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In today's competitive business environment, human resource management has made significant stride in the past decade. With the internationalization of markets, having a competent workforce is a key to maintain competitive. Contributing to an organization's strategic goal is a key area where HR can make a difference (Anonymous, 2009). Increased competitive pressures lead organizations to revise their strategy. Organizations invest in new technologies to increase their competitive advantage; however, possessing state of the art technology does not guarantee success. In other words competitive advantage depends on the management's ability to consolidate global technologies and skills into competencies to adapt rapidly to changing environment.
According to Amit et al., "Linking HRM to organizational strategy was accentuated with the rise of resource-based view of the firm currently." (as citied in Dan-Shang & Chi-Lih, 2008). Strategic human resource management links between organization strategy, organization environment and human resources. Human capital is now being increased focus in the field of human resources management and led to increased importance of managing human resources.
Why do you need strategic human resource management?
In recent times organizations emphasize on the strategic value of human resource management, in order to gain a competitive advantage. Besides capital, human resource is the one of the most important assets in all organizations. The growth of human resource management has led to more and more organizations discovering the benefits of using well qualified and experienced staffs who are ready to work from the day one. The importance of strategic human resource management treated as part of business strategy in the organization and its relationship with various employment policies. Human resource management strategy operated appropriately could increase organizational performance significantly. The Workforce Scorecard: Managing Human Capital to Execute Strategy (2005) concluded that how workforce success is a shared responsibility between line managers and human resources professionals and how effective workforce management strategies can have a powerful effect on productivity, profitability and shareholder value.(p.32).The management of human resource has to transfer down certain level of responsibility. While organizational human resource strategy is properly configured, it will provide a direct and economically significant contribution to organization performance.
What you need for strategic human resource management?
Organizations need to focus on the importance of the human resources in order to obtain and sustain competitive advantage for the organization. Starks & Brooks (2009) stated that the strategic human capital management plan has two key components: recruitment and retention strategies, which are not mutually exclusive. (p.62). Successful human resource management can be achieved by the implementation of those strategies through human resources practices such as recruiting, selecting, training and rewarding employees.
Traditionally, by post advertising message in the Internet can reach wide range of candidates. According to Ryan & Tippin (2004), "Employees who are referred are less likely to leave, have higher job satisfaction, and better performance". (as citied in Valerie & Janice, 2007). Hire the right staff with the right skills. Those referrals tend from ethnic background, same generation or qualification which matched with job specifications. While filling job opening of high level position, it can be beneficial to use internal promotions. Organization can take the advantage of investment made in recruiting and training the employees by recruiting from internal. And employees also can be motivated for their rewards for past performances. It leads to job satisfaction and performance improvement.
Training and Development
An organization's success is becoming increasingly dependent on the knowledge, skills, and abilities of its employees. Organizations must be flexible to allow an adjustment in production and resources to meet changing markets and customer demands. Today, organizations are now emphasizing on the growth and development of their employees. The quality of employees and their development through training and education are major factors in determining long term profitability of a business. If good employees are hired, it is good policy to invest in the development of their skills, so they can increase their productivity. Cross training and job rotation program are also helpful. With job rotations, employees can learn about different facets of the organization by spending time in positions in different departments. And also, employees possess the skill and training can able to perform a range of different tasks.
Knowledge is important for organizational performance. In order to develop the knowledge worker and to retain the knowledge, organization has to implement human resource strategy and maintain the competitive advantage. One key is employee retention. According to Drucker, "Knowledge workers are not labor, they are capital" (as citied in Riham, 2008). Without these "capital", organization would surely fail. And, effective recruitment plan must incorporate plans in order to retain employees once hired. However, Alvesson stated "The loyalty of knowledge workers and the ways to minimize turnover are critical management problems" (as citied in Riham, 2008).
Employee retention strategy leads to the promotion of effective employee communication and enhances the workforce. With the implications for job security and working condition, quality of life and professional development both are ways to retain top employees. When companies start focusing on their number one asset, their people, retention is no longer an issue.
Human resource management staffs have been facing challenges. According to Barnett & McKendrick et al., "Factors such as the globalization of competition, the tightening of skilled labor markets, advancements in technology, the growth of the knowledge economy, and the need for flexibility and expertise in the workplace have each presented strategic challenges to which organizations have had to response".(as citied in Wickham & O'Donohue ,2009). Lawler & Boudreau (2009) found that HR plays a stronger role in strategy the more the function can connect human capital to strategy, and in particular identify where talent and organization design features make a strategic difference. (p.21) Strategic human resource management takes on the main challenges which include the following:
During recruitment of minority employees, organizations face two major challenges. The first one is to reach the minority group peoples who meet the position's selection criteria. However, the minority groups do not use the same networks as the majority groups. By using web recruiting, different group peoples with different background can be reached. The second challenge is to get those potential candidates to submit their applications. Unfortunately, many companies are unaware that they are reflecting an image of homogeneity, while other companies must deal with the fact that their industry is poorly perceived.
Dimensions of workplace diversity are not limited to age, gender, ethnicity and educational background. More importantly, if the organizational environment does not support diversity broadly, one risks losing talent to competitors. Moreover, organizations failing to retain a diverse talent pool are incurring significant losses, especially recruitment and training cost. Sadler (2009) found that homogeneous workforce that shares similar backgrounds, education and ways of thinking does not generate the creativity and innovation that is imperative for a business to survive. (p.33). The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas. Broadening the talent pool and diversity of its talent contributes to the growth and development of the business. In the real world, diversity cannot be easily categorized and those organizations that respond to human complexity by leveraging the talents of a broad workforce will be the most effective in growing their businesses and their customer base.
The issue of strategic human resource management is gaining popularity. Human resource strategy must keep pace with the changing environment in term of addressing changing needs and expectations of customers and employees. Recruitment and retention programs are part of strategic human management plan designed to improve and retain the quality of the employees. In the long run, successful strategy implementation required staff development and job satisfaction, thus productivity and reputation of the organization can also be enhanced. Besides, monetary and nonmonetary rewards such as competitive compensation and better work condition can be used to attract diverse talent.
Organization culture is another issue contributing to the strategic human resource management. It leads to create culture of mutual respect regardless of identity and improve recruitment. To conclude, in order to gain competitive advantage through employees, it is necessary to analyze the business strategy and human resource practices in organizations. Therefore, human resource management plays a critical role in management planning and must always be treated as strategically important factor of business management.