The Concept of Human Resources Management
The word human resource describes the personnel who are responsible for driving an organization which is the main labor force of a company or an organization. This includes all the responsibilities relating to the management of the individuals which forms a strategic and management pillar of an organization. The roots of human rights and welfare arose when the basic principles of management were redefined and were thoroughly studied to identify the major concerns of an organizational success. This management of humans which relates their rights and welfare was initially named as ‘personnel function’ which was later pronounced as “Human Resources”. This function became the usual approach of all the organizations in their strategic and qualitative planning.
2. The Concept of Strategic Human Resources Management (SHRM)
The theme of Strategic Human Resources Management (SHRM) is initially associated with the “manpower” (sic) planning, but with the continued efforts of the researchers (e.g. Peters & Waterman, 1982 and Ouchi 1981) having strong grip on the issue of human resources the significance of effective management of these resources in order to attain competitive advantage was highlighted in an optimum way. These continued efforts eventually lead a way for extended research and efforts by the academics in order to formulate frameworks regarding the strategic aspects of Human Resource function (e.g. Beer et al., 1985; Fombrun et al., 1984), hence a prefix “Strategic” was attached to the “Human Resources Management”. The “Constituency-based) and “Rational Choice” perspectives can be presented in order to explain the significance given to the linkage of strategy concept to Human Resources Management by the practitioners and the academics. According to Barney and Pfeffer (1998), while focusing the attention of skills of people and the intellectual assets, a managerial logic exists in order to provide a key competitive advantage when technological superiority, even once achieved, will quickly erode. From a ‘constituency-based’ perspective, it is argued that academics and practitioners of Human Resources have embraced Strategic Human Resource Management as a means of securing greater respect for Human Resource Management as a field of study and, in the case of Human Resources managers, of appearing more ‘strategic’, thereby enhancing their status within organizations (Bamberger & Meshoulam, 2000; Pfeffer & Salancik, 1977; Powell & Di Maggio, 1991; Purcell & Ahlstrand, 1994; Whipp, 1999).
3. Different Concepts and models
Despite of ever growing significance and usage of Human Resource Management and Strategic Human Resource Management, there exists a touch of problematic environment regarding the precise meaning of Strategic Human Resource Management. It appears to be slightly unclear as which one of the given two terms links to a process or an outcome (Bamberger & Meshoulam, 2000). The term “Strategic Human Resource Management” is rated as an outcome by Snell et al, (1996, p. 199). They relate is with an outcome on the basis that as an organizational system designed to achieve sustainable competitive advantage through the people. On the other hand the same term “Strategic Human Resource Management” is considered as a process which involves linking the Human Resources practices with the defined / existing business strategy (Ulrich, 1997, p. 89). In continuation to this, Bamberger and Meshoulam (2000, P. 06) also rates Strategic Human Resources Management as a process with which the organizations endeavor to combine the social, human, and the intellectual capital of their members in accordance with the strategic needs of the organization. Another view points rates Strategic Human Resource Management as an outcome and associates with the missions, visions and the defined priorities of the Human Resources functions of the organizations Ulrich (1997, p. 190). Bamberger and Meshoulam (2000, p. 5) continues with the said theme and conceptualize Human Resources strategies as an outcome “the pattern of decisions regarding the policies and practices associated with the HR system”.
4. Evaluating Strategic Human Resource Management (SHRM) and models of human resources strategy
Primarily, in the organizations various sorts of limitations are being highlighted with the research works carried out at different levels. These limitations relates to various disciplines of the organizational setups including the Human Resources Management. These limitations of the organizational setups lead to lack of focus regarding the strategic decision making, conceptualization of the managerial controls and absence of the internal strategies. It has been noted that the conceptualizations of the existing Strategic Human Resources Management are predicated upon the traditional rational perspective to managerial decision-making – definable acts of linear planning, choice and action. In contrast to this, the critical organizational theorists challenges the said assumptions by presenting argument as these strategic decisions are not mainly based on output of the rational calculations. Another assumption that the organization’s business level strategies and the human resources systems creates a logical and linear relationship appears to be questionable on the basis that that the formulation of strategies is an informal, politically charged and is subject to the complex contingency factors (Bamberger & Meshoulam, 2000; Monks & McMackin, 2001; Whittington, 1993). Hence, it can be stated that the theme of aligning the business strategies and the human resources strategies applies only to “Classical approach of the strategies” (Legge, 1995). Those who question the classical approach to strategic management argue that the image of the manager as a reflective planner and strategist is a myth. Managerial behavior is more likely to be ad hoc, fragmented, uncoordinated and frenetic (for example Hales, 1986).
The context of theme that managerial rationality is fundamentally limited by the lack of information, cognitive capacities, and the time; associates and presents a linkage to the political perspectives on strategic decisions. Moreover, the strategic human resources management is considered as a highly competitive process in which the managers fiercely compete for the status, resources and the powers. Within such a management milieu, strategies can signal changes in power relationships among managers (Mintzberg et al., 1998). In contrast to relating the strategic choices with outcomes of the rational decision makings various researchers including Johnson (1987, elaborated in the Purcell, 1989, p. 72), argues that ‘the Strategic decisions are characterized by political hurly-burly of the organizational life with high incidence of the bargain… all within a notable lack of clarity in terms of environmental influences and objectives.’ The strategic human resources management is also conceptualized as a “discourse” or the body of language-based interconnection which appears at various levels within an organization. Therefore, a strong argument presented by Hendry (2000) that strategic decisions takes its meanings from social practices and discourse within which they are located. Hence, a decision not only be communicated once but strong and repeated emphasize is recommended till the time decision becomes embodied in the actions. The above elaborated perspective of strategic human resources management reaffirms importance of the conceptualizing management in terms of skills and the leadership competence of managers, functions and the contingencies.
5. The Human Relations Viewpoint
Human relations proponents argued that managers should stress primarily employee welfare, motivation, and communication. They believed social needs had precedence over economic needs. Therefore, management must gain the cooperation of the group and promote job satisfaction and group norms consistent with the goals of the organization. Another noted contributor to the field of human relations was Abraham Maslow. In 1943, Maslow suggested that humans have five levels of needs. The most basic needs are the physical needs for food, water, and shelter; the most advanced need is for self-actualization, or personal fulfillment. Maslow argued that people try to satisfy their lower level needs and then progress upward to the higher-level needs. Managers can facilitate this process and achieve organizational goals by removing obstacles and encouraging behaviors that satisfy people's needs and organizational goals simultaneously. Although the human relations approach generated research into leadership, job attitudes, and group dynamics, it drew heavy criticism. Critics believed the philosophy, while scientific management overemphasized the economic and formal aspects of the workplace; human relations ignored the more rational side of the worker and the important characteristics of the formal organization. However, human relations were a significant step in the development of management thought, because it prompted managers and researchers to consider the psychological and social factors that influence performance.
6. Knowledge Management and Strategic Human Resources Management
Knowledge management plays a significant role in achieving organizational efficiency. In the new economy, speed and responsiveness are determining success factors, especially in the dot.com arena. Companies today face stiffer competition in a globalized market place. Davenport and Prusak (1998) highlighted that globalized economy, with improved transportation and communication provides human resources with endless and unprecedented parade of choices across the world (Davenport and Prusak, 1998). Across the business spectrum, the human resources are fundamental to the success on every level. Scott and Einestein examine the role of knowledge management in building human resources and offers practical advice on sustaining them in the long term. There are many significant overlaps between the knowledge management and the Human Resources Management, though not as many as required to achieve an optimal level. The behavioral research is primarily rated to be a major contributor in the Knowledge Management, delivering insights on HR psychographics, demographics and the behaviors of value in all the transaction strategies. Knowledge Management is also considered to be a key contributor to the marketing communications, assisting to select channels and the targets, as well as to create relevant and response-promoting contents (Scott and Einestein, 2001).
7. Financial Benefits of Strategic Human Resource Management
Research indicates that organizations using strategic human resources management concepts are more profitable and successful than those that do not. Businesses using strategic human resources management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities. High-performing firms tend to do systematic planning to prepare for future fluctuations in their external and internal environments. Firms with planning systems more closely resembling strategic management theory generally exhibit superior long-term financial performance relative to their industry. High-performing firms seem to make more informed decisions with good anticipation of both short- and long-term consequences. On the other hand, firms that perform poorly often engage in activities that are shortsighted and do not reflect good forecasting of future conditions. Strategists of low-performing organizations are often preoccupied with solving internal problems and meeting paperwork deadlines. They typically underestimate their competitors' strengths and overestimate their own firm's strengths. They often attribute weak performance to uncontrollable factors such as poor economy, technological change, or foreign competition.
8. Non- financial Benefits of Strategic Human Resource Management
Besides helping firms avoid financial demise, strategic management offers other tangible benefits, such as an enhanced awareness of external threats, an improved understanding of competitors' strategies, increased employee productivity, reduced resistance to change, and a clearer understanding of performance-reward relationships. Strategic management enhances the problem-prevention capabilities of organizations because it promotes interaction among manager’s at all divisional and functional levels. Interaction can enable firms to turn on their managers and employees by nurturing them, sharing organizational objectives with them, empowering them to help improve the product or service, and recognizing their contributions. In addition to empowering managers and employees, strategic management often brings order and discipline to an otherwise floundering firm. It can be the beginning of an efficient and effective managerial system. Strategic management may renew confidence in the current business strategy or point to the need for corrective actions. The strategic-management process provides a basis for identifying and rationalizing the need for change to all managers and employees of a firm; it helps them view change as an opportunity rather than a threat.
The world has progressed in many unique ways and directions specifically in the last three decades. It has developed technologically, economically and industrially. It is also richer in terms of human capabilities, facilities and quality of living. Improvements in education, communication, technology and markets have made the world a global village. People live longer today, are better informed, can communicate with one another across the world and therefore carry on economic, professional, educational, social and other activities with ease. These decades of development indicate the vast potential for creating a world of order, security and well-being. It is commonly accepted that the people working for a firm are one of its main assets and one of the factors in determining its progress. Workers’ qualities, attitudes and behavior in the workplace, together with other factors, play an important role in determining a company’s success or lack of it. Workers are key elements in the success of a firm. Human resources, taken to be the pool of human capital under the firm’s control in a direct employment relationship, can provide the firm with a source of competitive advantage with respect to its rivals. This is possible because of the series of requirements that the workers fulfill (Wright and McMahan, 1992; Wright et al., 1994).
The first of these is the value added to the company’s production processes, the contribution made by each individual having its effect on the results obtained by the organization as a whole. Also, since individuals are not all the same, their characteristics are in limited supply in the market. In addition, these resources are difficult to imitate, since it is not easy to identify the exact source of the competitive advantage and reproduce the basic conditions necessary for it to occur. Finally, this type of resource is not easily replaced; though short-term substitutes may be found, it is unlikely that they result in a sustainable competitive advantage anything like that provided by human resources. For a firm to find the human capital to provide it with a sustained competitive advantage is not just a matter of luck. It depends rather on the action the firm is prepared to undertake towards that end. It is through strategic human resources management practices that firms try to obtain the human resources that will give them the advantage when it comes to holding their own against other companies.
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