Strategic Human Resource Management - Essay Example

STRATEGIC HUMAN RESOURCE MANAGEMENT Name Institution Course Professor Date STRATEGIC HUMAN RESOURCE MANAGEMENT Introduction The 21st century business environment focuses on the integration of the enterprise sectors to manage effective outcomes. Important in achieving the successful result is the role of Human Resource Management (HRM), especially in formulating efficient leadership. According to Sparrow, Brewster and Chung (2016, p. 2), HRM occupies a central position following the transformation of businesses into international markets through advancement in technology. More important is the increased competition on a global level whereby multinational companies become compelled to re-structure their HRM practices. As such, there is the introduction of the International HRM (IHRM), and the Strategic HRM (SHRM), as models realizing excellent working relations across diverse cultures distributed in various nations. This essay examines SHRM in leadership for multinational companies with an aims in identifying the function of SHRM in realizing effective leadership in these firms. It develops through the understanding of core theory in HRM relative to the operations of Multinational Corporations (MNC’s). Leadership in Multinational Companies The escalating competition today among enterprises, especially MNC influences their need to generate competitive advantage mechanisms. One of these strategies includes innovation developed through the availability of knowledge and new ideas (Jimenéz-Jimenéz, Martínez-Costa & Sanz-Valle, 2014, p. 47). Jimenéz-Jimenéz et al. (2014, p. 47) argues that MNC are characterized by openness to new experiences, cultures, ideas and markets. Here, these features perform as core capabilities of the firm leading to its continued domination in both domestic and international markets. However, for a company to ensure appropriate utilization of its capabilities across all its subsidiaries, it must employ knowledge transfer mechanisms which fall under the leadership strategies (Waldman & Balven, 2014, p. 225). To understand the relationship between leadership and knowledge sharing, it is imperative to consider the definition of knowledge transfer. Jimenéz-Jimenéz et al. (2014, p. 47) defines it as an organized system of exchanging information and skills. Moreover, in the exchange, there is a crucial component of collaboration among the entities. Here, collaborative mechanisms act to ensure a forward and reverse knowledge transfer from the parent and junior companies. In reference to Birasnav (2014, p. 1622), leadership is a vital component in knowledge management for MNC’s. The successful operations of these companies require the development of unique knowledge that surpasses that of their competitors. Therefore, there is a shift in focus from performance to knowledge development in gaining and maintaining a competitive advantage (Birasnav, 2014, p. 1622). However, since this knowledge resides in the employees, the firm must design systems to tap the knowledge and transform it into organizational capital. Consequently, Birasnav (2014, p. 1622) notes that the leadership style is import in generating support in knowledge management, particularly in establishing organizational knowledge. One of the leadership styles includes transformational leadership, where the behavior of the leader directs that of the subordinate (Birasnav, 2014, p. 1622; Waldman & Balven, 2014, p. 225). Research indicates that with this form of leadership, the organization manages to implement HRM practices along knowledge-supportive structures which are both crucial in managing MNC. Rao-Nicholson, Khan and Stokes (2016, p. 103) introduces Mergers and Acquisitions (M&A) as a characteristic of MNC. The execution of M&A develops significant impacts to the employees whereby depending on the leadership, the company may manage to affect positive psychological transitions. Research posits that a majority of M&A fail to become successful contributed by a number of a factors. Rao-Nicholson et al. (2016, p. 106) includes human side factors as one of the significant contributors to the failure of M&A meeting their objectives, especially in the implementation phase. Concerning the human factors, Rao-Nicholson et al. (2016, p. 106) provides the examples of organization cultures, cultural tolerance and management styles. The failure to address and establish a common fit about these factors leads the MNC to failures. Past examinations in the topic place leadership practices as a post-acquisition influencer in directing the psychological and emotional well-being of the employees. However, current studies identify leadership as a pre-acquisition element whose style and approach should provide pluralistic managerial practices considering the acquirer and target company (Rao-Nicholson et al. 2016, p. 106). Here, the leadership influences the building of trust and positive employee relations to realize improved growth and value for the organization. Responsible leadership as a concept develops through two fields of leadership and social responsibility. According to Waldman and Balven (2014, p. 224), existing literature extrapolate the relation between social responsibility and financial performance which is a primary objective for MNC’s. Nevertheless, there is limited research on the effects of social responsibility to the individual actions and decision (Waldman & Balven, 2014, p. 224). Interestingly, responsible leadership bridges this gap through its multilevel nature addressing the individual, group and organizational sectors. As such, it provides a unique concept for MNC’s who face a challenge of effectively managing the different frameworks of their companies (Cox, Hannif & Rowley, 2014 p. 4). Moreover, Waldman and Balven (2014, p. 225) explain that managers in these MNC’s deal with unique problems stemming from the nature of their work environments. Following these challenges, responsible leadership may act as a powerful internal force guiding managerial behavior and as an external force in directing managerial activities such as policy making and enforcing regulation. In management, MNC practice the concept of multinational management which entails creating strategies and management models that tap into the international opportunities (Cullen & Parboteeah, 2013, p.4). From this definition, multinational managers must possess specific competencies matching the expectation of this MNC. According to Cullen and Parboteeah (2013, p.5), one of the competencies for the position includes the ability to manage complexities in national differences. Other qualities include possession of a global mindset, skills in working with people of different backgrounds, emotional intelligence and talent in motivating employees to meet the organization objectives (Cullen & Parboteeah, 2013, p. 27). These attributes define a global leader necessary for the success of MNC’s. Iles, Chuai and Preece (2010, p. 179) introduce the concept of talent manage as a function of HRM. Here, talent management serves as a competitive edge for enterprises through the identification, development and re-deployment of talented persons (Iles et al. 2010, p. 180; McDonnell et al. 2010, p. 153; Nankervis et al. 2013, p. 70; Tarique & Schuler, 2010, p. 123). Imperative in this field is the interdependency of effective leadership in talent management and talent management in producing global leaders. Furthermore, McDonnell et al. (2010, p. 153) include the importance of talent management in MNC’s. In particular, it functions in recognizing global competent leaders and their influence in international business success; it enables the recognition and retaining of managerial talent in executing MNC functions and meets the demanding skill-set required in managing MNC. Strategic Human Resource Management HRM entails the designing of approach in effectively managing employees as the valued asset in an organization (Armstrong & Taylor, 2014, p. 3). Important in HRM are its constitutive systems with the examples of philosophies, policies, strategies, processes, practices and programs (Armstrong & Taylor, 2014, p. 4). Focusing on strategy, Armstrong and Taylor, (2014, p. 3) explain that it form part of the nature of HRM, specifically about formulating a policy goal in the organization. Consequently, it realizes the concept of SHRM which is an integrated plan in achieving the organizations objective through employing HRM systems (Armstrong & Taylor, 2014, p. 113; Paauwe & Boselie, 2002, p. 2). Strategy in this case entails the long term scope of an organization in managing its resources relative to the conditions in the business environment (Armstrong & Taylor, 2014, p. 113). Armstrong and Taylor (2014, p. 113) proceeds to discuss strategic intention which explain the plan of the organization. Contrastively, resource-based strategy includes the matching of resources to the particular plans which occurs due to the presence of strategic capabilities. This cycling integration of components develops the process strategic management whose goal is achieving a strategic fit (Armstrong & Taylor, 2014, p. 114). At this point, it is significant to include the possible meanings of SHRM as described by (Armstrong & Taylor, 2014, p. 115). First, it implies the use of a plan in realizing a particular objective. Secondly, it explains an approach in managing personnel systems in reference to an employment policy or a manpower plan (Armstrong & Taylor, 2014, p. 116). A third perspective includes the process of matching HRM activities to a particular existing strategy and lastly, it involves envisioning the employees as a resource providing competitive advantage (Armstrong & Taylor, 2014, p. 116; Marler & Fisher, 2013, p. 19; Paauwe & Boselie, 2002, p. 3). As managing people continue to become a difficult task, especially with generational difference, the management strives to identify best people management practices to achieve excellent organization performance (Kaufman, 2015, p. 516). In this quest, the Resource-based View (RBV) becomes a significant theory in extrapolating the relation in strategic management and HRM in developing SHRM system. In a similar approach, Cullen and Parboteeah (2013, p. 28) discusses the relevance of multinational management in an interconnected business world. Interesting in the discussion is the inclusion of skills in multinational management which become developed following the employment of strategy. In this case, strategy defines activities engineered in seeing an improvement in performance. Furthermore, Cullen and Parboteeah (2013, p. 28) caution on the need to identify future trends in the business in formulating efficient multinational strategy in utilizing the available resources including the humans. In understanding the concept of SHRM, Jackson, Schuler and Jiang (2014, p. 3) develop an aspirational framework that includes all the elements in SHRM. In the framework, a guiding principle is the involvement of the HR professional in collaboration with the manager to develop HRM practices that contribute to enterprise efficiency (Jackson et al. 2014, p. 3). Similarly, Marler and Fisher (2013, p. 19) proceed with the inclusion of e-HRM (electronic-human resource management) as a modifier to SHRM. Imperative in this case is the ability of both components in affecting transformational change in the existing HRM, such that there is an improvement in its performance (Marler & Fisher, 2013, p. 19). E-HRM introduces the technological concept in innovation aimed at fulfilling the desired outcomes of SHRM (Marler & Fisher, 2013, p. 19). Therefore, the application of e-HRM enhances the functions of HRM to become strategic and thereby realizing SHRM. Literature by Marler and Fisher (2013, p. 20) examines the development of SHRM beginning with the contingency perspective. Here, SHRM identified a fit between the HR policies and strategic elements in influencing the performance outcomes. The idea of a developing a fit followed an industrial and organizational economic approach focused in managing the external business environment which is the primary challenge for MNC (Marler & Fisher, 2013, p. 21). With the advancement in research, SHRM centered on the RBV theory whose focus is the internal environment (Colbert, 2004, p. 341). Here, the utilization of internal resources and core capabilities under particular conditions became a crucial factor in achieving competitive advantage. As such, the HRM as a practice availed the much-needed mechanism in managing a significant internal resource (Colbert, 2004, p. 341; Marler & Fisher, 2013, p. 21; Paauwe & Boselie, 2002, p. 3). Furthermore, Marler and Fisher (2013, p. 22) explain that this model entails that HRM is a strategic element and instrument in availing internal resources. Worland and Manning (2005, p. 12) argue that strategy exist in every business as the management must plan on what to do and how to execute the plan. It is this strategy that directs an organization towards maintaining viability and producing sustainable advantage in competitive environments such as that in MNC (Worland & Manning, 2005, p. 12). SHRM in this context influences both the HR and strategic plan to align with the organization objective, especially in managing both the internal and external business environment. Important in this case is the themes on SHRM ensuring the integration of HRM functions, responsiveness to the business environment and agreement with the firms’ goals (Worland & Manning, 2005, p. 12). A study by Lengnick-Hall et al. (2009, p. 64) on SHRM explain its role as managing the HR roles and strategies in measuring their influence in organization performance. Throughout its development, its performance follows particular themes that enhance the management understanding and application of the model for enhanced performance (Lengnick-Hall et al. 2009, p. 65). Furthermore, it provides a means for a MNC to achieve resilience as Lengnick-Hall, Beck and Lengnick-Hall (2011, p. 243) discusses. Concerning resilience, Lengnick-Hall et al. (2011, p. 251) note that it relates to the competencies effecting competitive advantage. Significant in this relation is the involvement of HRM in nurturing these capabilities through a mechanism that includes the availability and implementation of a strategic plan. Strategic Human Resource Management in Leadership The effective management of MNC is prone to a significant number of challenges stemming from its complex nature. According to Collings, Scullion and Morley (2007, p. 198) one of the persistent difficulty is global staffing which interprets to challenges in effective execution of the international business strategies. Here, MNC opt to use expatriates for a number of reasons as explained in Collings et al. (2007, p. 203). However, the primary issue is the application of SHRM in ensuring a successful identification and deployment of the expatriate to the target organization to see a continued growth in performance in these firms. This explains a leadership role by the management of the parent company in utilizing SHRM and affecting this transition. Further insight stems from the discussion by Edwards and Kuruvilla (2005, p. 4) concerning the challenge of managing global policies amidst responding to domestic pressures. Here, the problem falls under the leadership of the parent company and its strategies in mitigate these pre-existing difficulties. Again, for these MNC’s SHRM avails a vital model in realizing positive performance in the national and international levels. In enhancing the relevance of HRM in the current business environment, De Prins et al. (2014, p. 263) introduces the Respect Openness Continuity (ROC) model. The model explains on bridging theory and practice in establishing successful outcomes for MNC. Consequently, it includes the advancement of SHRM to a sustainable paradigm whereby its utilization by the leadership generates improvement in HRM practices (De Prins et al. 2014, p. 263). Similarly, Kramar (2014, p. 106) agrees on the efficiency of the sustainable approach in HRM, especially in meeting the leadership role in managing the financial, economic, social and human resource. Kramar (2014, p. 1069) continues exploring the inclusion of the sustainability feature to SHRM specifically its influence in the overall performance of the organization through the management. It is evident that it provides broader companies outcomes through its integrative social component an example being the bridging of cultural difference. SHRM influences organization performance, particularly in aligning business strategies and HR practices (Mitchell, Obeidat & Bray 2013, p. 900). It also strengthens the value of HRM practices in the fulfillment of the companies’ goals and organization effectiveness (Collins & Clark, 2003, p. 740; Mitchell et al. 2013, p. 900; Schuler & Jackson, 2014, p. 35). Mitchell et al. (2013, p. 900) note that SHRM contributes to utilization of high-performance human resource practices which reciprocate in the improved financial. Important in realizing this positive outcome is the involvement of the human resource productivity which is a function of SHRM (Mitchell et al. 2013, p. 900). At this point, it is crucial to recognize the underlying conditions for MNC. In particular, the leadership is responsible in managing financial successes and utilization of resources, especially the human capital (Schuler & Jackson, 2014, p. 39). Collins and Clark (2003, p. 742) discuss the importance of SHRM in establishing top management team (TMT). Here, this relates to a leadership role particularly in MNC since the effective performance requires collaboration and extensive communication. With SHRM, there is an enhanced development and support of the HR through the active application of HRM practices. Furthermore, it allows an internal alignment of employees through setting up social network of engagement (Collins & Clark, 2003, p. 742). Further discussion includes that these network function to develop the employees’ relation-building skills such that it become ingrained in the culture of the firm (Collins & Clark, 2003, p. 742). Consequently, there is improved individual and team performance across all MNC enterprises. A case in example is the successful talent management in China and Indian achieved by employing the integrative SHRM techniques (Cooke, Saini & Wang, 2014, p. 225). Psychological contract in a working environment leads to positive performance which is one of the objectives of MNC. Based on McDermott et al. (2013, p. 289) the leadership style in practice influence the making of this kind of contract to enhance the benefits available to the firm and workforce development. This form of contract explains the relation between the firm and its employees such that if positive, then there is a parallel improvement in performance. Therefore, it is a leaders’ responsibility to apply management practices that align with SHRM to generate positive psychological contracts (McDermott et al. 2013, p. 290). Alfes et al. (2013, p. 331) introduces the topic on moderating employee behavior through the application of the HRM systems. Here, it is the perceived leadership practices by the workforce that engineers the displaying of particular behavior which influences the organization performance. Furthermore, Popaitoon and Siengthai (2014, p. 908) explains on the practice of project orientation by a majority of these MNC in a quest to address effective HRM practices in a complex business environment. At this point, it is also crucial to recognize the rise of Green HRM (GHRM) as a paradigm in influencing positive collaborations among the different MNC subsidiaries (Jackson & Seo, 2010, p. 278; Renwick, Redman and Maguire, 2013, p. 2; Yusoff et al. 2015, p. 158). Here, the inclusion of the leadership to address and engage environmental conscience practices contributes to advantageous employee behavior. Conclusion In summary, the advancement of HRM to SHRM improves the performance in the organization. Important is its relevance in MNC’s which operate under complex business environments with multiple challenges engineered by this complexity. Concerning leadership, SHRM enhances the relation among employees including improving their interpersonal relationship skills. Moreover, it allows the management to identify, deploy and maintain talent in its different subsidiaries for improved performance. 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