Strategic Human Resource Management Paper
Strategic Human Resource Management Paper
This point of time when globalization become a natural phenomenon, bring human resource in a lime light. A large number of organizations viewed human resource as a source of competitive advantage. There is greater acceptance that distinctive competencies are obtained through highly developed employee skills, distinctive organizational cultures, management processes and systems. However, it is necessary to invest the concept with clear meaning. In today’s highly competitive business environment, organizations cannot sustain excellent performance unless they develop a competence for rapid, continuous strategic change.Strategic Human Resource Management Paper
According to Edward E. Lawler (2008) the source of competitive advantage has shifted in many organizations from reliability to innovation and flexibility. Further argue that it is a combination of the right structure and the right people that provides the foundation and tools for creating competitive and innovative organizations.
Traditionally, human resource has been considered a factor only after the strategic business decisions are made. Human resource issues were not even discussed during the decision to purchase the business. One human resource executive put it succinctly when he said “the line job is to tell us where the business is going and then it is up to us to find the people to develop.” Companies like GM and AIG are some of the example when they sour large number of their stake because they had not considered the human resource implication of their purchase.
However, companies such as IBM, GE, and Intel use of human resource management as an integral part of strategy formulation. Indeed, many companies have begun to require the human resource component in their strategic plan. Where they begun a great deal of experimentation and problem solving to decide what data are required, what issue should be considered, and how they can relate to the various aspect of the business.Strategic Human Resource Management Paper
The major emphasis in strategic planning has doubtless been on formulation. This led to a conclusion up until 1980 that much time and thought had gone into analyzing and planning strategy yet very little into implementation. But after 1980 it changes to the effective implementation of the strategy. i.e getting people to do the right things to make strategies happen. In this respect, the human resource tools become central and focus.
Strategic Human Resource Management
Strategic human resource management is a multipart process which is frequently developing and being studied and discussed by academics and commentators. Its characterization and associations with other aspects of business setting up and strategy is not complete and estimation varies involving writers.
It has been defined as:
* All those activities affecting the actions of individuals in their efforts to put together and put into action the strategic needs of business. (Schuler, 1992)
* The prototype of planned human resource deployments and activities anticipated to facilitate the forms to attain its goals (Wright, Macmahan, 1992)
In general, Strategic human resources management is defined as the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility.
Box all and Purcell (2003) argue that strategic HRM is apprehensive with explaining how HRM influences organizational performance. They also point out that strategy is not the identical as strategic plans. Strategic planning is the formal procedure that takes place, generally in larger organizations, defining how things will be done. However strategy exists in all organizations even though it may not be in black and white and expressed. It defines the organization’s behavior and how it tries to cope with its environment.Strategic Human Resource Management Paper
Strategic HRM is based on HRM philosophy incorporating the concept of strategy. So if HRM is a logical approach to the management of people, strategic HRM now implies that that is done on a planned way that integrates organizational goals with policies and action sequences.
Coppers & Lybrand (C&L) consider HRM and its development as their top priority. The administration is determined in hiring and retaining skilled and competent workers. Each worker should meet the demands of the highly competitive and growing business industry worldwide. Chairman and CEO says that the attraction and retention of people, which they consider as the highest intellectual capital is the critical objectives of C&L.Strategic Human Resource Management Paper
The Basic Architecture of HR
Source: Brian Becker et al. 2001
Implementing Strategy
There are four generic human resource activities of all the organization
1. Selection/ promotion/ placement process
Example of Chase Manhattan bank
During the period between 1975and 1980 the bank underwent major managerial changes key to the bank s’ successful turnaround from a troubled bank in the mid -70s was a careful strategic level selection and placement of executive. Historically in banking in general and specifically at chase senior level positions were based on historical precedent with old-boy net works playing a major role. Also the tradition incident based on historical precedent with old-boy net works playing a major role. Also the tradition in banking was reward those with banker skills not those with managerial skills which were implicitly considered to be less importance .Under the stress of serious performance problems chase Manhattan when the trust manager retired corporate management decide that the department whose operation had been essentially stable should focus on a more aggressive growth strategy instead of seeking a veteran banker chase hired a man whose experience had been with IBM because it was felt he brought a strong marketing orientation to the trust department which the new strategy required.
Similarly, when chase reorganized it retail banking business from a low margin operation in which the stress was keeping down costs of to a more expansionary business offering broader consumer financial services it hired because of his entrepreneurial skills an executive who had been a division chief of a small industrial firm and had a track record of entrepreneurial management experience.Strategic Human Resource Management Paper
2. Reward processes
Good selection is the sine qua non of performance. Once people are in job and perform however they should also be rewarded for good performance. These incumbents should also be developed to improve performance and prepare them for a new position.
The linkage to reward outcomes reduces or eliminates the developmental value of appraisals. Rather than an opportunity for constructive review and encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing.
For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses.
Nor is the desire to distort or deny the truth confined to the person being appraised. Many appraisers feel uncomfortable with the combined role of judge and executioner.
3. Development process
Ensuring that organization has an adequate supply of human resource talent at all levels is no easy task especially when organization is going to a rapid strategic changes. The key is to have a human resource planning system that make accurate forecast. In order to plan for the future, an accurate inventory of current human resource stock is important. This should include both the current individual performance and the future potential of an individual.Strategic Human Resource Management Paper
4. Appraisal process
A basic human tendency to make judgments about those one is working with, as well as about oneself. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified.
In many organizations – but not all – appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions.Strategic Human Resource Management Paper
Sue Peat tie
It has been seen that Food market continuous to grow rapidly since 1990 in UK. (Sue Peat tie). In order to full fill the demand of the market, markets had to use all available marketing tools. Promotion is one of the major adapted tools to maintain or increase the sales. However, more focus remains on price base promotion. As more and more competition is coming into market. This tool needs more attention. Business tends to use different kinds of promotions to attract more and more sales. Buy one get free one free, buy three in price of one, bundle deal are good attraction for promotion.
Strategic HRM and human capital management
Many writers have argued that strategic HRM and human capital management (HCM) is one and the same thing, and certainly the concept of strategic HRM matches that of the broader explanation of HCM relatively well as the following definition of the main features of strategic HRM by Dyer and Holder (1998) shows:
* Organizational level – because strategies involve decisions about key goals, major policies and the distribution of resources they be inclined to be formulated at the top.Strategic Human Resource Management Paper
* Focus – strategies are business-driven and focus on organizational effectiveness; thus in this perspective people are viewed first and foremost as capital to be managed in the direction of the achievement of strategic business goals.
* Framework – strategies by their extraordinarily nature provide unifying frameworks which are at once broad, contingency-based and integrative. They incorporate a full accompaniment of HR goals and activities planned specifically to fit extant environments and to be commonly reinforcing or synergistic.
This argument has been based on the information that both HRM in its appropriate sense and HCM rest on the supposition that people are treated as assets rather than costs and both focus on the importance of adopting an integrated and strategic move toward to managing people which is the concern of all the stakeholders in an organization not just the people management role. However, the perception of human capital management complements and strengthens the idea of strategic HRM relatively replaces it. (Armstrong and Baron, 2002)
Strategic HRM could consequently be viewed as the essential framework within which these estimation, reporting and management course of action take place and make sure that they are iterative and communally reinforcing. Human capital consequently informs and in turn is shaped by strategic HRM but it does not substitute it.
Strategic HRM and business performance
Since the mid 1990s, CIPD and others have been generating evidence for the impact of people management practices on business performance. Much emphasis has been put on the importance of ‘fit’. In other words it is argued that HR strategies much fit both with each other and with other organizational strategies for maximum impact. The main areas of practice which all the researchers agreed have an impact on performance are around job design and skills development.Strategic Human Resource Management Paper
However, CIPD work found that practices alone do not create business performance. They can create ‘human capital or a set of individuals who are highly skilled, highly motivated and have the opportunity to participate in organizational life by being given jobs to do. However, this will only feed through into higher levels of business performance if these individuals have positive management relationships with their superiors in a supportive environment with strong values. All these factors will promote ‘discretionary behavior’, the willingness of the individual to perform above the minimum or give extra effort. It is this discretionary behavior that makes the difference to organizational performance.
Conclusion
The SHRM idea is a influential idea if function properly within an organization. HR groups are able to plan for potential growth and react to any changes that may take place. In addition, SHRM allows companies to completely make the most of their human assets to make real improvement over their competitors. This advantage comes from having the HR policies and strategies perfectly aligned with the corporate goals so that the organization has the right human capital, right remuneration packages and training methodologies to allow the employees to efficiently do their jobs.
Strategic Human Resources Management
It is now widely accepted that an organization’s success is determined by decisions employees make and behaviors in which they engage. Managing people as an organization’s primary asset has inspired HR to become increasingly more effective at developing programs and policies that leverage talent to align with organizational competencies and at executing organizational strategy (Ruona and Gibson, 2004).
The importance of fitting structure, systems and management practices to an organization’s stage of development is widely accepted. As the organization grows and develops, it needs change. By understanding how an organization changes as it grows, it is possible to understand how human resource management must change (Baird and Meshoulam, 1988). Perhaps the change that has most impacted organizations in the past decade has been the growing realization that people are an organization’s primary source of competitive advantage.Strategic Human Resource Management Paper
The field of HRM has recently seen the human resources that it selects, trains and retains move from a supportive to a strategic role in organizations. This occurred because in strategic management sources of competitive advantage were no longer sought in external, but in the internal environment of a firm, namely in its resources, particularly its human ones. Accordingly the field of HRM reconsidered its own role, resulting in the emergence of a new distinct discipline termed Strategic Human Resources Management (Wielemaker and Flint, 2005).
Recent works on business strategy have indicated that firms competitive advantage can be generated from firm human resources. According to the resource based view, the firm that can develop sustained competitive advantage through creating value in a manner that is rare and difficult for competitors to imitate. Traditional sources of competitive advantage such as natural resources, technology and economics of scale have become increasingly easy to imitate (Chang and Huang, 2005).
Driven by a number of significant internal and external environmental factors, HRM has progressed from a largely maintenance function to the source of sustained competitive advantage for organizations operating in a global economy (Ferris et al., 1999: 385). Environmental factors such as uncertainty, technological innovation and demographic changes affect human resource strategy.
Numerous environmental characteristics have been investigated to determine how they constrain human resources or strategy formulation ((Lengnick-Hall and Lengnick-Hall, 1988).
By the effect of these factors; human resource planners started to learn the language and techniques of strategic planning, assumed a more proactive stance in promoting strategic thinking in the human resources area and extended the personnel function well beyond the limits of its traditional activities (Miles and Snow, 1984). Human resources can make contributions to strategy and strategic planning in a number of ways. Systems such as performance appraisal, staffing, training and compensation help enable managers to implement the organization’s strategic plan. Human resources planning also links strategic management and business planning with these systems (Greer, 1995).Strategic Human Resource Management Paper
The concept of strategic human resource management evolved with an emphasis on a proactive, integrative and value-driven approach to HRM. Strategic HRM, views human resources as assets for investment and the management of human resources as strategic rather than reactive, prescriptive and administrative. The definition of strategic HRM highlights two important dimensions that distinguish it from traditional HRM. Vertically, it links HR practices with the strategic management process of the firm and horizontally, it emphasizes that HR practices are integrated and support each other (Andersen, Cooper and Zhu, 2007).
Most of the writings indicating greater integration between HRM and strategic business planning take either of two predominant approaches. One group of authors suggest a reactive role for the HR function, viewing organization strategy as the driving force determining HRM strategies and policies. These authors have concentrated on developing specific HRM strategies to fit identified business objectives. They contend that HR systems such as selection, training and compensation should be tailored to match the company’s objectives and product life cycles. A second group of authors suggest that HR should also play a more central and proactive role by becoming involved in the strategy formulation process itself (Golden and Ramanujam, 1985).
As a result, today’s leading edge human resources staff is actively engaged on the management team, contributing participants in the planning and implementation of necessary changes. Human resource staff needs to be business oriented, aligned with the business and effective as consultants and business partners. The integration of human resources with the business requires a new paradigm for managing human resources in an organization (Walker, 1994).
It is desirable to integrate human resources management and business for some reasons. First, integration provides a broader range of solutions for solving complex organizational problems. Second, integration ensures that human, financial and technological resources are given consideration in setting goals and assessing implementation capabilities.Strategic Human Resource Management Paper Third, through integration organizations must explicitly consider the individuals who comprise them and must implement policies. Finally, reciprocity in integrating human resources and strategic concerns limits the subordination of strategic considerations to human resources preferences and the neglect of human resources as a vital source of organizational competence and competitive advantage. This reduces a potential source of sub optimization (Lengnick-Hall and Lengnick-Hall, 1988). Integration refers to the involvement of HRM in the formulation and implementation of organizational strategies and the alignment of HRM with the strategic needs of an organization. To achieve strategic integration and alignment of HRM with business strategies, a documented HRM strategy would also be useful as it can make more concrete the role and authority of HR managers in corporate decision making and increase capacity to cope with externalizes such as a tight labor market. A documented HRM strategy helps the organization to develop and HRM vision and objectives and to monitor performance (Andersen, Cooper and Zhu, 2007).
To make HR managers more available for participation in strategic decision making processes, it is argued that the responsibility of routine execution and administration of HR practices should be delegated to line managers as they have direct and frequent contact with employees and a capacity to understand, motivate, control and respond quickly to employees (Andersen, Cooper and Zhu, 2007).
The New Human Resources Management for the 21st Century
HR must now be judged on whether it enhances the firm’s competitive advantage by adding real, measurable economic value as a business partner. The HR function and its processes now must become a strategic player (Beatty and Schneier, 1997).Strategic Human Resource Management Paper
21st century HR requires factors like; increased centrality of people to organizational success, focus on whole systems and integrated solutions, strategic alignment and impact, capacity for change. These factors are described below briefly (Ruona and Gibson, 2004).
Increased Centrality of People to Organizational Success: Undoubtedly the most powerful force affecting the evolution of HRM is the increased centrality of people to organizational success. The emergence of resource based views of organizations has placed increasing importance on intellectual and social capital.
Focus on Whole Systems and Integrated Solutions: It is clear that HRM has become increasingly systematic during their evolution’s. With the strategic proactive role of HRM, the challenge for HRM is to continue to develop innovative systems by focusing on the integrated functions and systems of organization.
Strategic Alignment and Impact: 21st century HR has become more integrated by its measurement efforts and it is expected that the importance of these efforts will increase in the coming years. This is all being driven by increased pressure to work on issues that are most important to the business and to provide organizational leaders with understandable information that helps them to make better and more strategic decisions about the workforce. Ultimately, it is essential to work together to enhance HR’s capacity to contribute to organizational and financial performance.
Capacity for Change: Today’s organizations must thrive in complex and unpredictable environments and must be extremely agile. This demands the development and implementation of structures and processes that facilitate incremental change.Strategic Human Resource Management Paper
The new human resources management for the 21st century should play a strategic role by contributing the strategy formulation process and being a strategic partner during the implementation of these strategies. The HR practices should be designed consistent with the strategies of the organization taking into consideration the essential HR needs. In parallel with these, organizations can be able to be more flexible, flat and agile in order to struggle with the changes in the competitive environment by gaining competitive advantage with their HR assets.
HR professionals need to lead flatter organizations by encouraging individuals to exercise more initiative, autonomy and accountability by providing tools and techniques that improve their effectiveness and by enabling the acquisition of critical competencies through continuous learning opportunities (Schoonover, 2010).
Conclusion
Strategic human resources management has gained more importance for the organizations in recent years because human resources are seen as the most valuable assets of the organizations for gaining competitive. Human resources departments have started to play a strategic role in the organizations and all HR functions are integrated with the mission, vision and strategies of the organizations. The new HRM perspective for the 21st century requires HRM to be strategic partners of the organization that coordinates all functions and supporting the strategies by attracting and retaining the essential qualified employees.
Strategic human resource management (SHRM) has emerged as a significant issue in tandem with the increasing focus being given by the companies to strategy. Faced with an accelerating changing and unsteady environment, the response of the corporation has been to attempt to create a sound internal configuration that includes human resource management (HRM) systems. The key to providing an effective response is to have an HRM system attuned to strategic requirements. The philosophical and academic bases for SHRM, proposed during the past three decades, have followed differing paths. This project attempts to bring together the differing approaches to SHRM and presents a consolidation and evaluation of these viewpoints. A discussion highlights the problem of semantics and pinpoints the controversies and contradictions implicit in the different viewpoints. This project underscores the emerging area of agreement viz. the increasing emphasis on the strategic nature of HRM and considering human resource as a strategic resource to be used to create and sustain a competitive edge for organizations.Strategic Human Resource Management Paper
Definition
Strategic Human Resource Management is essential to every firm and organization to define its plans and strategies on how the company vision and goals should be aligned and attained through people. It is founded on the following propositions:
1- Human resources is a key source of competitive advantage
2- Employees are those who implement the strategic plans
3- A systematic strategy should be implemented to define which pass the firm is willing to take and how it is going to reach its goals.
Strategic Human resource is a process that encompasses the use of different and wide approaches to the HR strategies development, which are vertically integrated with the business strategy and horizontally with each other’s.
These HR strategies outline intents and policies firmly related to the organization goals, such as people management, organizational efficiency, resource management, employee’s training and development, reward and recognition, knowledge management and the management of change in structure and culture. In general, Strategic HRM deals with any major employee’s issues that affect or are affected by the strategic plans of the company.
Goals of Strategic HRM
The foundation for strategic HRM is the real advantage of having an agreed basis for developing methodologies to people management in the longer term, and this is how a company can achieve a competitive advantage.
Strategic HRM gives a perspective on how to address people’s critical issues and success factors; it offers strategic decisions that have long term focus and affect the firm performance either in its success or failure. The goal of strategic HRM is to create special capabilities by ensuring that the firm has what it needed from highly professional, skilled, devoted and motivated employees to create and sustain a competitive advantage in the market. It is aimed to provide direction and guidance for individuals, in a turbulent business environment, by implementing various HR programs and policies. Also when it comes to strategic HRM, it is essential to take into consideration the interest and benefits of all the stakeholders in the firm, so in addition to the employees, the management and owners of the organization are also key individuals to consider in any strategy before implementing it.
There are two types of strategic HRM: soft and hard. The soft strategic HRM will focus mainly on the security of the employees, their wellbeing, the internal communication process in the organization and the employees’ work-life balance. The hard strategic HRM on the other hand, take into account before any strategic decision or even a policy implementation, the profit that the business will get in return of investing in human resources. So any organization rallying its team to achieve its goals and is following an effective strategy to reach its vision, should obtain and retains its skilled resources by using more often the concept of soft strategic HRM. However the hard concept comes first in many firms and could not be considered wrong depending on the business and its circumstances but it has been noticed that effective strategic HRM should combine the hard and soft elements to accomplish a proper balance for the benefit of all stakeholders.Strategic Human Resource Management Paper
Blending Strategies
Business strategies are set to achieve a firm’s vision, mission and objectives. Different environment, vision, mission, and objectives require different types of strategies and in order to frame and implement these, appropriate type of HRM strategies are required. Some authors call these blending of strategies with HRM strategies as strategic HRM. Miles & Snow (1984) investigated the competitive strategies of several hundred companies in more than a dozen widely differing industries. This resulted in their popular classification of organizations as defenders, prospectors, and analyzers depending on their strategic behavior and supporting characteristics. These authors attempt to relate the elements in the HRM system across these three types of organizations. With regard to HRM system, the basic strategy of the defenders, according to them, could be to build human resource, of prospectors could be to acquire human resource, and of analyzers to allocate human resource. Taking the case of performance appraisal, defenders and analyzers could be process-oriented meaning thereby that they could evaluate performance based on critical incidents and production targets while prospectors could be result-oriented by evaluating performance on profit targets. Tackling the important question of compensation, defenders could determine it based on the position of a person in the organizational hierarchy, prospectors on performance, and analyzers on a mix of hierarchy and performance popularly referred to as merit-cum-performance basis.Strategic Human Resource Management Paper
Approaches to Strategic HRM
Among the several viewpoints of SHRM, five major approaches to SHRM were identified and we shall discuss them below:
Strategy-focused Approach
Several authors (e.g. Mathis & Jackson, 1995 or Beer et al., 1984) view HRM and SHRM as identical. According to them, HRM is strategy focused and contains certain elements. This means that HRM by its very nature is strategic. The elements of HRM such as recruitment and selection or compensation do not strictly operate in isolation but are derivatives of the requirements of the strategy that an organization employs. Strategic planning dictates HRM planning. Though desirable and idealistic, this view does not seem to be fully acceptable by the thinkers. There is a feeling that HR planning is to some extent strategic but not in all its aspects. So the HR strategy should be a derivative of the whole organization strategy and aligned with it, it is an integral part of the business strategy. This is called vertical integration between business and HR strategy to accomplish each other’s. Also Horizontal integration with other features of the HR strategy is needed to combine its different elements together. The purpose is to attain an intelligible approach to managing individuals in a firm in which the various practices are reciprocally supportive.Strategic Human Resource Management Paper
High-commitment management approach
As per Walton (1985), one of the main characteristics of HRM is to stress the importance of enhancing mutual commitment and increase the level of trust within the internal relations in an organization. The approaches to achieve high commitment are detailed below as per Walton (1985) and Wood (1995):
– Reduce the hierarchies in a firm
– Emphasis a high level of function flexibility while diminishing the potential of strict job descriptions
– Increase the reliability on team structure for better team briefing and working and improvement problem solving in groups.
– Focus on the career development for employees by trainings to ensure commitment at all levels in the company.
– Increase employee’s engagement in the quality management.
– Introduce the merit payment system and profit sharing advantage.
– Design and provide jobs that have a significant level of intrinsic satisfaction.
– Introduce a policy of kind of permanent employment securities with low risk of lay-offs
High performance approach
This approach aims to create an impact on the whole organization performance through its people in all different areas as customer service, productivity, profits, quality, growth and eventually better shareholder value. The High-performance approach includes severe recruitment procedures for ultimate selection of employees, diversified management development activities, performance management processes, extensive training programs and incentive pay systems.Strategic Human Resource Management Paper
The characteristics of this approach are as follows:
– Close monitoring for personal attitudes
– Clear job description and design
– Rigorous recruitment system, careful selection of employee and training
– Performance appraisals
– Clear and proper complaint procedures
– Formal MIS system to share information within all people in the organization
– Reward and promotion system related to the high performers in the company
The High-involvement approach
This approach considers employees as partners in the organization and their input in every issue is taken into great consideration and their interests are respected, in general it focuses on involvement and communication. The aim is to keep the communication channels and dialogues between managers and employees always open in order to outline expectations and continuously share information about the company vision, mission, objectives and values. This will keep the whole organization synched and aligned on the same page, with a full and mutual understanding on what should be done and when, all in the benefit of the company.Strategic Human Resource Management Paper
The resource-based approach
As per Barney (1991), this approach aims to achieve strategic alignment between the resources and opportunities to obtain the best added value after effectively deploying the resources. This approach stresses on the development of managers and other employees who are capable of thinking and planning strategically and who can understand the key strategic issues. In this way, the company can increase its strategic capability and can obtain a competitive advantage because its human resources are enabled to learn faster and to adapt quickly and effectively to changes than its competitors. Those who apply this approach believe that by investing in hiring and developing more talented employees adds to their value and extends the skills base in the company. Thus the main concern is to enhance the human and intellectual capital of the company.
A convincing rational behind this approach has been produced by Grant (1991):
When the external environment is in a state of flux, the firm’s own resources and capabilities may be a much more stable basis on which to define its identity. Hence, a definition of a business in terms of what it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs (eg markets) which the business seeks to satisfy.
This rational says that if the company invests in human capital, it is investing in a durable and stable base, while focusing on market needs is putting most of the efforts on an unsteady environment. Thus creating a unique pool of high performing, productive, flexible and innovative talents, is the basis of developing and sustaining a competitive advantage that is hard to imitate. Why it is hard to imitate? Because when adopting an HR strategy, a company is creating a unique blend of policies, practices, styles, personalities and culture which enable the company to differentiate what is supplies to the customers from what the rivals are supplying.Strategic Human Resource Management Paper
Conclusion and Limitations of the strategic HRM
All the approaches of the SHRM are based on the theory that every business, after reviewing and auditing the internal and external factors, they create a business strategy and from this strategy they generate HR strategies in specific areas which should be aligned with the business strategy.
But what we see in real life is that strategic HRM is not a formal process and it is not a well communicated policy. Aligning strategic HRM with business strategy is definitely a good theory but it is difficult to achieve specially that HRM is the closest function that deals with people and is affected directly by the organization culture.
All in all, the emerging discipline of SHRM offers interesting and insightful variants so far as the views and approaches are concerned. An on- going effort is required to unravel the mysteries of SHRM that holds the promise of being a powerful tool to manage human resource in the environment of fast-paced changes that organizations are experiencing today.Strategic Human Resource Management Paper
Human Resource Management in the Tourism Industry
As a direct result of new and more sophisticated technology becoming available to us, businesses are increasingly growing to such an extent that they develop into a global concern. This means that the role of Human Resource Management has become very important within businesses, but it is still looked upon as a lower department. However, the concept of Human Resource Management (HRM) has been heavily debated in literature and is used more increasingly within employment sector organizations. The history of HRM could be summarized as it being developed initially from work in the USA in the 1960s and 1970s and was created from several interrelated sources and since then the concept has been spread from the USA, into Europe and eventually Australasia.
There is no formal definition of HRM because different companies imply different definitions from various evidential sources. Basically, HRM can be defined as a range of circumstances that affect the employment and contribution of people, against the criteria of coherence and appropriateness (Brewster, 1994). However, Kirkbride (1994) suggested that the use of the term HRM gives the general sense of the policies, procedures and processes involved in the management of people in various work environments. Bratton and Gold (1999) also noted that a definition of the subject matter under which HRM covers would help to analyse and understand the HRM practices. They also defined HRM the subject as:Strategic Human Resource Management Paper
“…That part of the management process that specializes in the management of people in work organizations. Human Resource Management emphasizes that employees are the primary resource for gaining a sustainable and competitive advantage, and that human resource activities need to be integrated within the corporate strategy, and that human resource specialists help organizations to meet both the efficiency and equity objectives...”
Mead (1998) states that the key terms in HRM literature are strategic focus. This meant that the need for human resource policies and practices had to be consistent with the overall business strategy, allowing the individual sections of a HRM package to reinforce each other. This should particularly emphasize teamwork, flexibility, employee involvement and organizational commitment. This, however, is a completely opposite message to the traditional demands on the human resource systems of countries like USA where there is a collective bargaining arrangement from both the employers and the policy-makers.Strategic Human Resource Management Paper
Therefore, the product market environment of the 1980s changed this situation so that the traditional demands would still be met, but at the same time the human resource management system would also meet their new demands at the level of the individual employee and throughout the entire organization (Beaumont, 1993). The Harvard Business School approach to strategic HRM suggests that the need for all the people involved with the business organization, such as the employees, their union, the customers, etc., should be taken into account when considering any organizational arrangements, and making ’employee influence one of the leading policy areas in their attempt to develop a pro-active, strategic and broad-based HRM orientation in each individual organization or department. The terms and content have changed considerably through the 1980s and 1990s, with a greater emphasis now being placed on the financial, communication and problem-solving activities. (Beaumont, 1993).
Again, Bratton and Gold (1999) also stated that HRM could be described as the organizations valued assets, emphasizing the commitment of employees as a means of competitive advantage, and therefore creating calculative, quantitative and strategic managerial aspects of managing the workforce in a rational and humane way.
HRM Practices
As there is an increase in the greater quality of competition, the higher the emphasis on the market and the constantly changing attitudes towards work itself has made it necessary to identify and adopt different management approaches. Even though the focus has moved from a structural and systematic way of thinking to the development of specific managerial practices that will stimulate a corporate culture and in return employee commitment is secured to the extensive use of employee resources by the HRM. Therefore, in order to understand why HRM is needed in the tourism industry, it is important to look at the role of HRM within an organization, as this is the custodian of competitiveness.Strategic Human Resource Management Paper
A review of the literature based on international HRM by Hazing and Ruysseveldt (1995) revealed three main areas of discourse; staffing, training and development, assessment and compensation. These are also considered to be the main activities in both domestic and international HRM. In general, staffing issues in an international organization usually involve filling critical management positions. This means that almost all employees in the middle management and more operative levels are always selected and recruited on a local basis to the organization. Sometimes, when certain candidates for upper management posts are being recruited, there are various options as to whether choose a candidate from the organizations parent-country nationals, their host-country nationals or even third-country nationals. The final choice, however, is definitely dependent on the attitude of the top level management at the parent organization.Strategic Human Resource Management Paper
According to Perlmutter (1969), these attitudes can be divided into three central categories; Ethnocentricity, Polycentricity, and Geocentricity. In respect to quality, top level management is continuously battling to weigh professional managerial skills and technical competence against environmental adaptiveness. Therefore, the ability to adapt to local cultures is a major factor, involving not only the candidate, but also their partner and their immediate family as well.
Training and development activities within international HRM systems, places such emphasis on shifting from the preparatory training needs of expatriates to a fully international training and development system which is available to all managers and will improve their performance in a global perspective, regardless of their country of origin. Today, these activities are crucial to international HRM. They can be wide-ranging which means the person who gets the job will need to know the specific organizational structure to which they will be assigned and the job and task skills required of them there.
They must also acquire an understanding of the local area including such things as the social, cultural, and legal aspects and develop the necessary interpersonal skills with which to perform well in various situations. The importance of the last two areas however was pointed out in a survey conducted by Harzing and Ruysseveldt (1995), where they identified cultural sensitivity and the ability to handle responsibility as well as the ability to develop employees, a manager’s three most important skills in their job role.Strategic Human Resource Management Paper
Finally, the last important task identified was that of assessment and compensation. This process of assessing and compensating international managers is complex in nature and can be reflected in the requirements used in such assessments. For example, Adler and Bartholomew (1992) suggested that these requirements are often a reflection of a more traditional approach to international managers, thus meaning their methods are based on the ethnocentric attitudes held by high management levels that are predominantly using parent-country nationals to staff their company’s foreign subsidiaries. However, such subsidiaries are subordinates to the main headquarters, both on an organizational and cultural level.
As a result, more open-minded, authors, such as Brewster (1994) and Stone house (2000) have taken part in the continuing debate on the concept of strategic HRM. They have argued that the underlying concept is the idea that human resources are not only a high operating cost for most organizations, but are also a major factor in the contribution of the effective utilization of all the organizations resources as well.
The Importance of HRM and the Business Strategy
One of the main features that defines strategic HRM is its close relationship to the business’s main strategy and is creates the argument of is there a direct correlation between strategic HRM and economic success? HRM only becomes strategic when in private sector human resources are promoted to a position where the organization looks and treats them as a competitive advantage (Kochan and Dyer, 1992).
This has raised a key debate in terms of how HRM can contribute to the overall success and competitiveness of the business. Until recently, however, most companies preferred a reactive management method within their human resources, leaving the personnel management to consist mainly of administrative activities.
The creation of multiple new macro economies have led to the concept and recognition of people as a valuable asset which if managed as a strategic resource can help an organization to achieve superior performance levels and gain a greater competitive advantage. This awareness has led human resource management directly into the spotlight (Storehouse, 2000). Therefore, HRM has a definite strategic approach in arranging human resources and getting involved in a closer alignment of employment allocation systems along with business strategy.
The integration of HRM and business strategy means that the level at which the HRM issues are considered are now playing a larger role in the formulation of business strategies. Indeed, HRM intends to focus on the issue of strategy and the more organizations that become knowledgeable of this relationship, the more human behaviour becomes a competitive factor, which is closely linked to the strategic direction of the particular organization.Strategic Human Resource Management Paper
According to Kirkbride (1994), an integration of business strategy and HRM as described earlier can have several advantages. Firstly, integration means that a broader range of solutions is available for solving complex organizational problems without the need for external help. Secondly, it ensures that the human, financial, and technological resources also are given equal consideration when setting targets and looking at the implementation capabilities.
Third, through this kind of integration, various organizations can explicitly concentrate on the individual employees, who the departments comprise of and their needs and only then can they implement their policies. Finally, the response to integrating human resources and strategic plans can limit the level of subordination of strategic planning in consideration of human resource preferences and, thus neglecting human resources as a crucial source of organizational operations and the creation of competitive advantage.
Whichever way you look at it, there is a growing body of evidence that supports the link of an association between high performing human resource management and organizational performance. It has been found that businesses whom linked HRM practices with their business strategy are constantly delivering higher financial performance outcomes. Beaumont (1993) argued that it is not just the relationship that is important but the quality of the HRM practices and a distinct approach is necessary in delivering high performance indicators. HRM strategies and practices must therefore be working well together within the individual business’s strategy planning.
Conclusion
All of the theories used in this review have been extensively researched to settle in their final point of view. This means that it should not be that difficult to find any related researches within the subject field or any other secondary data I come across to answer my research questions and meet the objectives of my research as a re-analysis of all the data that has been already collected could develop a new approach to the research.Strategic Human Resource Management Paper
Search of secondary-data will be aided by internet searches which should prove useful for survey results like organizational surveys, academic surveys organization’s employee attitudes, email questions etc. Also, looking at and obtaining multiple-source data that has been published such as journals from tourism business magazines, books, government publications and organization reports. On closure, an important note to remember is that the results from my research and survey, along with the results from other surveys found, including the relations with the literature review, should meet my research topic generally and settle in a clear and informative answer to my research question and its objectives.
Organizations are made of among others, human resources (HR) which is the most valuable asset in today’s dynamic world. Indeed, it is people and not organizations that constitute an organization. Achievement of organization’s objectives depends on the individually and collective efforts put in by its work force. Human resources management (HRM) may be defined as the coherent as well as strategic maximization of human resources capital in an organization towards making a return on that investment (Gold & Bratton, 2001).Strategic Human Resource Management Paper
The practice, in its efforts, effectively attempts to maintain a ‘fit’ between the employees and the organization’s overall strategic direction. Unlike technology and processes, people have a soul, aspirations, feelings and emotions. As such, the concept of people as an asset, do not indicate perceiving them as commodities. In managing people, the manager must practice disciplines based on psychology, sociology, industrial relations as well as industrial engineering and economics. In achieving an organization’s objectives, it is possible to adjust the technology employed by increasing production speed as well as reducing the machines’ downtime. For a person, who has a soul, ability to reason and act in response, it is hard to alter the person’s working speed as well as the duration. Proper management of human resources leads to a motivated workforce, a development to loyalty and an assurance of survival and success of an organization.
This paper pays a close look at the practice management of human resources in an organization. This will encompass the importance of the practice, functions within this office and some of the motivation techniques that can be used as well as their role in achieving organizational objectives. Furthermore, the paper will focus an attention to a reputable organization in determining the applicability of incentives and compensation in HRM. Every organization has its strategic future which is broken down into objectives that are measurable and comprehensible, so that the workforce can implement (Snell & Bohlander, 2009). The sensitivity and value placed on organizational strategic plan cannot be left in the hands its employees if they are incapable or not motivated. The organization has a responsibility not only to invest heavily in technology and detailed professional processes but also on its workforce and strategic management policies.
Discussion
Importance of HRM
HRM as a practice significantly offers support and advice to the line management within an organization. Management of human resources must ensure an attraction, preservation, loyalty and development of highly profiled caliber of people/workforce in order to provide a competitive advantage necessary for the survival and success of the organization. The image of an organization, which develops the goodwill, is largely dependent on how well its human resources are managed (McCoy, 1999). The management of the human resources assumes the following roles. First, HRM manages the demand for human resources. Economies in which organizations are based are dynamic. There are economical shifts of growth and decline that require counteractive measures within an organizations workforce. The said measures demands both quantitative and qualitative procedures within the workforce. The practices of retrenchments, hiring, early retirements and the contract renews for the experienced are all structural adjustments that responds to economical changes affecting organizations.Strategic Human Resource Management Paper
Second, HRM is responsible in managing social pressure in provision of the desirable environment for the workforce. The hygiene and safety of the working environment must be always maintained as it is a motivation factor in employees’ performance. The provision of appropriate protective gear while working, pollution free environment and other working conditions is a paramount concern for the HRM office Berger, 2008). Third, HRM is important in managing political pressure usually generated by calls to hire from local labor market irrespective of the resultant factors of cost and knowledge/skills. Though it is ethical to hire from the contextual economy, political pressure should not compromise the quality and quantity of organization’s production and a resulting failure in achieving the organization objectives.
HRM also manages the technology by hiring the right workforce or alternatively developing/training the existing workforce in response to technological change. Changes in technology can contribute to obsolescence of the working force which would spill over to the organization not achieving its objectives (Jackson, 2007). HRM office must always find the most appropriate method of counteracting a technological shift by either hiring people with the needed expertise or by training the existing one. In developing an organization culture the later would be more appropriate. If the earlier alternative is adopted, the competition pressure in compensation must be properly dealt with. HRM is also important in designing and management of strategic HR planning. Strategic HR planning is the informed projection of the organizations needs for the appropriate employees, both in quantity and quality, and balancing off this with the organizations ability to sustainably meet the demands of those employees for a substantial period of time in the future. As such, the budgetary constraints associated with right hiring are cheked.HRM needs to make these projections in agreement with the line/functional management’s assumptions.Strategic Human Resource Management Paper
It is also the responsibility of HRM to initiate, alter and manage job design. Job design is the arrangement/rearrangement of work that is aimed at checking or overcoming employee’s job dissatisfaction and alienation resulting from repetitive tasks. In curbing this state, the HRM office should conduct job enrichment, job rotation, job enlargement and job simplification exercises. All these procedures are aimed at raising productivity levels which is the ultimate goal of the HRM’s office. In cases of mergers and acquisitions, it is the sole responsibility of the HRM’s office to rationalize, orient and harmonize the human resources in the involved organizations. The fundamental issues behind mergers and acquisitions are, more often than not, undesirable and unwelcome by employees (Bilsberry, 2005). The task of making an otherwise unpleasant issue acceptable lies squarely at the HRM’s office. Moreover, since work environments are different across organizations, the HRM must orient the various workforces involved to the new objectives and/ or organizational culture.
Finally, the HRM is responsible in managing implementation of change. Change may be in terms of process, organizational structure, systems and culture among others. Changes are the inevitable twists that affect the normal and known paths through which an organization operates. Some of the aforementioned twists arise internally from the organization’s need to achieve new status. Others are externally experienced due to the shifts in the business environment. The issues aforementioned under the discussion are achieved through the functions of the HRM office.
Functions of HRM
Generally, HRM management can be subdivided into three interlinked phases. The practice functions include recruiting qualified human resources, managing the employees in the working environment as well as preparing and enforcing exit of the employees from the organization. The process of recruiting employees arises from the organization’s need to properly position itself in the economy. Ideally, recruitment should follow an order closest to; vacancy advertisement, selection of potential candidates, interviewing and contracting the successful candidate(s). Once in the organization, new employees are inducted and trained. It is during work performance that issues such as motivation, compensation development, disciplinary actions, performance appraisals, career planning / development, counseling, talent management, safety management and staff communication are conducted (Gold & Bratton, 2001).Strategic Human Resource Management Paper
The employees continuously offer their service to the organization under the existing HRM measures until they exit. Exit may result from retrenchment, obsolescence, retiring, resignation or termination of employment. The HRM at this phase has a responsibility to counsel and prepare the exiting employee for the challenges and opportunities awaiting the employee in the future. The office should ethically hand over all the legal documents and benefits to the exiting employee for positive development of the organization’s goodwill/reputation in the corporate world. If need be, the HRM should have a succession plan for implementation at this phase. Motivation as a HRM activity can completely change the perception of employees while in the work environment. Different people in the workforce are motivated differently across and longitudinally with time. Compensation and incentive is a major motivation element that is easily applicable in many organizations since, almost every employee joins an organization with a sole/major purpose of earning.
Compensation and incentives HRM
An incentive can be defined as any factor, that can be financial or non financial that accounts for preference or stimulates/enables a specific course of action. It can as well be said to be the bonus paid on successful achievement of performance objectives. Compensation is the art of offering/giving money or something else, which can easily convert to money, for purposes of paying for work done. In general, compensation and incentive can be referred to a compensation package. A compensation package is the value placed on an employee as presented to that employee. Compensation can be categorized into three categories. First, there is non monetary compensation. This is the benefit received by an employee which cannot be tangibly valued. Such can include social and career rewards. Job security, recognition, opportunity for growth, flexible working hours, subsidized housing, magazine subscription, laundry services, elder care, are some of the non-monetary compensations (Berger, 2008). Second, compensation can be direct which is the employee’s base wage/salary expressed as salary or hourly wage as profit sharing bonuses paid based on performance. Finally, compensation can be indirect. The later includes facilities like health insurance, paid leave, moving expenses and child care being provided by the employer.
There is a corporate general consensus insisting on relating pay with performance for effectiveness. This may not necessarily be applicable in sectors such as agriculture where many performance results are dependent on factors beyond organization and employee control. Whichever the compensation used, it should also be fair with the market and not discriminating against some employees (Campbell, 2006). A job evaluation should be conducted in placing a value on employee. In such an evaluation, compensate factors such as experience, education level and job responsibility should be considered. Moreover, employees should be involved when considering their indirect compensation needs such as paid vacation, retirement planning, childcare among others. The HRM officer should regularly review the compensation package from time to time to maintain its fairness, equability and competitiveness.Strategic Human Resource Management Paper
Importance of compensation and incentives in HRM practice
Use of compensation and incentives is an importance practice in HRM as it has the following advantages. First, to many employees, the basic purpose for joining an organization is to secure a pay. The value placed in such a pay and not necessarily the amount/size motivates the employees more, and as result higher productivity levels are reported. Second, compensation facilitates hiring, retention, promotion and evaluation of the workforce. Without mentioning aspects of compensation, the HRM office might find it impossible to convince people to join the organization to work or even the existing employees to assume higher responsibilities (Armstrong, 2006). Third, compensation displays legality of a contract/employment. For a contract to be valid there has to be a consideration, which is partly what a pay or remuneration package serves. Compensation, especially bonuses, which practice sharing of profits with the employees, creates a sense of belonging to the employees. This is extremely important in securing employee’s loyalty during hard times in managerial practices.
In addition, compensation assists in valuing an organization as well as determining its future. Once the HRM office is capable of properly remunerating workforce, the employees are almost assured of their organization’s survival. Usually, when an organization is going under receivership, employees are the first victim as there is reduced employee compensation, which may in acute scenarios deny them their basic livelihood. Finally, compensation and incentives are the easiest motivational practices available for use by the HRM. This is because compensation is directly linked to employee’s welfare more than the improvement of working conditions (McCoy, 1999).
HRM at Coca Cola Company
Coca Cola Company is one of the leading beverage production companies. The firm that traces back its existence in 1886 ascribes to the philosophy that, it is people and not technology creates an effective organization. Employees are regarded as assets and as such their health and benefits are highly considered. Benefits compensations and benefits given at Coca cola company include a basic pay, medical facility, bonuses, picking and dropping of employees to and fro work station, gratuity fund as well as social security. The company has never performed downsizing exercise during its existence which displays a good relationship between the company and the employees (Berger, 2008). The company also practices an open door policy. Open door policy provides an opportunity for feedback from employees and vice versa. Compensation package review is objectively done from the annual performance evaluations. At the beginning of every year, HRM office communicates the objectives of the company and reviews their achievement at the end of the same period. The training policy for employees is well established to ensure that employees do not become obsolete. For example, new employees get a three month paid training while existing employees get a full free on new technology before they can use it. Training of employees is a non tangible compensation that assures employees of their job security.Strategic Human Resource Management Paper
Conclusion
As drawn from the evaluation above, effective management on human resources requires both scientific and a human relations approaches. The emphasis is both goal oriented as well as human welfare oriented. Any successful organization must invest sufficiently on HRM aspect failure to which the wrong organization culture will be developed. In order to effectively invest on the human resources modern firms ought to institute humane employee relations policies, reviews on package offered, appraise performance regularly, build motivation-oriented culture and possibly institute open channels to assist in participate management practices where employees are deliberately engaged during decision procedures. Conclusively, HR practices are crucial for organizational general performances levels and any move to drive the firms towards higher goals ought to be premised on attainable HR strategic goals. As evidenced, strategic policies crafts a decisive goal’s path for firm’s benefit whilst building effective workforce team.Strategic Human Resource Management Paper