Is Strategic Human Resource Management Really Strategic?
Human resource management (HRM) is a common term used to a depict range of functions aimed at successfully managing an organisation’s workforce or “human resources. ” HRM professionals watch over the “people” side of an organisation as well as benefits, hiring, training, career development, and many other functions.
Although many persons know the HR department as the people who conduct interviews and describe company benefits, the occupation has a much greater role in today’s business. The goal of HRM is to help out organisations to meet their strategic goals by attracting and holding qualified workforce, and managing them efficiently while ensuring that the organisation complies with all proper labour laws. The field of HR management, previously known as personnel management, is presently in transition.Earlier, HR was considered as mainly an administrative function, but this point of view is changing now. Modern HR expert must comprehend the whole business, not just field of human resources. Today’s HR professionals are becoming strategic business partners who perform role of adviser and consultant to senior management concerning effective use of an organisations’ number 1 resource: its employees.
The emergence of strategic human resource management was necessary to deal with the imperfections of personnel management. Personnel management was a reactive response in using the skills of an organization’s employees to benefit an organization. But globalisation and continuously increasing competitiveness require organizations to have strategic responses to change in place, in the form of flexible strategies and structures.Definition and PerspectivesAs stated by Lundy and Cowling “the concept of strategic human resource management is a process through which the human resource management of the organization would be linked to strategy”. Strategic human resource management can be described as the vertical and horizontal integration of human resource management functions and activities, such as recruitment and selection, training and development etc. into the broader corporate strategic planning process, which ensures organizations utilize their employees at all levels to create and sustain a competitive advantage (Lundy, Cowling).
Strategic Human Resource Management (SHRM) is a link of the human, social, and intellectual capital of its members to the strategy of an organization; it is an outcome and a goal. “The aim of Strategic HRM is to contribute fully to the achievement of business objectives (Armstrong).” There are essentially two major approaches to SHRM, hard and soft. Hard refers to focusing upon measurable and tangible standards of employee performance. This is a formal and administrative/accountancy approach to people management and accords with the emphasis on delegated budgeting to operational units e.
g. branches of a fast food outlet. The emphasis is on evidence, measurement, budgets, and accountability. Soft SHRM is more concerned with intangible qualities such as managing belief, culture and beliefs, all very real but not so easy to measure with accountancy tools and budgets. The management of employee commitment and managers as leaders is emphasised.
(Marchington ; Wilkinson )All the different interpretations and ideas of strategic human resource management, proves it difficult to allocate it within an organization, and it is therefore easily categorised as an ‘elusive concept’. For example, if strategic human resource management can be defined in so many different forms, then if we were to analyse an organization and try to discover whether strategic human resource practices are being implemented and maintained, it would be hard to find. What is clear however is that whichever variation of strategic human resource management is implemented by the organization, its adoption will impact directly on the management of people at work. Individuals within an organization need to be considered as an integral component of an organization, equally as the finance, production, marketing etc. departments are.
(Bach)HRM can be seen as a development that originated from traditional personnel management and which has replaced it to some extent. Key managers and some professionals in the personnel function felt the old system was no longer functional and there was a need for a change in the status of personnel practitioners as well as for getting them more involved in business decisions. HRM also reflects changes in philosophies and practices with respect to the management of people in organizations.In HRM there is a greater emphasis on strategic issues and on the way in which the human resource contributes to the achievement of cooperating objectives. Amongst the natural concerns of the organization are sensitivity to the needs of stakeholders, the development of human resources to meet future challenges, and ensuring that people’s energies are sufficiently focused in order to add value to organizational inputs. HRM underlines the importance of flexibility and the ability to react and adapt quickly management, where the requirement of the quality of both the operations of the organization and the product or service trigger a need for high calibre staff to secure competitive advantage.
(Bach)Every well-established organization has a vision. The process of materializing a vision into results is a complex one, yet if illustrated step by step, a clearer picture of what to do will guide and motivate those involved in this process. According to Lundy and Cowling, a strategy is a pattern or plan that integrates organizational major goals, policies and action sequences into a cohesive whole. In other words, if an organization desires to achieve these major goals, this plan, referred to as strategy must adhere and include all of its other sub-parts. In a more practical way, the sub-departments must be fully enrolled in this process of moving from vision to results, by using this so called strategy. It is then when Human Resources play a vital role to be one of the departments, which must be aligned to the corporate strategy.
(Lundy, Cowling)The Human resource department is in charge of managing the people who will perform in order to achieve these major goals. It is through the well-being and consequently the performance of this people that an organization will attain these so desired goals. This is the genuine reason why the Human resource strategy needs to be synchronized with the corporate strategy. It is as easy as comparing it with a car engine. If all the parts of the engine are properly aligned and these parts are in a good state, the probabilities of the car running are greater to reach to desired destination.
As opposed to if there are disparities in the engine, the most probable result will be that the car will not run! The effort in this “driving” will aid an organization in moving from abstract pictures to a concrete reality.A strategic orientation is a vital ingredient in human resource management. It provides the framework within which a coherent approach can be developed to the creation and installation of HRM policies, systems and practices. The aim of strategic human resource management is to ensure that the culture, style and structure of the organization, and the quality, commitment and motivation of its employees, contributes fully to the achievement of business objective. (Armstrong)The concern with strategy, which emphasizes on integrating policy with organizational strategy, taking a long-term perspective and resource rather than cost, distinguishes HRM from personal management.
It is claimed that personal management is substantially reactive, however HRM, exemplified by strategy, is proactive. SHRM takes a proactive way towards the competitiveness and efficiency of the organization instead of reactive day-to-day oriented personal management. Strategic literatures stress the internal resource of a business as the source of competitive edge, which can be maintained by the following aspects (Storey):§ They must add value to the organization activities§ They must be rare, unique§ They must be unable to be replaced by technology§ The competition should have difficulty in copying them / nonimitable§ These criteria of HRM appear in the form of skills, expertise and experience;ImplementationConsidering that one of personnel management’s main weaknesses was “derived from its failure to develop a sound theoretical base” (Lundy and Cowling), strategic human resource management theory consistently puts forward reasons why, to achieve a strategic link with organizational goals, it would be beneficial and is necessary for survival and increased competitiveness. Although, various literature state that strategic integration is not well developed, according to Storey strategic human resource management is being practiced “but is perhaps not well enough thought out”. (Storey) Torrington notes that the difficulties in implementing a strategic human resource approach are due to the fierce political dynamics and cultural system involved with human resource issues.
The reason for this is because organizations have not managed people strategically. The two major challenges confronting the successful practice of strategic human resource management would be the increased pluralism within the organization and the institutionalisation of change. (Torrington)Although HRM unashamedly embrace a cost effective business approach, it values employee for a perfectly understandable reasons. Being concern with the well-being of people is seen as a powerful way to motivate and inspire the work-force. HRM takes a systems approach to the analysis and management of organization.
It likes to see the different parts of the organization functioning effectively and together moving cooperatively towards meeting the overall goals of the enterprise. This is facilitated through the management of systems such as human resource planning, recruitment and selection, appraisal, training and development, and rewards. These systems must be integrated and “pull in the same direction”. In this way the HRM function assists the organization to be more effective and profitable.One of the central themes of strategic HRM is its use of the term ‘strategic’, which incorporates planning, a congruous approach to the management of HR systems, and seeing employees as a source of competitive advantage (Marchington, Wilkinson).
Strategic HRM seeks to ensure that all business planning processes realise that the ultimate source of value is people, and that the firm’s distinctive competencies and the types of people who are needed to build and maintain them are identified. Such a view makes HRM an equal partner in the strategic planning process. “The management of people is not a distinct function but the means by which all business strategies are implemented.” (Armstrong).Strategic integration and the promotion of employees’ commitment are key features of the HRM that bring about a new role and scope for the personnel function in the organisation.
It is the vital to the ongoing success of an organisation in today’s highly competitive market place. A strategic approach to HRM does everything to ensure that the right number of the right types of motivated, energised, and self-directed people with creative ideas and corporate commitment are there to manage the organisations business and in return the people are given adequate reward, agreeable job securities, continuously enlarging opportunities, and reinforcing employer-employee relationship.One of the major strategic IHRM issue is the ‘proactive’ identification of the determinants of expatriate success, and the use of selection, staff management and training processes to ensure that these determinants are met. The market place for talented, skilled people is competitive and expensive. Taking on new staff can be disruptive to existing employees. Also, it takes time to develop cultural awareness, product and organization knowledge and experience for new staff members.
Faced with rapid change organizations need to develop a more focused and coherent approach to managing people. In just the same way a business requires a marketing or information technology strategy it also requires a human resource or people strategy.Manpower planning – one of the key functions of the HRM. It is the process by which an organization determines its human resource management needs and issues, and develops and implements plans to address them. “It is the systematic and continuing process of analysing an organization’s workforce needs under changing conditions and developing personnel policies appropriate to the longer-term effectiveness of the organisation.” (Marchington, Wilkinson) It is an integral part of business planning since workforce costs and forecasts both affect and are affected by longer-term business plans.
Successful manpower planning is action strategic, so that more effort is applied to execution of the plan than to its development. Essentially action plans will be developed in a combination of the 4 areas: recruitment of the right people, training and development skills and capabilities, effective performance management and reduction of excess manpower through retirement, transfer and reluctance. (Marchington, Wilkinson)The programme of recruitment and selection is one effective way to reinforce the strategy and culture within organisations. It is clearly that a correct application of recruitment and selection can contribute the aim to preserve and underpin the core cultures and values of the organisation, therefore, the performances, reflections to the customers could be promoted by the strong impacts of the organisational culture that will guide the behaviours and attitudes of the individuals and groups. Meanwhile, individuals and groups will influence with each other.
The continuously development of the organisation will provide the stability and pride to the employees, which means the possibility for the organisation to attract, develop and maintain top-quality employees who are the essential assets to achieve the business objective successfully.On the other hand, none of the employee or the firm could be benefit from an ineffective recruitment and selection. A failed and wrong-directed programme of recruitment and selection will lead to a waste of company assets and society human resources as well as the restriction to the individual development. Therefore, the recruitment and selection programme plays significant role in the reinforcement and development of organisational culture so that it must be regarded as the first stage to ensure the health of firm’s strategy and culture.The process of appraisal enables organizations to take stock of their skills mix and standards, and for employees to look to where and how they should develop. Appraisal works best where there is objectivity, enhanced by trust.
The organization must appraisal their staffs fairly and objectively and tries to help them achieve their personal goals. The managers of the organization will review the employees’ previous work, and appoint some qualified employees for the manager’s position because they are excellent in their previous job. The newly appointed managers will find new projects or roles present new challenges, for which previous work has not equipped him.The most precious resource in any organisation is the staff. The greater the ability and application of the team members, the more successful the business will be.
The encourage of creative and experimental behaviour not only requires the necessary skills and confidence on the part of the individual, but also a long term training and development strategy by the organization. In order to fit with the constantly changing environment and variable job requirements, the training provided should be continuous; less structured and should focus on individualized knowledge requirements. This should enable employees to adapt to these changing conditions, to respond in unique ways to new challenges, and to become more comfortable with ambiguity.Training and development starts with the effective induction of new employees – the period of training, which takes place immediately on recruitment. The market for talented staff is becoming international and the ability to recruit, develop and keep them gives a significant, sustainable competitive advantage. New staff cannot be expected to know everything about the operation of the business therefore they are put through the training program to gain some knowledge of the organization and the business culture within the company.
Also, training can increase the range of skills available, which can be used in other parts of the organization. Multi-skills increase scope for the retention of staff in the off-season period. There is not scope to carry earner, training helps employees become effective as soon as possible. In addition, the organization will provide some management development program to help managers acquire new skills, or refresh existing skills through practical activities, discussion with other managers, and learning fresh approaches. These programs may include appraisal skills, meeting skills, motivation, negotiation, decision-making, innovation, problem solving, maintaining high performance, and etc.
To some extents, the company will provide the international managers with in-house training, including the nature of the companies’ international operations abroad, cultural sensitivity and flexibility in connection with different management cultures, language training and information technology communication skills. That will help the managers to possess international experience and ability to operate successfully in the international area. (Industrial Relations)Another forms of strategic decision-making are consultation and negotiation, where two or more parties approach a problem or situation wanting to achieve their own objectives – which may or may not turn out to be the same. In the employee relation’s arena, negotiation usually takes place within the collective bargaining environment. Also, the organization needs to consult with the workers or union to communicate some key company policies with the workforces and motivate employees through involvement.
The internal human resources strategy that companies are increasingly relying on to improve productivity, product and service quality, flexibility and adaptability to market demands, innovativeness, and time to market is employee involvement. Companies that are managed and operated in this culture are high-performance workplaces, where the emphasis is on teamwork and cooperation between employers and employees. Get the staff to contribute ideas, involving them will provide a new way of looking at the business. Getting the staff involved will mean that they are more likely to be committed to playing their part in meeting the targets. Employee involvement seeks greater employee participation in workplace decision-making. (Industrial Relations)Some structures or strategies of human resource management can be seen to be familiar to old practices, such as reductions in management and decentralisation, and increasing performance-based rewards.
But strategic human resource management involves more than just decentralisation. New practices include outsourcing, replacing the vertical flow of communication with horizontal ties between management, and cross-departmental collaboration. The key factor of effectively executing human resource strategies, are through the capacity for change, because it integrates the effects of improved competence and commitment to achieve and maintain competitive success. ConclusionIt is difficult to identify what extent we can point to ‘x’ and state that it is really strategic human resource management. The reason for this is that the underlying concept of strategic human resource management is that an organisation must be flexible and reactive to change, yet, how can an organization plan for the future if the future is not predictable? A turbulent environment needs be matched with increasingly sophisticated approaches to strategy. If an organization holds internal flexibility and mentality, it can pick up and respond strategically to even very weak environmental signals.
But also to identify ‘x’ as being strategic human resource management, is to define exactly what strategic human resource management is, which has been portrayed throughout this entire discussion, as an impossible task.Although, once a definition has been chosen, it is easier to pinpoint ‘x’ because it would assist in measuring it. For example, through improving organizational results such as increased productivity, employee commitment, and enhanced process indicators. It is true to say that it can prove to be difficult, complex and even confusing to measure strategic human resource management, but it is not impossible. The easiest way of doing it would be initially for the human resource executive to clearly understand the organization’s goals and then turn them into measurable strategic human resource practices.
Strategic human resource management is difficult to identify within most organizations because of the different descriptions it carries, and the intangible benefits and outcomes it provides organizations, but it does exist. Not only because there are numerous theories and frameworks to support its existence, but if a complex concept can not be easily measure, it doesn’t mean it is not real nor being used within organizations who want to succeed now and in the future.Unfortunately, while advances have been made towards the increased use of strategic human resource management, human resource executives seem to have to continue to prove their credibility and contribution they can offer, which provides a barrier to the success of strategic human resource management. The alignment of strategic human resource management theory with its practice is undoubtedly the challenge for human resource specialists now and in the future.In conclusion, while it works well in theory surrounding the issue of SHRM, human resource management seems to be problematic in practice.
Based on the discussion above, we have to admit that strategic human resource thinking, which provides a framework for HR requirements over a period, has its basis on rational thinking but in practice personnel managers have a variety of difficulties in appreciating and implementing the strategy. Some of the problems people face include developing new initiatives, restructuring, changing and retaining for new skills. And more difficulties come from cultural and behavioural change and so on. Strategic human resource management stresses numbers, quantitative statements, attitudes, behaviour and commitment while uses harder ‘matching’ models of HRM (Storey), but the implementation is problematic particularly when the responsibilities pass to the line managers. In practice, there are both objective and subjective factors relating to line managers and supervisors that lead to several blocks and obstacles to the integration between HRM strategy and organization strategy and the implementation of strategy.
In summary, it is fair to say that human resource management theory works well in theory but not in practice.;