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THE IMPACT OF HUMAN RESOURCES STRATEGIES ON THE ORGANIZATION

Without the continued emotional and financial support provided by my parents, I may have not reached the end of this journey. During my studies there were times when work Commitments and intermittent financial stress made me believe that I would not be able to see this journey through.

It was during these times, and many others, that my parents’ words of encouragement and their confidence in my ability gave me the motivation to persist. No words of thanks can adequately express the depth of my appreciation and love.

I would also like to seize this opportunity to personally thank my supervisor Mr. Terry Shevels. I cannot express the extent to which his support and understanding allowed me to reach the end of this journey. His encouragement, support, understanding and, above all, his prompt, constructive and greatly appreciated criticism and feedback, were invaluable to the research, writing and completion of this study. Thank you.

ABSTRACT

Information technology is expected to drive Human Resource (HR)'s transition from a focus on Human Resource Management (HRM) to Strategic Human Resource Management (SHRM). This strategic role not only adds a valuable dimension to the HR function, but also changes the competencies that define HR professional and practitioner success.

The study aims at investigating what role if any do Human Resource Information Systems (HRIS) play in SHRM. It attempts to examine how HR professionals and managers in different organizations see the effects of HRIS on strategic HR tasks and job roles. It also tries to find out if there is any significant difference in the usage of HRIS between Small/Medium (SME) size and large size companies. A survey questionnaire was sent to different companies.

The target group of the questionnaire was HR managers, HR directors, and HR professionals in companies based in England. The scope was widened to include both large and small/medium sized organizations across all the business sectors.

The results of the survey reveal that HR professionals not only consider HRIS usage as a support for strategic HR tasks but also perceive it as an enabling technology. The study also indicates that large sized firms are most likely to experience considerable HRIS usage in support of strategic HR tasks. Moreover, there was no significant difference in proportion to the size of a company regarding HRIS usage in support of commitment management and managing trade union relations with organizations. Low response rate of this study makes generalization rather difficult however, future research would benefit from higher response rates for more generalized results

OVERVIEW

The relationship between the HR strategies and the firm’s performance is an issue that has caused significant differentiations in the literature mostly because of the existence of many parameters that can influence the results produced through the examination of this problem in practice. Moreover, because within a firm, the participants and the interests are many it is difficult to identify the role and the significance of each particular organizational element particularly when there is no specific corporate plan for such an investigation.

RESEARCH PROBLEM

The human resources strategies followed by modern organizations present significant differentiations in accordance with the firm’s position in the market, its performance and its financial strength in general. In the long term, the application of specific human resources strategies has been found to be related with the performance of the organization. Moreover, where appropriate HR plans have been applied, the organizational performance has been found to be increased.

AIMS AND OBJECTIVES OF THE RESEARCH

Current research as already mentioned above will focus on the examination of the relationship between HR strategies applied within a particular organization and its performance. In order for the above task to lead to valid results, a series of other issues are going to be examined at a secondary level. These issues are indicatively: a) Which is the significance of the HR for the organizational operation, b) How the HR strategies can be more effective? c) Is there any chance for innovation in firms with specific HR plan or any relevant initiative has to be adapted to the existed framework? d) Which are the main aspects of organizational growth and e) Are there any other factors that can influence the firm’s performance and which would be their interaction with the HR strategies already implemented in the particular firm?

LIMITATIONS OF THE RESEARCH

Current research is limited by the fact that it is rather unlikely for companies to provide data related with their employees’ problems related with the workplace. On the other hand, any programs or support tools existed are very likely to be provided by all firms that would be ‘engaged’ in the research of current project. For this reason, although the job satisfaction and the personal development of employees would be rather easily monitored, the existence of problems in the workplace would be difficult to be proved. For this reason current research – as already described above focuses on the examination of the human resources strategies followed by organizations in general as these practices can be observed in most firms of modern commercial market. The existence of specific differentiations in accordance with the specific issue will have to be proved either by statistics released in general or by cases examined particularly in the legal area.

INTRODUCTION

According to Likert, “Every aspect of firm’s activities is determined by the competence, motivation and general effectiveness of its human organization. Of all the tasks of management, managing the human component is the central and most important task because all depends how well it is done”. This quotation sums up the importance of human components in an organisation and the need for managing it effectively. Human resource management is concerned with all aspects of managing the human resources of an organisation. More specifically, human resource management involves determining the organisation’s heed of human resource, recruiting and selecting the best available employees, developing, counselling and rewarding employees, acting as a liaison with union and government organisation and handling other matters regarding to the well being of employees. Each of these functions is necessary to some degree irrespective of nature and size of the organisation. That is why in most of the organisation a separate department know as Personnel/Human resource Department is created for the effective performance of these functions.

The relationship between the HR strategies and the firm’s performance is an issue that has caused significant differentiations in the literature mostly because of the existence of many parameters that can influence the results produced through the examination of this problem in practice. Moreover, because within a firm, the participants and the interests are many it is difficult to identify the role and the significance of each particular organizational element particularly when there is no specific corporate plan for such an investigation.

Organization must have a set of unique resources for gaining competitive advantage moreover proper utilization of those resources matters a lot. Today organization employee acts as a main resource and knowledge, skills and abilities have to be deployed and used to the maximum effect if the organization is to create value.

LITERATURE REVIEW

Human resources should be considered as a significant organizational asset. In this context, the application of the appropriate strategies for its development, can lead to the improvement of the corporate performance both in the short and the long term. However, there are also companies where human resources are not considered as having particular importance for the firms’ growth. In this context, Haines (1997, 95) supported that there are firms that “view their human resources as an expense rather than an asset an element that is expendable and perhaps discarded when the skills possessed becomes obsolete; however when human resources are viewed as an asset, companies enhance individual value through training and human development and ensure continued contribution to the organization”. The importance of human resources for the corporate performance has in any case proved both in the literature and the empirical research conducted in all industrial sectors. In accordance with the above, in order for a firm to achieve a stable and continuous growth, it is necessary that its employees are satisfied – as this term has been explained in the literature. More specifically, in accordance with Kim (2005, 669) “job satisfaction is an affective or emotional response toward various facets of one's job. Job satisfaction has been a topic of great interest for researchers and practitioners in a wide range of fields, including organizational psychology, public administration, and management”. On the other hand, the existence of job satisfaction has been extensively related with the level of payment of employees in the particular sectors of a specific organization. Indeed, the study of Rudman (2003) showed that “paying for performance is a big issue in contemporary human resources management; organisations have long believed that production and productivity improve when pay is linked to performance, and have developed payment-by-results (PBR) systems and incentive schemes to support this belief”. In the same context, it is noticed by Blinder (1990, 117) that “employees usually feel that profit sharing and gain sharing are good for personal effort, company growth and productivity, and workplace atmosphere”.

However, in order for the firms to achieve the maximum level of growth, it is necessary to design and apply the appropriate HR policies as indicated by each particular firm’s needs. The use of ‘fit’ as a criterion of evaluation of the appropriate corporate strategy has been extensively used in practice. Towards this direction Wright (1998, 56) mentioned that “the basic theory behind "fit" is that the effectiveness of any HR practice or set of practices for impacting firm performance depends upon the firm's strategy (or conversely, the effectiveness of any strategy depends upon having the right HR practices)”. In other words, the issues that need to be considered by a firm before applying any relevant HR strategy are many. Indicatively, Katzell (1975, 5, 11-12) tried to identify the relationship between the employee satisfaction (as a result of a specific HR strategy) and the corporate performance and found that “policy-makers must face up to a serious dilemma and find some way to resolve it; the dilemma is this: policy-makers would like to achieve two objectives for work organizations, on the one hand to enhance productivity and performance, and on the other to improve the quality of working life and job satisfaction for employers because under certain conditions, improving productivity will enhance worker satisfaction and improvements in job satisfaction will contribute to productivity; what it does mean is that there is no automatic and invariant relationship between the two”.

Under these terms, corporate performance has been found to be related with the employees’ performance within a particular organization. From a different point of view, Lawler et al. (2003, 15) supported that ‘HR's greatest opportunity to add value may well be to play a role in the development and implementation of corporate strategy; HR can make a logical case for being an important part of strategy development, because of the importance of human capital in the ability of the firm to carry out its strategy”. In other words, HR strategy can influence the firm’s growth in accordance with the measures provided for the personal and professional development of the firm’s employees even in the long term. The implementation of appropriate diversity strategy has to be considered in this case as absolutely necessary because in case of inequality in the workplace, no cooperation would be regarded as existed – even if such cooperation exists, it will be problematic. In this context, Mathews (1998, 175) noticed that “before diversity strategies are implemented, the organization's cultural environment, management and evaluation systems should be examined to ascertain if existing personnel/human resources processes will support or hinder diversity in the organization; then, appropriate strategies can be designed to develop and manage diversity based on these findings”.

From the same point of view, Ramlall (2003, 60) supported that “given that several large-scale studies have proven that HRM is a critical driver in an organization's financial performance, it is imperative for HR and other leaders to understand the critical nature and utmost importance of understanding the effectiveness of all HR activities in creating value for the organization”. To a more thorough examination of the problem, Christensen managed to identify the five elements that are considered as most crucial in the improvement of the employees’ productivity (as this improvement is expected to lead to the increase of the corporate growth). More specifically, Christensen supported that there are five elements which are extremely important for the effectiveness of employees within a particular organizational environment. These are (1958, 34): “a) The technical organization of the group; b) The social structure of the group; c) The individual task motivation, i.e., the willingness to work hard that each member brings to and maintains toward his job; d) The rewards he receives from doing the job, and e) The satisfactions he obtains from being an accepted member of the group”. The above elements can exist in any organization and can influence the productivity of its employees either in the short or in the long term.

HUMAN RESOURCE MANAGEMENT (HRM)

During and after 1970’s, several changes took place in many countries which led to the term “Human resource Management” in place of the traditional term “Personnel Management”. These changes, declining importance of trade unionism, shift from industrial employment to service sector employment, growing competition, deregulation of economies, etc. As a result, three important roles of human resources have emerged as stated below.

Human resource policies can be integrated with strategic business planning and used to reinforce appropriate culture.

Human resources are valuable and a source of competitive advantage.

Human resources can be tapped mostly effectively by mutually consistent policies which promote commitment and ‘Foster a willingness in employees to act flexible in the interests of the adaptive organisation’s pursuit of excellence.

The term ‘Human resource management’ has been the subject of considerable debate, and its underlying philosophy and character are highly controversial. Much of this controversy stems from the absence of a precise formulation of and agreement on its significance and definition (Storey, 1989; and 1995a), as cited by Bratton and Gold (2003: 7). Obviously, definition of the subject matter is needed for analysis and understanding of HRM theory and practice.

HRM DEFINITION

HRM has a variety of definitions but there is general agreement that it has a closer fit with business strategy than previous models, specifically personnel management. In all the debates about the meaning, significance and practice of HRM, nothing seems more certain than the link between HRM and performance (HRM Guide October 2006). Below are some of the definitions of HRM, although it can be argued that these will only be ones of several possible definitions. De Cenzo and Robbins (1996: 8) defined HRM as the part of the organization that is concerned with the people dimension, and it is normally a staff or support function in the organization. HRM role is the provision of assistance in HRM issues to line employees, or those directly involved in producing the organization’s goods and services. Acquiring people’s services, developing their skills, motivating them to high levels of performance, and ensuring their continuing maintenance and commitment to the organization are essential to achieving organizational goals. This is much the case regardless of the type of organization, government, business, education, health, recreation, or social action. The authors proposed an HRM specific approach as consisting of four functions- staffing, training and development, motivation, and maintenance. In addition, Bratton and Gold (2003: 7) define HRM as the strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage. This is achieved through a distinctive set of integrated employment policies, programs and practices. The authors presented HRM functions as planning, recruitment and selection, appraisal and performance management, reward management, development, employee relations, health and safety, and union-management relations. Moreover, to Alan Price (2004: 32) HRM aims at recruiting capable, flexible and committed people, managing and rewarding their performance and developing key competencies. Contributing to the working definition of HRM is Abecker et al., (2004). They see HRM as a strategic and target oriented composition, regulation and development of all areas that affect human resources in a company. Efficient and effective management of these resources to a large extend, affects human resource behaviour, and consequently the performance of the organization as a whole. Moreover, the authors identified HRM with the field it covers. These include planning aspects- personnel requirements analysis and personnel asset analysis, and change aspects- recruitment, personnel development and labour displacement (Ibid). Next, is the diagrammatic representation of the said field.

Human Resource Management

Change Aspects

Planning Aspects

Personnel Requirement Analysis

Labour Displacement

Personnel Development

Recruitment

Personnel Asset Analysis

Figure1: Fields of HRM

(Source: Abecker et al., 2004)

It is however, somehow strange, that, an important aspect of HRM, payroll or compensation/payment is missing from the field in figure 1 above propounded by the authors. Abecker et al., (2004) like the previous other authors, did not present a conclusive and detailed definition of HRM including the other concepts (HR processes).

Lastly considered are the opinions of various management scholars who have taken a more in-depth look at the whole concept of HRM. These opinions should be given the greatest weight, since they reflect more in-depth research on the subject than is done by most textbook authors. Few such authors are Dessler et al., (1999), and Torrington et al.,(2005).

According to Torrington et al., (2005: 5) HRM is fundamental to all management activity and has evolved from a number of different strands of thought. It is best described as a loose philosophy of people management rather than a focused methodology. Thus, distinction has been made between HRM as body of management activities on one hand (generically described as personnel management) and then on the other as a particular approach to execute those activities (carrying out people-oriented organizational activities than traditional personnel management).

An organization gains competitive advantage by using its employees effectively, drawing on their expertise and ingenuity to meet clearly defined objectives. Torrington et al.,(2005: 5) identified the role of the human resource functions with the key objectives.

These four objectives are the corner stone of all HR activities. These include Staffing, Performance, Change-management and Administration. Staffing objective focuses on finding the appropriate pool of human resources needed to ensure full and timely supply of work force (Ibid). It therefore involves designing organizational structures, identifying working conditions for different groups of employees followed by recruiting, selecting and developing the personnel required to fill the roles. Performance objective aims at ensuring workforce motivation and commitment for effective performance. Consequently, employees training and development remain important.

Moreover, managing change effectively and efficiently remains one of the core objectives in almost every business. Key issues here include recruiting and/or developing people with the required leadership skills to drive the change process. Change agents are employed to encourage acceptance of change by coming out with reward systems associated with the change process. Employees’ involvement is also paramount here and is encouraged. The aim is to avoid resistance to change, more especially where it involves cultural changes (attitude, philosophy or long-present organizational norms).

Administration objective aims at facilitating the smooth running of the organization. Hence, there is the need for accurate and comprehensive data on individual employees, records of achievement in terms of performance, attendance, training records, terms and condition of employment and personal details are (Ibid).

However, for the purpose of this study, literature on the HRM concept will be based on the opinions of Dessler et al., (1999). The authors defined HRM as the management of people in organizations. It consists of the activities, policies, and practices involved in obtaining, developing, utilizing, evaluating, maintaining, and retaining the appropriate number and skill mix of employees to accomplish the organization’s objectives. The goal of HRM is to maximize employee’s contributions in order to achieve optimal productivity and effectiveness, while simultaneously attaining individual objectives and societal objectives Dessler et al., (1999: 2). To the authors, the function of HRM include assisting the organization in attracting the quality and quantity of candidates required with respect to the organization’s strategy and operational goals, staffing needs, and desired culture. Helping to maintain performance standards and increase productivity through orientation, training, development, job design, effective communication, and performance appraisal. Helping to create a climate in which employees are encouraged to develop and utilize their skills to the fullest. Helping to establish and maintain cordial working relationship with employees. Helping to create and maintain safe and healthy work environment. Development of programs to meet economic, psychological, and social needs of the employees. Helping the organization to retain productive employees and ensuring that the organization complies with provincial/territorial and federal laws affecting the work place such as human rights, employment equity, occupational health and safety (Ibid).

HRM PROCESSES

This sub section illustrates the processes involved in executing the HRM functions. Each of the functions: planning, recruitment, selection, orientation and training, performance appraisal etc. goes through a process. Unless otherwise stated, the rest of this section will be drawn from (Dessler et al., 1999)’s literature based on pages 165 to 533.

PLANNING PROCESS

Human Resource Planning (HRP) process reviews human resources requirements to ensure that the organization has the required number of employees, with the necessary skills, to meet its goals, also known as employment planning. HRP is a proactive process, which both anticipates and influences an organization’s future by systematically forecasting the demand for and supply of employees under changing conditions, and developing plans and activities to satisfy these needs. Key steps include forecasting demand for labour considering organizational strategic and tactical plans, economic conditions, market and competitive trends, social concerns, demographic trends, and technological changes.

RECRUITMENT PROCESS

Recruitment is the process of searching for and attracting an adequate number of qualified job candidate, from whom the organization may select the most appropriate to field its staff needs. The process begins when the need to fill a position is identified and it ends with the receipt of résumés and completed application forms. The result is a pool of qualified job seekers from which the individual best matching the job requirements can be selected. The steps in recruitment process include identification of job openings, determination of job requirements, choosing appropriate recruiting sources and methods, and finally, generating a pool of qualified recruits. Job openings are identified through human resource planning or manager request. Next is to determine the job requirements. This involves reviewing the job description and the job specification and updating them, if necessary. Appropriate recruiting sources and methods are chosen because there is no one, best recruiting technique. Consequently, the most appropriate for any given position depend on a number of factors, which include organizational policies and plans, and job requirements.

SELECTION PROCESS

Selection is the process of choosing individuals with the relevant qualifications to fill existing or projected openings. Data and information about applicants regarding current employees, whether for a transfer or promotion, or outside candidates for the first time position with the firm are collected and evaluated. The steps in the selection process, in sending order include preliminary reception of applicants, initial applicant screening, selection testing, selection interview, background investigation and reference checking, supervisory interview, realistic job previews, making the hiring decision, candidate notification, and evaluating the selection process. However, each step in the selection process, from preliminary applicant reception and initial screening to the hiring decision, is performed under legal, organizational, and environmental constraints that protect the interests of both applicant and organization.

ORIENTATION, TRAINING AND DEVELOPMENT PROCESS

Employee orientation is the procedure of providing new employees with basic background information about the firm and the job. Is more or less, considered as one component of the employer’s new-employee socialization process. Socialization process is an ongoing process of initialling in all employees the prevailing attitudes, standards, values, and patterns of behaviour that are expected by the organization. Training however is the process of teaching new or present employees the basic skills/competencies needed to perform their jobs. Whereas training focuses on skills and competencies needed to perform employees’ current jobs, employee and management development is the training of long-term nature. The aim is to prepare current employees for future jobs with the organization or solving an organizational problem concerning, for example, poor interdepartmental communication. Training and development processes include needs analysis, instructional design, validation, implementation, and evaluation and follow-up.

CAREER PLANNING AND DEVELOPMENT PROCESS

It is the deliberate process through which persons become aware of personal career related attributes and the lifelong series of activities that contribute to their career fulfilment. Individuals, managers, and the organization have role to play in career development. Individuals accept responsibility of own career, assess interests, skills, and values, seek out career information and resources, establish goals and career plans, and utilize development opportunities.

The career stage identification entails career cycle (the stages through which a person’s career evolves). These stages include the following: growth, exploration, establishment, maintenance, and decline stages. Occupational orientation identification is the theory by John Holland. This theory enumerates six basic personal orientations that determine the sorts of careers to which people are drawn. They include realistic orientation, investigative orientation, social orientation, conventional orientation, enterprise orientation, and artistic orientation.

PERFORMANCE APPRAISAL PROCESS

Performance appraisal may be defined as any procedure that involves setting work standards, assessing employee’s actual performance relative to these standards, and providing feedback to the employee with the aim of motivating the worker to eliminate performance deficiencies or to continue to perform above par. Processes in performance appraisal contain three steps: defining performance expectations, appraising performance, and providing feedback. First, defining performance expectation means making sure that job duties and standards are clear to all. Second, appraising performance means comparing employees’ actual performance to the standards that has been set, which normally involves some type of rating form. Third, performance appraisal usually requires one or more feedback sessions to discuss employees’ performance and progress and making plans for any required development. Some of the appraisal methods include graphic rating scale, alternation ranking, paired comparison, forced distribution, and critical incident methods.

EMPLOYEE COMPENSATION AND BENEFITS PROCESS

Employee compensation involves all forms of pay or rewards accrued to employees and arising from their employment. This however consists of two main components: direct financial payments, and indirect payments. While direct financial payments are in the form of wages, salaries, incentives, commissions, and bonuses, indirect payments are in the form of financial benefits like employer-paid insurance and vacations. Moreover, legal considerations in compensation, union influences, compensation policies, and equity and its impact on pay rates are the four basic considerations influencing the formulation of any pay plan.

Benefits are indirect financial payments given to employees. These may include supplementary health and life insurance, vacation, pension, education plans, and discounts on say company products. Furthermore, income and medical benefits to victims of work-related accidents or illness and/or their dependents, regardless of fault are all part of employees’ compensation.

The processes in establishing pay rates involve the following five steps: First, conducting wages/salary survey to determine the prevailing wage rates for comparable jobs, which is central in job pricing. Second, determine the relative worth of each job (job evaluation) by comparing the job content in relation to one another in terms of their efforts, responsibility, and skills. This eventually results in wage or salary hierarchy. Third, group similar jobs into pay grades, a pay grade comprises of jobs of approximately equal value or importance as determined by job evaluation. Forth, price each pay grade using wage curves. A wage curve is graphical description of the relationship between the value of job and the average wage paid for the job. However, if jobs are not grouped into pay grades, individual pay rates have to be assigned to each job. Fifth, fine tune pay rates. This involves correcting out-of-line rates and usually developing rate ranges.

OCCUPATIONAL HEALTH AND SAFETY PROCESS

Occupational health and safety process aims at protecting the health and safety of workers by minimizing work-related accidents and illnesses. Laws and legislations to ensure and observe general health and safety rules bound employers. More so, rules for specific industries, for example, mining and rules related to specific hazards, for instance, asbestos have to be adhered to. The following steps are important in this process. Checking for or removing unsafe conditions by using checklist to audit a company’s adherence to safety rules that are guarded against hazards, which cannot be removed. Next, through selection, screening out of employees who might be accident prone for job in question without compromising the human right legislation. More so, establishing a safety policy, this emphasizes on the importance of practically reducing accidents and injuries. Setting specific loss control goals by analyzing the number of accidents and safety incidents and then set specific safety goals to be achieved. Enforcing safety rules through discipline and conducting health and safety inspections regularly by investigating all accidents and near misses, and by having a system in place for letting employees notify management about hazardous conditions.

CHAPTER SUMMARY

There is no clear-cut definition of HRM. However, the common ground settled by different HR professionals and academicians is that they recognize that HRM is closely fitted with business strategy than personnel management.

HR processes starts by planning labour requirements. This include, resource specifications, long range planning, forecasting supply and demand of labour, staffing, applicant qualification, training programs, costs analysis, salary, contract type, and other related issues. Other key HR processes involve recruiting, selecting, performance appraising, training and orientation, career development, occupational health and safety, and compensation and benefits.

THE CONCEPT OF STRATEGIC HUMAN RESOURCE

MANAGEMENT (SHRM)

The significant position of HRM in the overall strategy of an organization and its integral function in the strategic planning process is presented. In addition, the various definitions of strategic HRM are explained and a conceptual view of other dimensions of SHRM is provided. The chapter then ends with a summary.

SHRM DEVELOPMENT

SHRM has grown considerably in the last years. Schuler et al., (2001) described the evolution of SHRM from personnel management in terms of a two-phased transformation, first from personnel management to traditional human resource management (THRM), and then from THRM to SHRM. To improve firm performance and create firm competitive advantage, firm HR must focus on a new set of priorities.

These new priorities are more business, and strategic oriented and less geared towards traditional HR functions such as staffing, training, appraisal and compensation. Strategic priorities include team-based job designs, flexible workforces, quality improvement practices, employee empowerment and incentive compensation. SHRM was designed to diagnose firm strategic needs and planned talent development, which is required to implement a competitive strategy and achieve operational goals (Huselid et al., 1997).

SHRM DEFINITION

In spite of the increasing attention paid to SHRM, the term remains unclear. Some scholars have described SHRM as an outcome, others have described it as a process, and others have considered it a combination of process and outcome. As an outcome, Wright and McMahan (1992) considered SHRM ‘the pattern of planned HR deployments and activities intended to enable a firm to achieve its goals’. Similarly, Wright and Snell (1991) considered SHRM to be ‘organizational systems designed to achieve sustainable competitive advantages through people. As a process, Ulrich and Lake (1991) described SHRM as a process of linking HR practices to business strategy. Moreover, Bamberger and Meshoulam (2000) argued that SHRM is a competency-based approach to personnel management that focuses on the development of durable, imperfectly imitable, and other non-tradable resources. Considering both process and outcome together, Truss and Gratton (1994) defined SHRM as the linkage of HR functions with strategic goals and organizational objectives to improve business performance and cultivate an organizational culture that fosters innovation and flexibility.

Torrington et al., (2005:5) defines SHRM as means of accepting the HR function as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Whereas strategic HR recognizes HR’s partnership role in the strategizing process, the term HR Strategies refers to specific HR courses of action the company plans to achieve. The authors further presented three theoretical perspectives of strategic human resource management. The first was based on the ‘one best way’ concept of managing human resources to improve business performance. The second was the need to align employment policies and practices with the requirements of business strategy for successful business. This was on the assumption that different types of HR strategies are conducive for different types of business strategies. The third, which also happened to be the more recent approach to strategic HRM, was resource-based view of the firm, and the perceived value of human capital. The focus of this perspective was on the quality of the human resources available to the organization and ability to learn and adapt more quickly than competitors.

Moreover, the Universalist approach on SHRM has also proven popular. The perception was based on the concept of seeing HRM as ‘best practice’. This is based on the premise that one model of labour management (a high commitment model) is related to high organizational performance in all contexts, irrespective of the particular competitive strategy of the organization (Torrington et al., 2005: 5). Guest’s theory of HRM is one of the best presentations of such perspective. The Guest’s theory of HRM was based on four HR policy goals: strategic intentions, commitment, flexibility and quality. These policy goals, nevertheless, were related to HRM policies expected to produce desirable organizational outcomes. The four policy goals were described as:

Strategic intention: ensuring that HRM is fully integrated into strategic planning by allowing coherent HRM policies, which enable line managers to use HRM practices as part of the day-to-day work.

Commitment: ensuring that employees feel bound to the organization and are committed to high performance through excellent behaviour.

Flexibility: providing an adaptable organization structure and functional flexibility based on multiple skills.

Quality: enabling a high quality of goods and services through high-quality flexible employees.

For, Flint et al., (2005) the field of Human Resource Management (HRM) has in recent times been seen as moving away from a supportive - selecting, training, and retaining (Porter, 1996) to a strategic role (Bartlett & Ghoshal, 2002). The latter explained that rather than being supportive, focusing on recruiting, training and taking care of benefits, HRM’s role has become strategic building and using human capital to ensure competitive advantage. This is further explained using a diagrammatic presentation in Figure 2 to illustrate the strategic and supportive roles of HR, and HRM functions.

The Arrow 1 indicates that a strategic role for HR moves parallel with a strategic role for HRM. To the authors, strategic role for HR does not necessarily imply a strategic role for HRM. The two are not identical but perform different functions in an organization. HR either may support a firm’s processes or may constitute strategic resources that allow the firm to achieve competitive advantage. Such a shift in the status of human resources is represented by arrow 2.

Similarly, the HRM function may support a firm’s HR by selecting, training, and retaining them or theoretically representing an HRM capacity that gives the firm a competitive advantage over others. Such a shift of HRM function is represented by arrow 3. They however concluded that given the two separate dimensions, where human resources become strategic, the HRM function might very well maintain its supported role.

1

3 Strategic

(SHRM) HRM function & human resources are strategic

HRM function & human resources are supportive

HRM function Supports Strategic Human Resources

2

Support

Support Strategic

Figure 2: The Supportive and strategic Role of HRM function

(Source: Flint et al., 2005)

Bratton and Gold (2003: 37) defines strategic human resource management as the process of linking the human resource function with the strategic objectives of the organization in order to improve performance. To the authors, global companies function successfully, if strategies at different levels inter-relate. An organization’s human resource management policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces. They however cautioned that the human resource-business strategy alignment could not necessarily be characterized in the logical and sequential way suggested by some writers; rather, the design of an HR system is a complex iterative process.

However, in the absence of a consistent definition, scholars broadly agree that the central feature of SHRM involves designing and implementing a set of internally consistent policies and practices to ensure that firm human capital contributes to achieving business objectives (Gratton and Hope-Hailey, 1999; Jackson and Schuler, 1995).

Based on the broad agreement among the central features of SHRM, and the determinants of HRM as strategic, this is how this study defined SHRM. The degree of participation in core decision-making and partnership played by HRM departments, and the specificity and formality that HRM departments require in planning and implementation, all of which are designed to ensure that firm human capital contributes to achieving firm business goals (Bratton and Gold, 2003: 37).

DIMENSIONS OF SHRM

In addition to focusing on the matching of SHRM and HR strategy, researchers have identified a number of important themes associated with the notion of SHRM (Bratton and Gold 2003: 37). These are:

Re-engineering.

Leadership.

Workplace Learning.

Trade unions.

RE ENGINEERING AND STRATEGIC HUMAN RESOURCE MANAGEMENT

All normative models of HRM emphasize the importance of organizational design. For example, the ‘soft’ HRM model is concerned with job design that encourages the vertical and horizontal compression of tasks and greater worker autonomy. The redesign of work organizations has been variously labelled ‘high-performing work systems’ (HPWSs), ‘business process re-engineering’ and ‘high-commitment management’. The literature emphasizes core features of this approach to organizational design and management, including a flattened hierarchy, decentralized decision making to line managers or work teams. This largely enables information technology, strong leadership and a set of HR practices that make workers’ behavior more congruent with the organization’s culture and goals. (Hammer, 1997; Hammer and Champy, 1993), Cited in Bratton and Gold (2003: 59).

LEADERSHIP AND STRATEGIC HUMAN RESOURCE MANAGEMENT

The concept of managerial leadership permeates and structures the theory and practice of work organizations and therefore how SHRM is understood. Most definitions of managerial leadership reflect the assumption that it involves a process whereby an individual exerts influence upon others in an organizational context. There is however a growing debate over the presumed differences between a manager and a leader.

Managers develop plans whereas leaders create a vision (Kotler, 1996) cited in Bratton and Gold (2003: 60). Managers look for leadership style that develop the firm’s human endowment and cultivate commitment, flexibility, innovation and change (Bratton et al., 1987). Apparently, most re-engineering shortfalls stem from breakdowns in leadership (Hammer and Champy, 1993: 107), and the organizational change driver is leadership (Kotler, 1996: 32). Moreover, popular leadership models advocated for working beyond the economic contract. Consequently, the transformational leader empowers workers.

However, such leadership models shift the focus away from managerial control process and innate power relations towards the psychological contract and individualization of the employment relationship.

WORKPLACE LEARNING AND STRATEGIC HUMAN RESOURCE MANAGEMENT

Formal and informal work-related learning represent key lever that can help managers to achieve substantive HRM goals. These include commitment, flexibility and quality (Beer et al., 1984; Keep, 1989 cited in Bratton and Gold, 2003: 60). From managerial perspective, formal and informal learning arguably strengthen organizational core competencies and acts as leverage to sustainable competitive advantage- having the ability to learn faster than one’s competitors is of essence (Dixon, 1992; Kochan and Dyer, 1995) as reported in Bratton and Gold (2003: 60).

TRADE UNIONS AND STRATEGIC HUMAN RESOURCE MANAGEMENT

The idea of embedding worker commitment in HRM model has led to strong argument among writers, that, there is a contradiction between the HRM normative model and trade unions. In the prescriptive management literature, the argument is the collectivist culture, with ‘them and us’ attitude, sabotages the HRM goal of high employee commitment and the individualization of the employment relationship. Moreover, critics argue that, ‘high-performance- high-commitment’ HR strategies provide workers with false sense of job security, by hiding underlying sources of conflict, inherent in employment relations.

However, other scholars with pluralist perspective argue that not only do trade unions and ‘High-commitment’ HRM model coexist but are indeed necessary if an HPWS is to succeed (Bratton and Gold, 2003: 60).

In addition, other researchers like Sparrow and Hiltrop (1994: 25) in Morley et al., (2006) identified a shift from the HRM function and its associated terrain to a strategic role in other areas of HRM activity. Thus, the greater emphasis on the integration of the human resource function into strategic decision-making, a decentralization of much activity to line managers, and pre-occupation with industrial relations and collective bargaining, has made way for a more SHRM activities such as communications, human resource development, workplace learning, career management and human capital accumulation.

CHAPTER SUMMARY

SHRM has evolved and been transformed from personnel management into traditional human resource management (THRM), and then to SHRM. SHRM, like HRM, do not have any consistent definition but scholars generally concord to the central feature of SHRM comprising designing and implementing a set of internally consistent policies and practices to ensure human capital contributions to achieving business goals (Gratton and Hope-Hailey, 1999; Jackson and Schuler, 1995). The changes identified in the shift of HRM to SHRM included integration of the human resource function into strategic decision-making, a decentralization of much activity to line managers, effective communications, human resource development, workplace learning, career management and human capital accumulation. These were in addition to managing organization’s trade unions relations, greater worker autonomy, high commitment management, leadership, and business processes reengineering.


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