Explain the relationship between strategic management and human resource management. Use the academic research literature to discuss how strategic human resource management may contribute to the competitive advantage of the firm
Every organisation is trying to become more efficient and more productive. The key to an organisations success is to become more global and advance from a technological prospective. In order to become more efficient and to make its goals achievable, an organization should focus the most important assets of all other resources, which is the human capital or the intellectual assets. After all, none other than a person or an employee executes every achievement or any activity in an organization. Thus keeping this particular asset in good terms and managing it up to a standard is quite a challenge in terms of time and similarly finance. However, having a well organized and a well-managed human resource brings more significance to an organizations' wellbeing. This essay will investigate how Strategic Management (SM) and Human Resource Management (HRM) are related, and then evaluated the role they play in providing organisations with a competitive advantage.
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Strategic management deals with devising people interventions that help an organization to develop the customer behaviour to promote the competitive advantage (Saini, 2009). The strategic management process helps the organisation to react quickly towards the new challenges. This dynamic method helps organizations find new and more capable ways to do business. Strategic formulation, which is the practice of classifying a company's' goal and strength and strategic implementation which express as the process of allocating resource and developing structures are the two components of strategic management process (Kramar, Bartram and De Cieri, 2011)
Strategic management processes raise the organizations to discover new and more capable ways to do business. Situation analysis, strategy implementation, strategy formulation and strategy evaluation are the key elements of the strategic management process (Kramar, Bartram, and De Cieri, 2011). By dealing with these elements of the SM process in order listed, companies can assess and re-evaluate situations as they develop; always making sure, the company has placed itself optimally in the business environment. Situation analysis engages with looking over the companys' internal and external environments and the context in which the company fits in those environments. It starts with monitoring the company's interior environment and investigating how employees cooperate with each other at all levels. After the first step is completed, it is time to formulate a strategy (Kramar, Bartram and De Cieri, 2011). This involves determining the company's strengths to decide which strategies could be implemented. Operational strategies involve routine operations, outlining the procedures and process by which the company does business. Competitive strategies involve finding ways to compete with a particular industry or business (Kramar, Bartram, and De Cieri, 2011). The third step is strategy implementation, which involves putting the formulated strategy into place. The final step in the strategic management process engages observing the results of an implemented strategy (Kramar, Bartram, and De Cieri, 2011). As mentioned, these four elements and the process of building a good strategy would be very significant to an organization, which presumes to manage their intellectual resource with great efficiency. Using strategies would help HRM to be more rapid and supervised in their decision making process and in achieving the objectives and targets of the entity (Kramar, Bartram and De Cieri, 2011)
Human resource management described as a set of activities aimed at building an organizational performance (Plumb, 2008). Also having a good HR management department is identically important to an organisations' strong financial. Any organization is goal oriented and has targets to achieve, and the employees of the organization perform them. The employees are the works force in the entity, thus managing and maintaining them is very crucial and very vital to its' top managers on behalf of the organization. Managing the work force is also important as it gives the foundation of a healthy entity; this happens only if an entity holds a strong work force that is right for the job (Payne, 2010). Having a strong work force opens many opportunities for the organization in terms of growing their day to day businesses, and consequently by overcoming supplementary trades the company unwraps a pathway to a successful and a most importantly a sustainable organization in today competitive world.
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Thus, using strategies and planning HR activities is quite important to a business entity for the betterment of the employees, which consequently brings success to the organization itself. HR strategies are laid down according to the overall objectives of the organizations in the same way as investments or marketing strategies. However, HRM strategies explained through quantifiable terms so that outcomes of them measured. Also HR strategic objectives go past the basic calculation and control of staff numbers and minimization of costs (Barrett, 2009). The function of a Human Resource Management strategy is when adopting their HR practices, organizations must take into account the interest of the fit between these firm strategy and practices. As a result, the main goals of strategic HRM is to make sure that HRM is aligned with the strategic needs of organization (Saini, 2009).
Strategic management is important in all kind of organization activities to achieve their long-term goal. Hence, most of the managers agreed that perceived strategic management is the most important capability and information technology as the least important competency for HR managers (Payne, 2010). Strategic management contained visioning, analytical and leadership skills that managers viewed as important for human resource (Payne, 2010). Thus HR leaders can make significant role to strategy development and achievement as well as to improve the quality of decision related strategy and talent. Overall, the relationship between HR and management is becoming mutual. HR executives are trying to become a part at the management table and they are concerned in everyday management activities. However, there is still a long way to go if HR is to become a strategic partner at all levels. In order to do that, HR needs to expand its internal competencies to deal with organizational issues and find ways to suggest creative and innovative solutions to organisation wide issues (Kramar, Bartram and De Cieri, 2011).
Meantime, harder strategic HR themes like cost cutting, rate of return productivity measurement, performance measurement and the employees have largely seen voluntary negatively. Therefore, there is a clear dualism in HR involvement that organisations have been adopting for their survival (Saini, 2009). In addition, strategic management prescriptions are never comfortable when put together with pluralist employment relations framework (Saini, 2009). Some organisations have a practice of using strategies not only in HR but also in other aspects of their organisations to achieve their target goals and objectives without any hassle. Practicing strategies in HR would be beneficial not only to the employee but also it is the right way to do the right job (Lawler, Boundreau, 2009)
Strategic Human Resource Management (SHRM) also identifies the long-term effects of HR decisions on the employment and development and development on the bond between management and staffs in the organisation as being significant (Barrett, 2009). This is important if the company wants to gain competitive edge through its workforce. As a result of, HR departments' integration to the business, the personnel were re-looked as a resource in the company.
On the other hand, SHRM system helps effectively answering the requests of the strategy and environment and assists strategic flexibility with the goal of achieving the active fit (Pablos, Lytras, 2008). Strategic management can also help the organization to identify their strength, weaknesses, and opportunity and threats (SWOT). So, that the organization can compete with their competitive firms and build their profit and achieve their success. Strategic management as general and within HR, helps to organize how HR systems and practices with the aim of developing a competitive advantage for the firm (Pablos, Lytras, 2008)
According to Porter, (1994) competitive advantage defined as an advantage that arises from observing and realizing ways of competing that are unique and distinctive from those of rivals, and that can be sustained over time. Some researches tell that human resources can become a cause of competitive advantage for the organization is not new. At the same time, the organization need to understand that competitive advantage is not permanent (Pablos, Lytras, 2008). The speed with which competitors are able to acquire the skills needed to duplicate the benefits of a firm's value-creating strategy determines how long the competitive advantage will last (Pablos, Lytras, 2008). In addition, it has accepted that firms can generate a competitive advantage from their management practices. Organizational resource leads to a constant competitive advantage when the resources are valuable, rare and have no substitute (Pablos, Lytras, 2008). Human resource needs to create organizational values in order to be a source of competitive advantage. Therefore, organizations offer jobs in which individual can show their different skills (Pablos, Lytras, 2008).
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When the firm choose a strategy, they make choices among competing alternatives. Competitive advantages help to sketch the organizational procedure by analytically, the emergent strategy help the rational decision making process by senior management and enhance the firms' competitiveness. In addition, the organizations can develop a long-term competitive advantage. Strategic Human Resource Management (SHRM) allows the adaptation of HR practices, the knowledge, and the behaviour of the employees as regards the immediate needs of the organization. In brief, SHRM must facilitate strategic flexibility with the goal of reaching an active fit (Pablos, Lytras, 2008).
In the past, organizations and their top managers assumed the status of managing the most vital intellectual assets of an entity. Thus, they tried to bring in systems in which they could be in track of workers and their actions, which is handling and regulating the work force of an organization. However, as the world has evolved throughout the years, due to many reasons managers have understood the workforce is also kind of a resource that is in common with other resources. As a result, they implemented the process of strategic management.
Therefore, in conclusion this essay has expressed how strategy and planning are related to HRM, the relationship between strategic management and HR management and how strategic human resource management helps to develop the competitive advantage of firm. As proved above, practicing of these strategies would absolutely assist an organization in achieving their aims and objectives. Consequently, it is significant for HR management to change from being primarily administrative and operational to becoming a strategic contributor.