Implications of Human Resource Department Becoming Strategic
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Published: Tue, 02 Jan 2018
The human resource management is a coherent and much strategic way of managing company’s highly valued assets, who the people working in an organization and either individual or collectively ensure the attainment of the organizational goals and objectives. The terminology human resource management and human resource have taken over the place of personnel management, as an explanation of the procedures involved in the management of people in any organization. HRM simply implies to the process of employing individuals, develop their abilities, using them, maintaining them and make their compensation.
Through research, a number of articles have been produced proposing certain HR activities that are much linked to strategies of businesses. Furthermore, recent studies have started looking at determinants of human resource practice from the strategic point of view, (Beaumont, 1991).
The Role of theory in SHRM
Since SHRM exist in an applied nature, it is much significant that the field uses theoretical models that provide room for prediction and understanding the impacts of HR activities in the functioning of a company. It is just till recent that, that the most inadequacies of SHRM, was the lack of theoretical basis that is much strong, that allows the viewing of HRM functioning in larger companies. According to Zedeck and Cisco, (1984), the matters of HRM are part of a system that is much open, and research lacks theories, unless put under broader organizations’ contexts. Concerning the SHRM dependant variables, it has been stated that, it will be very significant to develop articulated personnel theory that draws from the human resource management. This field instead of having theories, it is characterized by descriptive typologies in place of good theories. The writings in the field of SHRM are just concerned with real advices of empirical data. The SHRM is described as plethora of statements since the field lacks proper theories, (Hill & Jones, 1998).
Though there has been an explicit proposed connection between business strategies and the practices of HR, strategic intent has been viewed as being one determinant of such like practices. Some theoretical models leave out business strategy as a HR practice determinant. By concentrating on determinants that are not as an effect of proactive decision making, it has been argued that SHRM has to look into political and institutional determinants of the HR activities, to the extent of predicting and understanding decision processes of SHRM. The coordination of slate of HR deeds towards some strategic ending has been hindered by the political and institutional forces.
Strategic theories of HRM
From the time of strategic introduction in the management field, industrial companies strategists have mainly dependent on single frame work of SWOT analysis. The main assistance to the strategy, literature has been centred on portions of these competitive advantages models. It has been argued that SHRM entails two key functions, namely; management of competence and management of behaviours.
Competence management entails factors that companies does not ensure its employees have needed skills in execution of some strategies. This take into consideration negotiations with external workers for the attraction, selection, retention and the usage of employees with required skills, knowledge and capabilities for the execution of the strategic business plan. Competence acquisition refers to the practices like selection that ensure organization’s employees have the much competence required. Competence utilization involves activities that use latent skills that in the previous strategy had been seen unnecessary. Retention of competence on the other hand refers to the strategies that aim at the retention various competences in the company via the reduction of turnover and continuous training. Lastly, displacement of competence entails practices that target the removal of competencies that are seen not to be necessary for the company’s strategy, (Charles & Jones, 1998).
Management of behaviour on its side, once employees with needed skills and competence are brought in the organization, they work collectively or individually to ensure that they are giving support to the strategy of the organization. Behavioural control on its part entails practices like performance appraisal and systems of pay that looks forward in controlling behaviours of workers, to ensure that they are in line with company’s goals. Strategies of coordinating behaviours entail appraisal and organizational development practices that coordinates behaviours across employees to support the strategy of the organization, (Fombrun, Tichy, & Devanna, 1984).
Snell’s model of control theory model emphasizes on the importance of coordinating various HRM practices. On the other hand, it explicitly recognizes the imperfect nature of making decisions in SHRM because of bounded uncertainties. Other models assume that environmental and strategic competencies and the real competencies and behavioural responsibility are much important in achieving the strategy. Good HRM activities that elicit such like competencies and behaviours are exactly known in this model. In cybernetic sense, control theory is a dynamic model of continuous environmental monitoring and internal alterations. The HRM activities and adjustments that correspond, these activities whenever outcome tends to move away from the desired system.
The agency cost theory model has been connected to the human resources through bureaucratic costs concept. These costs are transaction costs that that are mostly associated with human resource management in a given hierarchy. In this, the HRM activities allow the measurement of contributions that are unique. They also provide enough rewards for personal performances. The agency theory has been used in explaining determinants of things like systems of compensation, (Peter & John, 2003).
Due to the fact that transaction cost model has been used in strategic management literature, it is now also possible to apply theoretical framework in finding a relation between strategy and SRHM. It might look intuitive that strategy of a company can have an impact on the work nature. To the level that work nature changes, to either have more or less uncertainties. The types of HRM systems are important to monitoring inputs, manners, and even the output changes. This framework provides theoretical foundation for looking at the reasons that makes different strategic decisions giving rise to different HRM activities, (Porter, 1985).
Over the last 20 years, empirical studies have been done to find the connection between the HRH and the performances of the organization. Strategic human resource entails three strands of work; Best fit, Best practice and Resource Based. The idea of best practice suggests that the adoption of some best practices in Human Resource management results in better organizations performances. It has been argued by (Pfeffer, 1994) that there exist seven best practices that can be used to attain competitive advantage through individuals and profit building by placing people first. They include employment security, selective hiring, information sharing, intensive training, self-management teams, high pay and reduction of status differentially. Best practice is to be implemented in bundles hence difficult to identify which is the best, as shown by (Elwood et al 1996).
Research has shown that best fit argues that HRM improves performance where there exist close vertical fit between HRM practices and the strategies of the company. This enhances coherency between HR people processes and the external market. There are many theories on the nature of this vertical integration. Lifestyle models explain that the policies and practices of HR can be mapped on the on the stage of organizations’ development. The competitive advantage model, takes the views of porter about the strategic choice and places arrange of HR practices onto the firm’s choice of the competitive strategies. The configuration model provides a sophisticated approach which advocates for close examination of the firm’s strategy so that appropriate HR practices and policies can be determined. On the other hand, this method assumes that organization strategies can be identified- many firms exist in a state of development and flux, (Legge, 1989).
Recent studies have shown that resource based view forms the foundation of modern human resource management. It concentrates on the internal resources of an organization and how they usually contribute to the competitive advantage. The uniqueness of such resources is preferred to homogeneity. The HRM has the central responsibility of to develop human resources that are rare, valuable, effectively organized and difficult to copy and or substitute.
Generally the HRM theory explains that that, the objective of human resource management to assist organizations meet their strategic goals by maintaining and attracting employees on top of effectively managing them. HRM ensures a fit between the firm’s employee’s management and overall firm’s strategic direction, as concluded by (Elwood et al 1996).
Strategic Human Resource Evaluation
Over the years, companies have realized that workers are needed to be looked upon as competitive advantage. As an impact, the HR department is developing from carrying out simple administrative issues, to being strategic partners. The department has been given the responsibility of ensuring that company objectives have been attained. This development needs new methods of defining and assessing the successes of HR development. It is not sufficient to measure it basing on traditional operational methods of internal efficiency. Due to this, the department of HR, need to value of their strategic participations (Angel, & Elizabeth, 2003).
Years back, HR department used to measure their achievements by looking at how busy they were, the number of employees recruited or even interviewed among other things. This measure depicted HR practices as being administrative functions required to execute practices t5hat are related to personnel. This HR functioning conception has really changed as companies have started realizing the potential competitiveness of their employees. A large number of organizations are putting in much effort in designing practices of HR that give room for the development of the strategic value of their employees. This approach that is on the way coming, SHRM, calls for the expansion of HR role that involves strategic on top of administrative functions. To change the centred HR also needs the development of new methods of defining and assessing the Hr duties, (Porter, 1985).
The modern functions of HR, includes four major complimentary duties. The first role is excellence in administrative work; this role is much significant due to its immediate way of participating in to the efficiency of the organization, and usually helps in building the credibility that is much needed in assuming other influential roles. Secondly; the duty of HR, professionals have to know that employees are champions in all the ways. By recognizing the value of committed, and motivated, the HR has to play his or her critical roles of advocating employees. The department of HR is supposed to be the voice of employees in management discussions, on top of which, the department has initiate programs that airs issues and employee concerns and issues.
The two additional roles that modern departments of human resource management are these concerned with the strategic partner, and an agent of change. Since the department is a strategic partner, it calls for continuous evaluation of the alignment between modern practices of HR and the business goals of the organization. It also calls for continuous effort in designing policies and activities that ensures that this alignment is maximized. The professionals in HR have to assist in determining the current culture of the company. Also the structure has to change towards the direction that supports strategy of the company. At the same time, the department of human resource needs to play the main role in management and implementation such like changes that have been established. By assessing potential sources, of resistance to these changes and the collaboration with line managers in ensuring that they overcome these hindrances.
The roles that were mentioned earlier, about administrative expertise and champions of employees, are considered day-to-day and operational nature. On the other hand, the duties of strategic partners and agents of changes, stands in for the developing strategic dimensions of the duties of HR. in a similar fashion, the duties of administrative expertise, and the deal of strategic partner with the operations, whilst the champions of employee and agents of change duties concentrates on individuals, (Angel, & Elizabeth, 2003).
This turn that is taking place in strategic HR functions, makes one to have expectations of observing trends that are parallel in the manner in which the department of HR evaluates its own performances. On the other hand, traditional measures, indicates the degree of operation efficiency, the effects of specific programs of HR, on the strategic objectives of the firm have to be assessed too. This new changes are based on deliverable individuals not on variables that are dabbles.
The Department Of HR Challenges in Becoming Strategic Partners
Avoiding strategic plans on top of Shelf, though many strategies have been written, only a few have been acted upon. There have been the creation of many visions, but only a few have been realized. Comparing the missions that have been expounded, but only a percentage has been executed. Becoming a member of strategic partner, have a meaning that explains the turning strategic statements into a set of companies action. The process of overcoming SPOTS challenge, calls for professions in HR to forces issues of an organization into strategic discussions, before deciding on the issues that are strategies. The department of HR is supposed to facilitate diagnosis of the organization, which in brief explains on how aligned strategies of business are to the culture of the organization, (Humanresourcesdegreeonline, 2010).
Another challenge is the creation of a balanced scorecard. The idea of balanced scorecard has been in existence for long time; however, its application is the one that has been made popular. A scorecard that is much balanced centres on serving many stakeholders, and can be total index in assessing the executive.
The implications of the human resource department becoming strategic clearly show that there is a change from personnel management to HRM. The implications of department show that the utilization of human resource at different times has played an important role making the department to become strategic. The aspects of human resource management have been designed in a way that it concurs with the needs of surrounding in which changes to SHRM. The basic aspects of SHRM, is rooted on assumption that the human resource strategy can in one way or the other assist in attaining business strategies but also vindicated by it, (Nadeem, 2009). This concept’s validity rely on the extent at which it is assumed that individuals create added value, and as a result, there is need for them to be handled as a resource that is much strategic. SHRM is real only when translated into theoretical models and then implemented through personnel strategies. Human resource department needs a shift towards a macro-point of view, to apply to the broader part of the organization. In fact, there need to be commitments on high quality in the company, which then will become more productive in the firm. Basing on the same point, a stronger leadership group is needed in the department for the exploration of both human and non-human resources.
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