strategies. References Armstrong, M. 2000. Strategic Human Resource Management: A Guide to Action. 2nd ed. London: Kogan Page Publishers. Armstrong, M and Baron, A. 2002. The Concept of Strategic HRM. In Strategic HRM: the key to improved business performance. London: CIPD Publishing. (Ch.3, pp: 41-53). Beardwell, I. 2004. Strategic Human Resources Management. IN Beardwell, I., Holden, L. and T. Claydon (eds). Human Resource Management a Contemporary Approach. 4th ed. Harlow: Pearson Education. Bratton, J. 2001. Strategic Human Resource Management. In Bratton, J and Gold, J’s Human Resource Management: Theory and Practice. 2nd ed. London: MacMillan Press Ltd. (Ch.2, pp:37-70). Bryson, J. M. 2004. Strategic planning for public and nonprofit organisations: a guide to strengthening and sustaining organisational achievement. 3rd Ed. California: John Wiley and Sons. Famham, D and Smith, P. 2005. People management and development. CIPD, 2nd ed. London: CIPD Publishing. Heam, M and Michelson, G. 2006. Rethinking work: time, space and discourse. Cambridge: Cambridge University Press. Legge, K. (1995). Human Resource Management: Rhetorics and Realities. London: Macmillan Business Publishers. Mabey, C, Salaman, G and Storey, J. (1998). SHRM: A new way of managing? In Human resource management: a Strategic Introduction. 2nd ed. Oxford: Wiley-Blackwell. (ch.1,pp: 11-85). Price, A. (2007). Strategic HRM. In Human Resource Management in a Business Context. 3rd Ed. London: Cengage Learning EMEA. (Ch. IV, pp: 251-328). Storey, J. 2007. What is Strategic HRM? In Human Resource Management: A Critical Text. 3rd Ed. London: Cengage Learning EMEA. (Ch.4, pp:59-78). Schuler, R.S and Jackson, S.E. 1999. Linking Competitive Strategies with Human Resources Management Practices. In Strategic human resource management. Oxford: Wiley-Blackwell. (Ch.9, p: 159-176). Read More