Strategic HRM typically helps to achieve strategic goals
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Published: Mon, 5 Dec 2016
It will be interesting to see how companies have benefited through HRM practices. Take the example of Tesco which is UK’s biggest supermarket. It has more than 240000 employees and has seen consistent profits over the years. The company over the years has used participative management which has helped the organization as a whole. The company made use of the competitive A company or an organization is an entity where two or more people come together to achieve specific goals. The basic aim of any organization is to earn profits. There is always a talk on ways by which a company can earn profits continuously. In this context the word “strategy” is often heard. It is also said that proper alignment of strategy with all the processes is extremely important. In the present essay I would like to focus on how strategies help to achieve competitive advantage. I have also tried to evaluate the effect of linking strategy to human resource management to improve employee performance. I have found that properly aligning organizational goals with different processes helps the firm to achieve competitive advantage. It can also be seen through many examples how strategy linked to HR practices helps to improve performance of employees.An organization is always in dilemma regarding use of financial, technological and human resources. According Porter (1985) an organization must use resources which are valuable, inimitable and rare. In this context there has been a shift in focus from financial aspect to human resources. An organization is said to have sustained competitive advantage when the strategies applied by it are not applied by any of its competitors and are hard to implement. Now it is necessary to understand what strategy is? And which aspect of strategy gives importance to human resources? Strategy can be defined as plans and methods deployed by a company to achieve competitive advantage and operate profitably. It is related to the long term plans of the company. The resource base view of strategy sees it as a way to create opportunities using the organizations internal resources and competences (Johnson, Scholes, & Whittington, 2005). According to this theory employees are considered as resource with knowledge, skills and experience present with them as the core of organizational performance. Now, human resource management (HRM) is the branch of management which deals with managing employees in an organization and using their knowledge to gain effectiveness. The resource based view looks employees as valuable resource, which is rare, their knowledge is hard to imitate, which provides organization to get competitive advantage (Pfeffer, 1994). Strategic human resource management can be defined as predetermined steps of human resource development activities undertaken to achieve organizational goals (Jackson, & Schuler, 2003). The strategic approach makes it necessary for organizations to focus on improvement of Human resource capability (H
helps the organization to improve its
competitive position by improving human skills, knowledge and experience. The strategic approach to various human resource practices like staffing, performance management, training and development, career planning, etc helps in improvement of human resource capabilities.
Beer et al. (1984) stated that with rapidly change in environment the makes it essential to take strategic approach to human resource function. Strategic HRM can therefore be considered as overall process related to long term human resource issues which are part of strategic management of the firm. The SHRM approach need that the HR function of the firm must set new priorities which are more business and strategic oriented. These priorities have less orientation towards traditional HR practices like staffing, performance management and training. There is more emphasis laid on improvement of organization structure, quality, values, culture and performance of employees which are the pillars of an organization. The traditional HRM focused more on physical skills. It was more of functional nature and there was lot of concern of individual efforts. It gave more importance to “tasks” and there was less focus on “people”. The strategic HRM focus on overall contribution and efficiency of firm (Chang & Huang, 2005). It promotes innovation, creative behavior and cross function integration. This approach helps to produce employee behavior that focuses on core business priorities. This in turn helps to drive the growth, profits and market value of the firm. The strategic HRM approach systematically brings about coordination of all HRM measures and implements it, so that it influences employee attitude and behavior which helps a business to gain competitive strategy. There is need for proper strategic human resource planning as it helps not only to retain the talent necessary to achieve organization goals but it also helps in penetration of strategy at all level of an organization. Proper strategic human resource planning helps an organization to find the gap between current position of a company and desired future position. It helps to stimulate creative thinking and promotes proactive behavior. It helps to identify causes of the problems and opportunities present.
Now let us examine these aspects in more details. For any company its employees are the major assets. So as suggested by Hertzberg (1959) in his two factors theory, the hygiene and motivating factors should be made available to them so that it results in satisfaction of employees. These factors include good working conditions, status, rewards, incentives, communication, work
culture, etc. So if the hygiene and motivating factors are provided the employees will be satisfied and they will work productively. The question is how strategic approach to HRM helps to achieve competitive advantage? Strategic HRM typically helps to achieve strategic goals in many ways. The main aspect of using strategic approach is alignment of all the levels of the organization with the organizational goals. The strategic approach to HRM will lead to development of policies that align with the organizational strategies. The various HR policies will try to reward positive behaviors which are essential to achieve organizational strategy. The HRM functions help to achieve corporate goals like growth or expansion by recruiting people, training and orienting them, and put them in new job assignments. The growth plans of any organization will require employees and recruitment is the only function which ensures that people with required skill sets are acquired. The retention strategy used by the company can lead to differentiation by retaining best of the talent force. Retaining best of the employees will lead to quality work, higher efficiency, customer satisfaction, etc. According to Jain (2005) the organizations which have ability to attract and retain employees which have skills to achieve the organizational goals gets sustainable competitive advantage. The strategic approach when taken helps performance management as there will be measurement of correct parameters which affects the organization as whole. It also ensures that correct feedback is obtained so that measures are taken to bring above the improvement. The other practices like performance appraisal helps to assess employee performance and using suitable reward system the company can channelize employee’s efforts to achieve organizational objectives. The training and development function ensures that the employees have the skill sets required to perform their tasks. The training programs are organized to train the employees for specific skills which will help them to achieve required goals. The strategic approach will help in developing effective training programs. Due to this the organization is benefited as there will be proper utilization of financial resources available for training and development function. The training and development function also supports the growth of the organization through career development of employees.
It will be interesting to see how companies have benefited through HRM practices. Take the example of Tesco which is UK’s biggest supermarket. It has more than 240000 employees and has seen consistent profits over the years. The company over the years has used participative management which has helped the organization as a whole. The company made use of the
situation by improving the way in which they interact with the customers. Tesco used continuous innovation, welfare management, customer relation in conjunction with HRM strategies to gain respectable position in UK retail industry. It treats employees as champions and involves them in decision making. It has also resulted in increase in employee satisfaction, efficiency, high work morale, motivation and greater acceptance to any change. Total development of all the employees within the organization is the main strength of Tesco. It constantly focuses on effective implementation and utilization of HR strategies, which has helped it to perform well in the market. For Tesco the HR policies go along with marketing strategies which are then placed into operation. The participative management practices have helped in improvement of the employees as well as the whole company. These have made them to achieve required performance through employee engagement. It has used distinct employee management practices which have helped it to achieve competitive advantage (Strategic HRM: TESCO, n.d).
The strategic HR practices help to produce competencies that differentiate products and service and thereby create competitiveness. The strategic approach is also important as in many cases the human resource is in direct contact with the customer.
Finally to conclude it can be observed that HRM function manages various functions like human capital skills, work culture, employee commitment, teamwork, productivity, etc. which is likely to be source of sustained competitive advantage for any TESCO. The human resources are extremely important in a company from finance to sales to customer service. There is a significant relation between satisfied employees and customer satisfaction. It is therefore necessary for managers and supervisors to ensure that employees are motivated, productive and enthusiastic.
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