Is hrm a strategic approach to managing people business essay
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Human resource management concept has a claim that it is strategic in its approach while managing people at work place."The concept of HRM is often defined as a strategic approach to the management of an organisation's most valued assets- the people working there who individually and collectively contribute to the achievement of its objectives for sustainable competitive advantage". (Armstrong M, 1994).HRM emphasis on few aspects that are, interests of management, keeping strategic approach , achieving value addition for the organisation from people with the help of human resource development. Furthermore performance management, gaining commitment toward the aim and objective of the organisation, requirement of strong corporate culture as well as maintaining coherence in HR policies and practices. HRM is oriented to business, where the concern is for proper management of people in order to add value to achieve competitive advantage for the organisation. HRM is appealing to management because with the help of human as resources and technology it competes at the global level. HRM can be regarded as a "Set of interrelated policies with an ideological and philosophical underpinning" (Storey 1989). Human resource has been strategic in its approach while managing the crucial resource people which are important for any organisation. The essay discusses the approaches which are the evidence of HRM having strategic approach. The rationale behind having strategic approach in HRM is discussed. Models and theories are used to understand the strategic aspect of HRM. First the relevance of Harvard model is explained in relation to soft approach of HRM. Furthermore the literal meaning of strategy is explained and matching model is put forward in relation to hard approach of HRM. In addition to it classical and emergent strategy are explained and four fold model is understood with its help. Concurrently Porter's model is analysed with reference to HRM philosophy. While going through these theories their relevance in workplace is assessed in supporting the claim that HRM represents a strategic approach to managing people.
Human resource management has strategic approach it refers to the overall direction the organisation wishes to pursue in achieving its objectives through people. Human resource strategy deals with long term effects on employment and development of people. It also concern with relationship between management and staff. The strategies related to HRM focuses on people issues which affect the strategic plan of the organisation. Strategic HRM deals with structure, values, culture, quality, commitment, performance, competence and management development. It deals with specific issues of the organisation which needs to be altered or attended for organisations benefit. The issues should be related to people that is training motivation reward, flexibility team working and stable employee relations. The explanation about the HRM strategies clearly reflects that HRM adapts to strategic approach when it is managing people. Human resource is intangible in its character so to manage it, strategic approach is essential. In its origin HRM is considered to be proactive, and long term employee commitment is integral to it. Harvard framework consists of six components which treats HRM as an entire system. As said by (Beer M, 1985) components are situational factors-which shape the environment within which organisations operate. Stake holder interests-it's about trade off that occurs between employer and employee. HRM policies, HR outcomes, long term consequences and a feedback are the component. Policies are related to HR flows, reward system and work systems.HR outcomes are commitment, competence, cost effectiveness, congruence. Long term consequences are employment and growth. Feedback creates a loop which keeps the continuity Harvard frame work had horizontal alignment it acknowledge role for alternative stakeholder interests-including government and community. The approach has been very positive and had a broader perspective. . Thus it can be seen at very initial level HRM has a set pattern of dealing with human resources. This model of HRM is the 'soft' model because it focuses on management of 'resourceful humans' assuming that employees are valued assets and a source of competitive advantage through their skills and abilities. (Storey J. , 2007). In the soft model staff is managed where managers engender commitment and loyalty to achieve high level of performance. The soft model considers that the most important is to promote level of employee motivation, commitment and satisfaction which in turn provide excellent performance.
The rationale behind HRM being strategic is that it rests on the perceived advantage of managing people in organisation for long term gain, with the help of agreed and understood basis for developing the human resource. The logic of the strategies is that they integrate the need of both organisation and people when human resource is managed.. Management of people is the key to achieve competitive edge in the competitive global market. When we talk about managing people in workplace strategy is bound to occur. "Strategy is derived from the word 'strategos' which mean, a general, who organises, leads and direct his forces to the most advantageous position" (Bracker, 1980). If we talk about strategy in business world the top management leads the organisation to get its goal achieved, its vision attained and its position in the society in a given environment. If we look at the universal model it stress the importance of top management commitment to key HR practices. This model assumes there are 'best HR practices' which ensures success of organisation irrespective of circumstances. The model explain the link between organisational strategy and HR strategy, it advocates that this involves top management giving 'HR practices the profile they deserve in the senior management process (Boxall, 2003). Other model is matching model which has different approach from universal model. Matching model (closed) approach specifies HR policies and practices which are relevant to specific organisational situations. In this model there is a clear and mutually supported relationship between organisational strategy and HR strategy, this relationship gives rise to the implementation of specific HR initiatives. "The match between the organisational strategy and HR strategy is closed and prescribed in the sense that a particular type of organisational strategy suggests the need for a specific HR strategy and set of practices" (Fombrun, 1984). Matching model (open) argues the existence of a clear and mutually supportive relationship between organisational strategy and HR strategy. This is different from the closed model because according to this model HR strategy initiatives should not be prescribed but should be left open. "In other words, the test of the degree to which the HR strategy is truly 'strategic' is a test of its appropriateness to the organisational strategy" (Mabey, 1998). These models explain that the nature of HRM is strategic in its approach while managing people in the work place. Matching model highlights the resource aspect of HRM where the optimum utilisation of human resource is done to achieve organisational objective. Hence is considered to be 'hard' model. "The 'hard' model stresses the links between business and HR strategies and the crucial importance of a tight fit between the two" (Fombrun, 1984). In other words organisations consider human resource like other resources and intend to obtain cheaply and exploit fully for its profit maximisation. Labour is co modified although it may be treated well when conditions are favourable and labour is short in supply to fulfil organisational goal. In contrast organisation will make them redundant when its value is less than the expectation. In spite of being hard in its approach this strategy gave initial framework to subsequent theories. In some cases the approach is top down whereas in other it is prescriptive in nature. The approach of HR is even open to the situation within the given conditions of the organisations but the common factor is that all the models had systematic approach in dealing with people in the work place.
Strategies are innate for HRM they can be deliberate or emergent. When HRM is managing people and has the corporate and business mission it can comprehend and deliberately make certain strategies .Where as in other situation they emerge with the progress in the organisation. The classical perspective of managing human resource has its strategies which are deliberate .According to (Chandler, 1962) "Structure of an organisation Flowed with its growth strategy" .'Classical' strategic management process has certain principal elements .The approach establishes the long term direction of the organisation, it assess the product market and geographical location within which business can prosper. Whereas analyse the external environment while identifying possible opportunities and threats. Approach is deliberate with the intent to elevate the organisation with the help of sustained competitive advantage. Moreover having a mission statement and objective for the organisation helps in creating competence. Determining the scope of organisation whether it will be in primary sector or expand itself is important aspect for strategising. It is important to set specific goals and examine alternative choices. Conducting an internal organisational analysis by doing SWOT can equip the organisation to understand the nature of existing management systems, competencies, and capabilities. (Grant, 2008) Argues that the "best -equipped strategists have a profound understanding of the competitive environment and are able concurrently to systematically appraise the resources available to them". Operational activities have effect of top management decisions. Expansion plan merger or takeover all such decisions play an important role in strategy making. Adoption / implementation of chosen choices are critical factor for strategy making. Entrepreneurs have certain image about the organisation and it is vital to be known at the time of developing and implementing strategy. "Appreciating that the values and expectations of senior decision-makers play a sizeable part in the development of strategy because it is how they choose to interpret advice about external and internal resources that ultimately shapes strategic decisions" (Lovas, 2000). Strategies operate at three levels corporate, business and operational level. Firstly it's about the scope of the organisation, structure, financing and distribution of resources. Next is how organisation compete in the given market conditions with the help of product development and customer satisfaction. Finally it's about how all the subunits -Marketing, finance, manufacturing are involved in forming strategies. If we summarise the classical approach of making strategy it rely on senior managers who determine the best plan and to be implemented for gaining competitive advantage in chosen market situation. Hence it proves that even in classical approach human as a resource is managed in strategic way when it strategise at corporate level. We have examined that the development of resources is done to gain competitive advantage and is strategised properly. When SWOT is done the human resource is evaluated in its strengths and weaknesses. This approach proves to be beneficial for the organisation but it has hard variant of HRM. Later in the essay when the four fold model is discussed we can appreciate even the 'Hard' variant when with appropriate mixture of 'Soft' variant
Alternative approach to classical is emergent in its nature. The strategy is analysed as emergent from the organisational progress. (Quinn, 1980).Regards the most effective strategies as those that tend to "emerge step by step from an iterative process in which the organisation probes the future, experiments, and learns from a series of partial (incremental) commitments rather than through a global formulation of total strategies". Decisions in the organisation are taken by the people and these people have their opinion which influences the strategy. Problems in organisation occur due to the changes in environment; there is a possibility that any specific strategy can prove best in a particular situation whereas it can be a failure in different situations. (Mintzberg, 1987) "Notion of strategy being crafted evokes ideas of skill and judgement, as well as people working together to make sense of confusing situations before reaching a conclusion that appears to offer a way forward". This clearly states that people are managed in a systematic way to deliver results in the workplace. People's skill and their actions in a particular situation help in forming strategy. Classical approach and emergent approach both are individually incomplete. Because one means no learning and other mean no control. Mix of both of these can be beneficial for organisation; to exercise some control while fostering learning. (Whittington, 1993) present four generic approaches to strategy formation. These approaches can be helpful in understanding the complexities and multidimensional features that any strategy has. The two outcomes are profit maximisation and pluralistic whereas strategy formulation is emergent or deliberate. Classical approach delivers profit maximisation due to the deliberate effort of senior manager here the analogy of general can be given. This approach reflects the literal meaning of strategy where top down approach is visible. Evolutionary approach is also having profit maximisation but is emergent in nature. This strategy is seen as a product of market forces in this only the competitive few exists. "Competitive advantage is the essence of competitive strategy. It encompasses those capabilities, resources, relationships and decisions which permit an organisation to capitalise on opportunities in the market place and to avoid threats to its desired position" (Lengnick-Hall, 1990).In Processual approach is pluralistic and emergent ,the manager is not clear about the profit maximisation what should be the optimum level of output targeted. There is lot of confusion within the organisation .Strategies appear in small steps at irregular intervals from the practical process of learning, negotiating and compromising instead of clear series of steps (Quinn, 1980). Processual view takes Micro political perspective considering that organisation has tensions and contradictions within it. There are rivalries and conflicting goals, and with behaviour that seek to achieve personal and departmental objectives (Pettigrew, 1973). Strategic plan are thus necessary and important for the organisation. Systemic approach is pluralistic and deliberate; the strategy shaped by social system in which it is embedded. Class, gender, legal regulation, and educational system have their effect on how employer and employee behave. (Granovetter, 1985).The organisation need to have its strategy made according to the people on whom the business is dependent. People with different culture react differently, while managing people in work place their environment needs to be studied. The implementation of any strategy can only be successful if external factors are managed properly.
Outcomes Profit maximisingWhittington's typology of strategy
These strategies and their links with HRM explains that in classical perspective it is unproblematic because making decisions and cascading this through the managerial hierarchy to shopfloor and implementing to achieve goal is a direct process. Whereas in evolutionary view primacy is upon market forces situation it becomes complicated to respond instantly where the promptness to satisfy customer is required. In processual perspective there is lack of communication, tension within management, or challenges which may be mounted by workers in such situations HRM styles also emerge in a fragmented manner. However in systematic approach HR cannot be very functional if the social norms and function are ignored. To implement HR practices globally it has to cater according to local need. Finally HRM has to be strategic in its approach while managing people in workplace. The strategy may vary but it is essential. "Strategic human resource management encompasses those decisions and actions which concern the management of employees at all levels in the business and which are directed towards creating and sustaining competitive advantage" (Miller, 1989). HRM strategies are useful even in turbulent environment it translate business need into policies. Looking at this model and discussing four folds we can observe that HRM plays a very crucial role in appropriately balancing these variants by managing people in workplace strategically. HRM moves on the double edged sword where it has to prove itself to be result oriented to organisation and has to be compassionate enough to employees to get the work done in the most efficient manner.
In an organisation the goals of the company tells where a business wants to go. Whereas strategy answers how it plans to get there. (Porter, 1985) Condensed three starting point for strategic thinking. Overall cost leadership-here the business works hard to achieve the lowest costs of production and distribution so that it can price lower than its competitors and win a large market share. Differentiation-here the business concentrates on achieving superior performance in some important customer benefit area valued by the market as a whole. Focus- here the business focuses on one or more narrow market segments rather than going after the whole market. Various HRM combinations can be adopted by organisations to support Porter's model. (Schuler, !989) has identified corresponding HRM policies to Porters model. They are 'accumulation'-selection of good candidates on the basis of personality instead of technical efficiency.' Utilisation'- selection of individual on the basis of technical fit. Facilitation- selection of employees on the ability to work together in collaborative situations. The emphasis on 'external fit' is important to implement these philosophies. External fit mean organisational strategy leading individual HR practices that interact with organisational strategy in order to improve Organisational performance. Quality strategy will require combination of accumulation and facilitation HRM policies to acquire, maintain, and retain core competencies. Cost reduction strategy will implement utilisation HRM philosophy have short term contracts and do external pay comparability. If organisation wants to adopt innovation strategy it will require facilitation HRM philosophy which needs to bring out the best of existing staff. According to external fit philosophy good HR practice is dependent on the organisation's strategy. With the analysis of this model it can be claimed that HRM represents a strategic approach to managing people in the work place.
In brief we can say that when HRM deals with people it is kept in mind that it needs to be strategic in approach. Human as resource is intangible in nature HRM use certain models and theories to get the appropriate strategy set up. As we have discussed several models HRM can use any of them to maintain its competitive image in the organisation. Most important is that HRM manage people at workplace where organisation's goal is vital, thus strategy is required.
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