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The motive of the assignment is to explore the relation between Strategy and Human Resource Management. This essay will examine the change and development to an organization life-cycle by Strategy and Human Resource Management. This study is focused on the critical areas of an organization and inter-link within Strategy and Human Resource Management.
This section is designed is such a way to cover the relation between Strategy Human Resource Management and Human Resource Management. Its main focus is to establish the relation between Strategy Human Resource Management approach and Human Resource Management approach and difference between them and how employees plays an important role in meeting long term objectives of the organization.
2. Strategy Management
According to Samuel and Peter "strategy management is a continuous, iterative, cross-functional process aimed at keeping an organization as a whole appropriate matched to its environment.". It means strategy management is about a constant and repetitive practice in which all the functional process of the organization works together in order to match the strength with the opportunities to its environment and to meet the objectives of the organization.
John and Richard define strategic management as, "the set of decisions and subsequent action used to formulate and implement strategies that will optimize the fit between the organization and its environment in an effort to achieve organizational objectives ".
Strategic management is made up of decision, analysis and action which an organization considers so that it can create and sustain competitive advantage. This definition has three ongoing processes analysis, decision and action.
Strategic management pertains to analysis of objectives, goals, mission of the organization with taking care of external and internal environment of it. Now organization has to decide with whom they are competing and how to compete with them. And last action which an organization must take in order to bring their strategy into practice by designing and allocating required resources where needed the most.
The principle of strategic management is to find out the opportunities and threats posed by external environment. Also organization must focus on internal environment so as to strengthen its various areas. For example, a company should have a skilled and qualified workforce in order to achieve its objectives. Also organization needs to induce how to contend in order to sustain in long term. Thus, organization has to create competitive advantage in market. Managers need to examine the objective of the organization whether they want to be positioned in low cost producers or provide good and services which are unique and will help organization to build a premium image in the market. Also strategy should be created to have sustainability so that it become more difficult for the competitors to follow or to replace our product which can be done only by providing valuable and efficient products and services in the market.
Strategy in short, bridges the gap 'where we are' and 'where we want to be'.
Human Resource Management:
Human Resource Management is process of organizing and managing people in an organization in an appropriate structure and total mode of action. Human Resource Management practices and manages some basic functions in an organization like staffing (recruiting and selecting people), orientation, training and development, low labour turnover, job description, job analysis etc.
4. Performance Appraisal System:
The performance appraisal system is used to determine and examine the employee performance in terms of contribution and work to the organization within a given time period. The aim of the performance appraisal system is to calculate the employee performance in positive and negative aspects which will help the organization to make efforts in the direction of its objectives and to control its operations. For ex. Armstrong (2006a) argues how "performance management review (individual and 360-degree feedback) provides the input required creating personal or team development plans, and to many people performance management is essentially a developmental process. Performance reviews can, however, produce data in the form of individual rating, which may be used as the basis of performance related pay decision." (p.146).
Performance appraisal can be beneficial to an organization to maintain a healthy work culture but it depends upon how the performance appraisal is practiced in that organization. Also evaluating the performance of the employee is positive channel to the organization because it will give strength and weakness of the employee. Then organization can plan training and development for its employees by providing various motivational and enthusiasm training. Other gainful use of performance appraisal system is that it can speed up the organization understanding and judgment for promotion or demotion, reward allocation, incentives, layoff and transfer. By exercising performance appraisal system in an organization only those employees will get the benefits that fit the most. This will help the manager to develop and motivate their employees towards personal development and organizational development. Performance appraisal is good to relate with the strategy and HRM practices of the organization because evaluating of performance has a direct correlation with the wider performance of the corporate as a whole.
The question however surrounding the exercise of such methods is how they might be perceived by the employees that receive them (see Rangone, 1997).
Furthermore, questions arise like what kind of performance appraisals will be appropriate to help produce the necessary satisfaction for their positive performance as well as indicate areas of improvement when weaknesses are detected? The argument that is supported by authors across a wide spectrum is that performance appraisal systems or reviews, cannot in themselves, become a positive resource for improvement in the organization (Kuwaiti and Kay, 2000; Wiese and Buckley, 1997). It is argued that performance appraisal systems can be manipulated differently by the members of an organization. For example, Cook (1995) argues that "The interviews also uncover managers' reasons for making deliberately low PRs: to shock someone back onto a higher "performance track", to teach a rebellious subordinate who is in charge, to send someone a message that they should consider leaving the organization and to build a well-documented record of poor performance to speed up termination" (p. 3). All of the above characteristics indicate how performance appraisals can be used in a number of ways and according to the interests of those that deploy them (Neely, et. al., 2000).
5. High Performance Work Practice:
The study of High Performance Work Practice got attention in Strategy HRM as it was considered that some special processes were executed in work practice of an organization could lead to high performance level. HPWP can be used to constitute a blend of best work practices that can be contributed to the success of the organization. By studying 968 public firms Huselid (1995) was able to identify a set of common trends that were shared between organizations. These trends specifically demonstrate approaches to the employee's contribution in the organization. HPWP now days has become a important part of strategy HRM because by implementation of it results in high performance of employee and hence fulfilling of objectives of organization and employee.
De Waal (2007) argues that high performance organization (HPO) share some certain characteristics like " strong financial results, satisfied customers and employees, high levels of individual initiative, productivity and innovation, aligned performance measurement and rewards system, and strong leadership". (p.180). This is because due to High Performance Work Practice the efficiency of employee and quality of work will increase and it will result in making more profit to the organization. Also the output will be high and by measuring the performance of the employee by Performance Appraisal System and it will motivate the employee towards the higher productivity and hence employee satisfaction. When productivity is high and the quality of work is good then customer will be more satisfied and new customers will be attracted towards the product and services. The efforts made by an organization in the direction of nurturing for managing of the workforce play an important role in the overall performance of the organization. High Performance Work Practice and HRM have same motives in some aspects; they both are interlinked with each other. For example, if an organization is exercising High Performance Work Practice efficiently then it is strengthening its HRM practices because it will bring customer and employee satisfaction, aligned performance management and strong leadership. Also performance of an individual affects the productivity of the organization and if employee is satisfied he will be more focused on its work and by making efficient use of available resources with skilled workforce will result in organizational benefits. By drawing reference on the above qualities of High Performance Work Practice the effort is to try and establish a narrower and almost causal relationship between HRM practices and performance. However, and despite the above emphasis it is equally widely agreed that there is little known about how the employees' high involvement can help generate high performance in the organization (Guillory, 1996; Mirrielees, 2006; Stevens, 2000; Teare, et. al. 2002).
6. Self Managed Teams:
The use of self management team has become a popular way of organizing the team the employee working environment and it is believed that can contribute to an increase of efficiency and input. ( Buckenmeyer, 1996). In Self manage team an employee has a feeling of belongingness towards the organization and employee feel growth of the organization as a part of its personal growth. The employee has a sense of freedom towards sharing its ideas and feels independent while working with others. When an employee shares it ideas, it may result in innovative decisions and will contribute to an increase of efficiency of the organization and also motivate the other employees to do so. In using the work by Sirking (1993) Elmuti (1997) argues that "self manage team programs can produce greater satisfaction, reduced cost, fast and better decision making, improved pricing and increased market share". (p.234).
According to Elmuti (1997) there is distinction between two most popular approaches to self manage team, namely
a) Work team: Work team focus on productivity of the organization and they work everyday to meet the objectives of the organization.
b) Problem solving team: problem solving teams are assigned only for specific task; they do not work all the time with the organization.
The study of self management team has also been encountered as a controversial issue because management lacks at considering the individual's idea and sometimes employee do not contribute to the team and share its ideas. For example at an individual level there is lack of recognition and gratitude due to which employee do not lead to sharing of innovative ideas which could help the organization in attaining its objectives and improve its performance.
Difference between traditional work group and self directed team:
Traditional work group follow the prescribed direction whereas in a self directed team individual takes initiatives and give its ideas.
In a traditional work group every individual is focused on individual's performance but in self directed team the focus of all the team members is on overall team growth and performance.
In a traditional work group individual will put blame on other member of the same team whereas in a self directed team every individual will concentrate on solving the problem.
In traditional work group, every individual competes with each other but in self directed team all members work as a whole team and co-operate with each other.
Traditional work group spends money to improve the work quality but in self directed team, it improves work quality to save money and increase the efficiency.
Therefore, self directed team is a win-win situation for an organization because employee's contribution will be evaluated in such a way where team as well as individual's effort will be recognized.
7. Performance management functioning in the Organization:
The examination of performance management in the empirical literature is strongly connected with measuring the employee performance criteria that can be introduced from the management or from planning with employee. Organization the employee performance is a form of quantifying their contribution to the organization. Organizations that function in the service sector often want to measure how the employee's relation with the customers, how glowing they managed to answers questions the customers asked and whether the discussion was held in a specialized manner that resembled the values/principles of the organization. In the literature, PM is discussed in light of managing learning and change. Authors argue that organizations should not only indicate the targets that need to be met but also provide the necessary learning structure so that employees are able to develop the right competence in order to meet them. PM practices fail to accomplish what they are believed to offer because employees experience uncertainty about the process of accomplishing them. Moreover, managers set standards without acknowledging the skills and competence employees not only have but also lack. In an extensive study on performance reviews, researchers at General Electric came to the following conclusion. Implicit in performance appraisal programs are now structured and include two distinct objects 1) letting a person know where he or she stands via ratings and salary actions, and 2) motivation him or her to improve.
In this context, the process of managing the employees' performance takes place together with managing their learning or development that is not immediately corresponding to the targets that need to be met. It is for this reason that Armstrong (2006b) rightly argues how: "Discussions take place on ways in which the individual's role could be developed so that it becomes more challenging from the viewpoint not only of new tasks to be accomplished but also the need to acquire or extend knowledge and skills in order to carry out those tasks". (p.144)
8. Implementation of Strategy and HRM:
ABC is a company which is operational in Mauritius. It was established in the year 2008, since then it has created a good market for itself by implementing proper HR practices in its organization. Its routine process and legislation of HR practices is assigned to the line manager as they have directed and frequent contact with employees. Line manager needs to have appropriate and required skills to perform HR practices efficiently and effectively to a milestone already organized by HR manager. It means that senior HR manager needs to correlate work and coordinate with line to manager, providing training resource, incentives and frequent contact with employees to carry out HR practices in a secured and conformity with HRM policy. These are the practices which ABC Company needs to follow in order to fulfill its objectives with employee and customer satisfaction:
A strict, logical and well cultivated selection system helps in determining and distinguishing the right person with the potential to perform among the bulk of candidates. A strict selection system creates a feeling of consciousness and high expectations of performance by its employees. A wrong selection will result in hamper the performance level whereas a well cultivated selection system can ensure a better fir for the right job.
Training and development system:
ABC Company can enhance and develop the quality of work done by its employee by providing training and development about problem solving sophisticated technique, team work and to maintain relation with other employees of the company.
Performance appraisal system:
ABC Company can evaluate its employee work and contribution to the company. Also thorough performance appraisal a Company can judge the attitude and behavior of employee towards organization and other employees. By measuring performance of employee company can provide rewards and incentives on achieving specific goals of firm.
HRM treats every employee as an asset of the company which leads to high performance work practice by its employees. It will influence its employees towards self-managed team and it will result in performance, satisfaction and productivity of employee and company.
9. Creating more strategic HRM focus:
After examining the number of key areas that represent important strategic approaches to HRM, the company is able to integrate some of the mentioned practices which it to provide a more strategic frame to its recruitment and maintenance of its employee. For example considering the major key area such as the performance appraisal system can be used to manage the employees' strength and weaknesses, and develop strategy accordingly to reduce their weaknesses in an aim to achieve the organization goal.
There are other key areas of strategic approaches of HRM that creates a significant growth for the company and helps to manage its employee and production process. By taking the example of ABC Company which is well established in Mauritius so by improving the strategic HRM approach the company can improve the exchange of learning in different location between the different customers and the employees. If the company is able to identify the more clear area about needs to improve in the strategic HRM process ,that will help the company to identify the required needs for the development of the employee management and other strategy which leads to the growth of the company in a profitable way.
Focusing more on the strategic HRM rather than the traditional HRM helps to maintain a coordination between the employees working in an organization by more involvement and empowerment those who are working in different department like administrative and managerial level, and it helps to create a distinct cooperation among the employees which helps in fulfill the target of the organization in shorter period of time. It helps to create a link between the opportunity and challenge among the employees working in different working environment.
Training and development for the employee is an important part of any organization which leads to create more focus on the strategic HRM. So every company should focus more on the training and development of the employee to reduce their weaknesses and use their strength to in a more effective and efficient way, which helps in the organization to achieve its growth and growing more profitably.
The aim of this assignment was to examine the connection between Strategy and Human Resource Management. In this essay it is investigated that Strategic Human Resource Management is intimation of transforming role of Human Resource Management as settling a much more critical and corporate responsibilities that it received in past. The practices which are discussed in this assignment aims at merging the duties and performance of employees such that a more defined estimation as well as managed within the wider communal strategy. The training and development provided to its employees by an organization plays an important role not only in maintaining the objectives but also the improvement to the collective strategy of the organization. For strategy to come into practice there should be a definite bonding between the Human Resource Management policy and approach on over all organization strategic goals and environment. The main focus of the assignment was to establish connection between its Strategy and Human Resource Management.