This approach focuses on how unique patterns or configurations of multiple independent variables are related to the dependent variable, by aiming to identify 'ideal type' categories of not only the organisation strategy but also the HR strategy. Configurational approach is different from contingency approach in a sense that these configurations approach represent 'non-linear synergistic effects and higher-order interactions' that can result in maximum performance (Delery and Doty, 1996: 808). Configurational approach seeks an internally consistent set of HR practices that after maximising horizontal integration, links these to other strategic configurations in order to maximise vertical integration (Marchington and Wilkinson, 2002). Thus, put simply, strategic human resource management, according to configurational theorists, requires an organisation to develop an HR system that achieves both horizontal and vertical integration. Delery and Doty use Miles and Snow's (1978) categories of 'defender' and 'prospector' to theoretically derive 'internal systems' or configurations of HR practices that maximize horizontal fit, and then link these to strategic configurations of, for example, 'defender' or 'prospector' to maximise vertical fit
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Now attention should be directed towards our ways of seeing and thinking about world, the ways that generate the language, the code, the keys we used in conceptualizing and practicing HRM. It is at this point that we became fully aware of value representing context as a tapestry both to create and make sense of HRM. These ways of seeing are the wrap, the thread running the length of the tapestry that give it its basic form and texture which are more apparent when we turn the tapestry over and examine how we perceive reality, make assumptions about it, and define if for ourselves
As Medcof and Roth (1974) said that despite the impression that we are in direct and immediate contact with the world, our perception is , in fact, separated from reality by a long chain of processing.
Psychologist indicate that perception is a complex process involving the selection of stimuli to which to respond and the organization and the interpretation of them according to patterns we already recognise
MAKING ASSUMPTIONS ABOUT REALITY
Bannister and Fransella (1971) states that we cannot contact an interpretation free reality directly. We can only make assumptions about what reality is and then proceed to find out how useful those assumptions are. Some assumptions are so deeply engrained that they are difficult to identify and express but they are nevertheless embodied in the way we approach life. These include the way we conceptualize, theories about and manage the employment relationship.
DEFINING REALITY FOR OURSELVES
We define reality for ourselves in the following manner
Orthodox means correct or generally accepted opinion inculcated in the majority of members in any given society through the processes of socialization and education and sustained through sanctions against deviation. We do not generally question our orthodox beliefs, and therefore we do not pay much attention to them nor consider how they frame the interpretations we make of our world nor what other alternative there could be.
The following three approaches stand in contract to orthodox thinking
It is concerned with understanding the individual's conscious experience rather then analyzing this into fragments, it takes a holistic approach. It acknowledges the significance of objectivity (Sanders, 1982).
It is also concern with individual experiences but emphasises the individual's cognitive process.
It does not assume that a reality independent of observer exists. Reality is only what we construct ourselves and that not through our own cognitive process but the social processes of language, discourse and social interaction.
The wider social, economic, political and cultural context of HRM is diverse, complex and dynamic. The metaphor of a tapestry is therefore used to express the way in which its meaning is constructed from the interweaving and mutual influences of assumptions deriving from the basic perceptual, epistemological, philosophical and ideological positions. The notion of Wrap and Weft are used to discuss such key contextual elements as phenomenology, constructivism, social constructionism etc.
The best-practice approach highlights the relationship between 'sets' of good HR practices and organisational performance, mostly defined in terms of employee commitment and satisfaction. These sets of best practice can take many forms: some have advocated a universal set of practices that would enhance the performance of all organisations to which they were applied (Pfeffer, 1994, 1998); others have focused on integrating the practices to the specific business context (high-performance work practices). A key element of best practice is congruence between policies and horizontal integration. Difficulties arise here, as best-practice models vary significantly in
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their constitution and in their relationship to organisational performance, which makes generalisations from research and empirical data difficult. Here, it is argued that by identifying, by commitment and proper implementation of set of best HRM practices, all organisations will benefit and see improvements in organisational performance.
Universalism And High Commitment
One of the models most commonly cited is Pfeffer's (1994) 16 HR practices for 'competitive advantage through people' which he revised to seven practices for 'building profits by putting people first' in 1998.
Pfeffer (1994) explains how changes in the external environment have reduced the impact of traditional sources of competitive advantage, and increased the significance of new sources of competitive advantage, namely human resources that enable an organisation to adapt and innovate. The universalist approach or 'ideal set of practices' (Guest, 1997), concerns about how ideal set of practices are achieved by close organisations, the hypothesis being that the closer an organisation gets, the better the organisation will perform, in terms of higher productivity, service levels and profitability. The role of Human Resources, therefore, becomes one of identifying and gaining senior management commitment to a set of HR best practices, and ensuring that they are implemented and that reward is distributed accordingly.
MEASURING THE IMPACT OF SHRM ON PERFORMANCE AND THE BALANCED SCORECARD
It is now appropriate to consider in more detail how strategic management processes in firms can be improved to deal more effectively with key HR issues and take advantage of HR opportunities. A study by Ernst & Young in 1997, cited in Armstrong and Baron (2002), found that more than a third of the data used to justify business analysts' decisions were non-financial, and that when non-financial factors, notably 'human resources', were taken into account better investment decisions were made. The non-financial metrics most valued by investors are identified in
This presents an opportunity for HR managers to develop business capability and demonstrate the contribution of SHRM to organisational performance. One method that is worthy of further consideration is the balanced scorecard (Kaplan and Norton, 1996, 2001). This is also concerned with relating critical non-financial factors to financial outcomes, by assisting firms to map the key cause-effect linkages in their desired strategies. (Boxall and Purcell, 2003).
Kaplan and Norton identify the significance of executed strategy and the implementation stage of the strategic management process as key drivers in enhancing organisational performance. They recognise, along with Mintzberg (1987), that 'business failure is seen to stem mostly from failing to implement and not from failing to have wonderful visions' (Kaplan and Norton, 2001: 1). Therefore, as with the resource based view, implementation is identified as a key process which is often poorly executed.
Kaplan and Norton adopt a stakeholder perspective, based on the premise that for an organisation to be considered successful, it must satisfy the requirements of key stakeholders; namely investors, customers and employees. They suggest identifying objectives, measures, targets and initiatives on four key perspectives of business performance:
Financial: 'how should we appear to our shareholders to succeed financially?'
Customer: 'how should we appear to our customers to achieve our vision?'
Internal business processes: 'what business processes must we excel at to satisfy our shareholders and customers?'
Learning and growth: 'how will we sustain our ability to change and improve to achieve our vision?'
They recognise that investors require financial performance, measured through profitability, market value and cash flow or EVA (economic value added); customers require quality products and services, which can be measured by market share, customer service, customer retention and loyalty or CVA (customer value added); and employees require a healthy place to work, which recognises opportunities for personal development and growth, and these can be measured by attitude surveys, skill audits and performance appraisal criteria, which recognise not only what they do, but what they know and how they feel or PVA (people value added). These can be delivered through appropriate and integrated systems, including HR systems. The balanced scorecard approach therefore provides an integrated framework for balancing shareholder and strategic goals, and extending those balanced performance measures down through the organisation, from corporate to divisional to functional departments and then on to individuals (Grant, 2002). By balancing a set of strategic and financial goals, the scorecard can be used to reward current practice, but also offer incentives to invest in long-term effectiveness, by integrating financial measures of current performance with measures of 'future performance'. Thus it provides a template that can be adapted to provide the information that organisations require now and in the future, for the creation of shareholder value
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Human resource approach and practice is a management function aimed at maximizing return on investment in human capital. The main purpose of HR department is to ensure that there is an increased pool of human knowledge, skills and abilities in the organisation.
Wright & Boswell (2002) point out HR practices which include recruitment and selection, training and development, performance management (including appraisal) and pay and reward schemes. In present times when organizations increase their presence in multiple countries, the need to align HRM practices in a global context has become increasingly important (Geringer, et al., 2002).
We are fully aware of the value representing context as a tapestry both to create and make sense of HRM. These ways include how we perceive reality, make assumptions about it, and define it for ourselves.HR function plays an important role in an organization progress and growth. HRM policies and practices is directly linked with the organization performance. SHRM indicates that people in organization are strategic resources i.e. man force capital that must be balanced in implementing corporate strategy.
HRM adds value to business by:
Increasing the effectiveness of the processes such as hiring, staffing, performance appraisal, communication, and compensation etc. These processes govern how work is done and enhance organizational competitiveness and therefore adds value
Making recruitment process effective. By recruiting right person with proper job description can improve performance and goal congruence will be achieved.
It ensures compliance with policies and procedures and ensure all department follow those policies and procedure consistently. This standardizes the working within the organization and creates unity among employees and keeps them motivated.
Creates accountability. It identifies who is responsible for HR work and identify the role of manager in this context.
Identify and ensure when and how HR should be proactive, reactive, or anticipatory.
Its makes employee participative. It ensures whether staff are compatible with the job and ensures that a company employs the right volume of people required
Further by maintaining the company margins, which in turns ensures the continuing viability of the company.
It meets the legal requirement related to HR.
It ensures that employees appraisals are carried out on regular basis which not only motivate them but also give them feedback about how they are working and what they should do to achieve their targets. This in turn increases their efficiency and effectiveness in the job.
Ensures fair employee compensation. Fair pay scales and benefits help organization attract best candidates and increase the goodwill of the organization as equal opportunity employers.
For successful enactment of these role HR manager must: know where the company's is going, position where company stands among competitors and Capabilities and competence of HR manager to execute the task. To successfully accomplish business partners role and SHRMs change agent, the HR practitioner must be very well informed, multitalented, multi skilled and obtain essential competencies like business know how, strategic visioning and global operating expertise, reliability, veracity and consulting skills, among others.
This essay tries to prove close link between HRM policies and organization performance and argued that businesses should adopt good HR policies in order to increase their performance and competitiveness. This essay also identified that HR policies are influenced by business strategies organization follows therefore investment in on and off job training, employee participation, quality initiatives and by increasing employee job satisfaction organzition can sustains its economic performance. This essay has identified number of implications for both decision makers and managers.
Organization should develop policies related to HR based on the business strategies they follow as business strategies and policies related to HR are not mutually independent. For the purpose organization should have HR department representation to the board level.
The emphasis should be given on the development of those HRM policies and business strategies which improves employees' outcome such as attitude, skills and behaviour.
The important aspect of HRM strategy should revolve around selection, work design, performance appraisal, training and development, incentives, communication, promotion, Participation, involvement.
Business strategy should revolve around cost, quality and innovation.
HR Professionals should always consider whether investment in HR will help achieve business objectives and how it will increase business productivity. Secondly, trust is the foundation to add value in organization.HR manager / director should consider ways of increasing trust levels in an organization which is based on confidence, honesty and the ongoing participation.
Organisation's set of HRM policies will be effective if it is consistent with other business strategies (Gomez-Mejia & Balkin, 1992). Porter's (1985) suggested generic business strategies of cost reduction, quality enhancement and innovation, for an organisation to gain and retain competitive advantage. A cost business strategy influences the relationship between HRM policies and organisational performance. A quality business strategy influences the relationship between HRM policies and organisational performance. An innovation business strategy influences the relationship between HRM policies and organisational performance (Schuler &