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Within the context of the business this essay will emphasize on the role human resource play in achieving the organizational strategy, corporate goals, and the objective, while giving the firm a competitive advantage. It will also focus on the importance of achieving consistency and sustaining corporate strategy with the organizational structure and the human resource practices.
It is strongly agreeable that, human resource play a strategic role in achieving the organizational goals and objectives. The strategic use of human resources helps managers to contribute to the release of true value by the ideal use of human competencies. Strategic human resource approach requires that the organizational goals are matched by the knowledge, intelligence, skills, needs and talents of employees. People¿½s competencies have become the building blocks of successful organizations. For example, the low cost, high quality cars like Toyota and Saturn aren¿½t just a result of stylish automated machines; instead it is the result of extremely committed hard working employees. Hence, to develop and sustain such competencies, the organization needs to have a perfect balance between its strategy, structure and the human resource practices.
It is a fact, in order to achieve competitive advantage employees have been the central focus, leading to the creation of strategic human resource management. This has been defined as ¿½the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility¿½ (Dessler, 2002).
Perhaps the most vital role of human resource division has been the growing involvement in developing and implementing strategies. Thus, in strategic human resource management (SHRM), the human resource (HR) function needs to be accepted as a strategic partner in the creation, formulation and execution of the company strategies through a set of internally consistent HR practices such as performance appraisal, training, recruitment, selection and motivation. Alternatively, human resource strategy refer to the specific human resource courses of action the firm pursue to achieve its objectives. For example, DHL¿½s primary aim is to achieve high profitability and superior level of customer service through a highly committed workforce.
A more sophisticated view of human resource is that, its role is simply to ¿½fit¿½ into the company¿½s strategy. And to adapt individual human resource practices such as recruitment, selection and training to fit into specific corporate strategies. Human resource practices must be performed strategically. For example, if the firm decides to take over another business or merger with another company, the HR is told to create the necessary programs that would be required to successfully implement that corporate strategy. Researchers argue, ¿½the human resources management system must be tailored to the demands of the business strategy¿½. The idea here is that ¿½for any particular organizational strategy, there is purportedly a matching human resource strategy¿½ (Dessler, 2002, p.17).
It is important to achieve consistency between structure and strategy in order to have a balance. The structure of the organization must reflect the goals and objectives of the business. These goals are those that need to be achieved by the corporate strategy of the firm. As a matter of fact, strategies are long term plans and therefore, it is hard to change. Structure, if not having a good fit with the strategy must be changed according to the strategy of the organization.
Stone (2008) emphasizes that ¿½the effective implementation of an organization¿½s strategy requires management to ensure that the organization¿½s design helps to achieve its strategic objective. HRM is particularly concerned with organizational structure because it can directly affect employee productivity and behavior¿½. For instance, if the organization has a narrow span of control, it would be more formal, rigid and authoritarian, specialized and inflexible. In contrast, an organization with a wider span of control, will allow employees more flexibility, better communication, informal, adaptable and more entrepreneurial.
However, depending on organization to organization, the span of control is likely to vary. For example, subordinate jobs that are complex, indistinct, vigorous or otherwise complicated will require more management involvement thus a narrower span of control. Similarly, if the subordinate jobs are more related and routine, the easier it is for a manager to supervise employees with wider span control. A narrow span of control may also occur where there is greater physical proximity of subordinates. i.e., if they are geographically dispersed, it will be difficult for the manager to regularly contact with them. However, if there are few employees the manager could reasonably administer or oversee, in such case, having a wider span of control. Other factors such as the ability, motivation and confidence of employees, abilities of the managers, and level of technology are all factors that would affect the span of control.
Figure 1.0 shows how span of control affects organisation structure.
In recent years, more organizations have been moving towards a wider span of control. It reduces cost, enable quick decision making and greater flexibility and empower employees. However, organizations are investing in training managers and employees and in technology thus enabling share of information and enhancing communication between and amongst the managers and employees which in turn avoids the potential problems of wider spans of control.
In order to understand the link between the organizations strategy and human resources practices, it is important to understand the critical issues relating to strategic human resource practices, such as motivation, recruitment, selection, performance appraisal, training etc. It will be important to understand to what extend do these strategies and policies stimulate employees in achieving their designated goals. For example, employees will be more motivated when they have clear understanding of the organization¿½s needs and goals. Highly motivated employees are prompt, effective and more productive, whereas, less motivated workforce will result in greater absenteeism, high labour turn over, prone to quit and less likely to achieve organizational goals resulting in stakeholder dissatisfaction. So the organization must conform to the needs of the employees in order for them to work towards achieving the corporate strategy.
Employees could be motivated with two main types of motivators. Financial motivators which include wages and salaries, fringe benefits often called ¿½perks¿½, profit sharing and share ownership and non-financial motivators such as, job enrichment, job enlargement, job design, team working and empowerment, good working condition, safety at work. Emphasis on employee motivation is important because, it creates the best environment, a good self- management and has a great impact in a company¿½s performance.
Training the workforce is a key element in improving organization performance to align with its strategic goals. Dessler (2002) defines training as ¿½the method used to give new or present employees the skills they need to perform their jobs¿½ (p.135). Training increases the level of competences in individuals and organization as a whole. It enables the managers to reconcile the current environment with the future, i.e. for example, desired targets and actual levels of performance, thus enabling organisations to be more proactive. Mullins (2005) point out that, ¿½although the potential benefits of training may appear obvious, it does not necessarily follow that training, per se, will lead to improved performance.¿½ (p. 757). It is important for organisations to develop training skills that reflect to the objective of strategic goals.
A ¿½summary outline¿½ of ¿½what is training¿½ is presented in Figure 2.0
Another important aspect of Strategic human resource is the process of recruitment and selection. Successful outcomes from these processes are critical for potential job performance and organizational success. Recruitment and selection process is important for organisations trying to achieve a competitive advantage. Thus, a failure to approach these function effectively and efficiently will have a direct consequences on future job performance. For example, if an organization has to restructure and re-engineer work processes to comply with legislative requirements or to adapt to a new technology, it will also need to reallocate work and create new jobs.
The inability to acquire appropriate and skilled workers during recruitment, will contribute to the failure of achieving the strategic goals. Consideration must be given to minorities, people with disabilities, or any form of discrimination, as there may be gems amongst those minorities. For recruitment and selection to be successful, while the organisation try to understand the job requirements, human resource management will need to evaluate the most effective recruitment method, internally and externally. HR managers must approach recruitment and selection process from a strategic perspective, the policies must integrate within both HR strategies and organisation strategies.
Figure 1.0 shows a systematic approach to recruitment and selecton.
Performance Appraisal is a crucial activity for the management of human resources, involving continuous judgment on the behavior and performance of staff. It also helps to review the performance and potential of staff. A comprehensive appraisal system can provide the basis for key managerial decisions such as those relating to allocation of duties and responsibilities, pay empowerment and levels of supervision, promotions, training and development needs and terminations. (Mullins, 2005).
The appraisal system should be viewed in relation to the corporate objectives of the organisation, and it should be designed to suit the culture and particular requirements. Mullins, 2005 suggests that ¿½the system should be integrated with related personnel policies and practices such as human resource planning, and training and development programs¿½ (p.766). Consideration must be given to the design, implementation and establishment of the systems, methods or appraisal and potential problem areas. It is also important that formal appraisal system does not undermine the manager¿½s responsibility for reviewing performance on a daily basis.
Finally, this research agrees that one of the aims of HRM is to give an organization a competitive edge. An organisations HR policies can provide a great deal of value while attempting to create competitive advantage. There are three Generic strategies underlying the concept of competitive advantage, namely Cost Leadership, Differentiation and Focus. (Porter, 1998, p.12). For example, if an organisation is aiming to get competitive advantage through cost leadership strategy, HR department can ensure that its employees are highly efficient and productive. Similarly, if the organisation is attempting to adopt a differentiation strategy in order to gain competitive advantage, HR policies can be formulated in such a way that, differentiation strategy can be met through use of human resources. Thus, in order to be successful, firms need to employ and sustain the right people in the right place. HR function must be involved as a strategic partner to ensure that there is maximum utilization of human assets, creating a sustainable competitive edge. Porter (1996) points out that ¿½A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both¿½
In response to the dynamic changes such as increased globalization, competition and technological advancements, organisations still need to survive in the international arena with a competitive edge. Ironically, although the need for human resource is obviously growing, the future of HR divisions itself seems in doubt at times. Because, as firms grow more global, they adopt cost cutting methods such as downsizing, re-engineering, outsourcing etc. So, to be on the safe side, HR divisions need to focus more on activities that add value to the firm¿½s bottom line including strategic planning, change management, corporate culture transition, and development of the human workforce. To conclude, it is agreeable that human resource management does translate into high cash flows, greater market value and high productivity. Hence, in the future there will be great emphasis given on motivating and sustaining the human resource of the organisation.