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Human resources are the efforts, skills, and capabilities that people contribute to an employing organization which enable it to continue in existence. Although difficult to define, SHRM is generally perceived as a distinctive approach to managing people which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce. moving into the realm of SHRM is about managing the human capital of an organization in such a way as to achieve some type of competitive edge. Having not only a committed workforce, but also having a workforce that is highly trained for the job that must be performed achieves the competitive edge. Moving in this direction is where human resources becomes SHRM.
Van Donk (2001) takes this idea one step further by explaining where in the planning process of a company the human resource management role must fit in order to make it strategic in nature. He also explains how this role has evolved in the past twenty years or so: From the 80s onward there have been pleas for integrating human resource management and corporate strategy. A number of authors have been working on approaches to the achievement of what is called Strategic Human Resource Management. These approaches place the human resource management policy formulation at the strategic level. In these approaches to Strategic Human Resource Management it is claimed that: (1) human resource problems are problems solved by linking HRM and strategy formulation at an early stage; and (2) problems with strategy implementation are solved by early adjustment of the HRM to these strategies
Managers were forced to develop rule, regulations and procedures to control the increasing number of workers. A study of Singaporean companies found that when HR managers lack the necessary skills to perform their duties competently, line managers and executives take over some of the functions of HR managers (Nee & Khatri, 1999). To develop good strategies, SHRM requires some key characteristic factors discussed as follows:
Recognition of External Environment: the external environment presents a set of opportunities and threats to the organization in form of social, economical, political, technological and demographic forces.
Fiscal Functions: Staffing budgets, departmental budget, accounts payable, insurance receivables, total package costing.
Expert administration: SHRM requires an active role of the staff in reengineering administrative and processes effectively with in the firm.
Decision Making Focus: Approaching strategically means choosing among the best alternatives. State, Federal family and medical leave rights, county approved leaves of absence, rights upon return to work, light duty assignments for temporary periods.
SHRM strongly believe that critical organizational capabilities or performance behaviors are sine qua non, for the attainment of a particular business strategy or goal. Unlike the traditional HRM which covers a wide range of employment practices, including recruitment, selection, performance appraisal, training and development and administration of compensation and benefits, SHRM reflects a more flexible arrangement and utilization of human resources to achieve organizational goals, and accordingly helps organizations gain competitive advantage (Wei, 2006).
Mintzberg and Waters mentioned that realized strategy - the actual strategy that is implemented - is only partly related to that which was intended (Mintzberg suggests only 10-30 percent of intended strategy is realized). The primary determinant of realized strategy is what Mintzberg terms emergent strategy - the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. This model should also been seen as a process and especially if you include the variable of time. As show in the model below the realized strategy effects the intended strategy as times goes by. This is an important part of the model since it shows that current strategies will affect future strategies. There are two extreme types of organizations, the ones that have only deliberate strategies and the ones that have only emergent strategies. These two pure forms are very rare and perhaps there is no organization that has one of these pure types of processes. For a pure deliberate strategy, the organization must have pure intentions with a relative concrete level of detail. This plan has to be carried out exactly as intended. For a strategy to perfectly emergent there has to be consistency in action over time but without any intentions. Except for these two pure types of strategies that are extremely rare according to Mintzberg & Waters (1985 pp 257-258) but they argue that between those two extremes are several different type of strategies that are common in companies today. Mintzberg & Waters (1985) classifies eight different types of strategies:
The planned strategy is clear intentions back by formal control. The leader is the centre of authority with their intentions being very clear and precise and the goal is to transform the intention to collective action with minimum distortion. Programs and systems are built in to the plan to ensure that no one acts in another way then intended.
For this type of strategic process to be effective the environment has to be extremely stable or the organization has to be able to predict it with great accuracy. When organizations put large quantities of resources in a mission or project they might not tolerate unstable environment. When they have plan several years ahead and don't allow avoiding behaviour and commit themselves firmly. An example of this can be mining companies.
The human resource of an organization offered the potential synergy for sustained competitive advantage, when properly deployed, maintained and utilized. From the onset, the traditional HRM, the formal system for managing people in organization, concerned itself essentially with transactional and administrative support services. The emergence of SHRM, concerned with the relationship between HRM and strategic management of the organization, was a paradigm shift. To perform successfully, the roles of business partner and change agent under SHRM, the HR practitioner must be highly knowledgeable, multi skilled and acquire core competencies like business knowledge, strategic visioning and global operating skills, credibility and integrity, internal consulting skills, among others. (Benjamin James Inyang, International Bulletin of Business Administration, 2010)
Examples of Strategies related to Intended, Planned
Motorola in China (A): Dealing with an Evolutionary Industry Life Cycle. This case explains how Motorola tuned its strategies to emerging trends. Actually, by January 2003, its going was becoming tough in the Chinese market. Most of its invented strategies failed. Then it realised that its strategies can no longer neglect the market trends. (reference Case Study)
Due to the large size of the Chinese cell phone market and its potential for long-term continual growth, competition for access to China's consumer markets is intense. Competitive threats from Nokia, Siemens, Samsung, and local producers like TCL are a cause for concern within Motorola. However, eighty-four percent of Chinese consumers prefer foreign mobile phones to local models, with Motorola, Nokia and Ericsson being their favorite makers, according to a nation-wide survey conducted by the China Telecommunications Association and Eaglewings Public Relations. For this reason, Motorola's biggest competition for cell phone supremacy would likely appear to come from foreign companies outside of China.
China's aforementioned government structure plays an interesting role in the assumption that foreign companies will maintain dominance. As is traditional, the socialist government hierarchy prefers for a majority of any industry to have local majority control. The government, which controls the operations of the service provider sector and is a dominant player in distribution channels as well, has the means to make this goal a reality - quickly. For this reason, Motorola must not only utilize shorter-term strategies to find a way to grow market share, but long-term change strategies to find a way to compete with government powered locally owned firms.
The Ministry of Information Industry showed that Motorola had a leading market share of 28.7% in the mobile phone industry as of April 2002.
10% Market Share of Chinese Cell Phone Market (as of 1st Quarter 2005)
The cellular phone industry in China is going through the growth stage of the industry life cycle.
Hence this was the reason that companies wanted to make sure that local responsiveness should be the ultimate target. The sources needed to plan emergent strategy in order to tackle the consumers.
Standard Corporate Planning Picture
(The above picture shows how a SHRM works. The managers intend to make a predefined strategy they make it possible through the use of SWOT and STEEPLE analysis. Then a corporate strategy is developed. Therefore the main picture come into view is as shown in figure 001.)
Intended vs emergent Strategy: Fit for organization
In organizations like Walmart, Ebay and Citigroup, The strategies are developed from time to time. They have a lot of planning and formulation techniques through which they formulate intended strategies. But they meanwhile also have some mechanism to formulate strategies for emergent happenings. Some very common types of techniques for formulating these strategies are Quantitative analysis planning matrix and Ansoff matrix. In SHRM too they have formulated strategies to tackle these emergent situations.
Previous research suggests that firms can gain sustainable competitive advantage through strategically managing their human resources, operationally exercised as strategic human resource management (SHRM). However, it remains unclear about the conditions under which a firm employs SHRM so as to achieve enhanced performance. As an important feature underlying SHRM, fit reflects the interactive role of HRM practices and their relationship with the organizational strategy.
As a fundamental characteristic of SHRM, fit denotes the utilisation of human resources to help with the achievement of organisational goals. According to Wright and McMahan (1992: 298), fit means "... the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goal.". Scholars suggest that there are two kinds of fit: horizontal fit and vertical fit. Horizontal fit refers to the congruence among the various HRM practices (Baird & Meshoulam 1988), and vertical fit refers to the alignment of HRM practice with the strategic management process of the firm (Schuler & Jackson 1987). In general, vertical fit is viewed as a critical step toward attaining the organisational goals through initiating some human resource activities that are aligned with firm objectives, while horizontal fit is essential when making good use of these resources.
Deliberate and emergent strategies
Figure 002: Strategies have a form and they are formulated
Firms Resources and the SHRM
The RBV of the firm is based on the ideas of Penrose (1959), who sees the firm as "an administrative organization and a collection of productive resources". A firm that obtains and develops the human resource can achieve competitive advantage (Hamel & Prahalad (1989). Other researchers have similarly advocated the need to align HR systems with the firm's strategy to create competitive advantage (Barney, 1986, 1991; and Wright & McMahan, 1992). The underlying assumption of the RBV of the firm is resource heterogeneity. This means that the resources that different firms own are unlikely to be identical. Accordingly, these resources owned by the firm that help it achieve sustained competitive advantage must meet four requirements. The resources must be (i) valuable, (2) rare, (3) inimitable, and (4) non-substitutable.
This follows therefore that if the resources a firm employs cannot be easily imitated by another firm or substituted by similar resources another firm employs the firm can easily take advantage of this to gain competitiveness not simultaneously pursued by other firms. Snell, Youndt & Wright (1996) argue that human resources meet these four requirements. Others have equally shown that the linkage of organizational resources and firm strategy cannot be easily identified and imitated by other firms due to the social complexity and causal ambiguity (Barney, 1991, Boxall, 1998). Thus, the integration of human resource practices and policies with the appropriate strategy can generate a sustained competitive advantage for the firm (Wei, 2006).
The firm's HR policies, practices and strategies are a unique blend of process, procedures, personalities, styles, capabilities and organizational culture, which are difficult to imitate.
1. The firm has higher quality people than its competitors.
2. The unique intellectual capital possessed by the business is developed and nurtured.
3. Organizational learning is encouraged, and
4. Organizational specific values and a culture exist that 'bind the organization together [and] give it focus.
SHRM: Role Conception
The HR professional becomes more challenging under SHRM - the emergent business partner model. Unlike the traditional SHRM, which is changed with changing times and is concerned with administrative activities, SHRM is a value-added core responsibility that aligns the HR system, policies and practices with business strategy to gain sustained competitive advantage for the firm. In performing the new challenging roles, the HR professional must think outside the traditional way of emergent SHRM strategy and develop a more different approach to manage the human element to effectively support the firm's business strategy formulation and implementation. For successful implementation of the business partner role, the HR manager needs to understand the company's business direction and its competitive position in the market place. Apart from this, to become a successful strategic partner, the HR manager must have competencies that have to do with the business issues involved in strategy and strategy development, and ability to contribute to organizational design and change management (Lawler, III and Mohrman, 2003). The HR function, according to Rowden (1999) must change from a staff function that delivers prepackaged HR services to a service that helps managers create customized strategic plans to influence the effectiveness of company performance. The HR manager can play an important role in the formulation of strategy and providing the human resource required to support various strategies and strategic initiatives in the organization. He provides the leadership role in developing the human capital and the necessary capabilities to enact the strategy and drive the implementation and change management processes to success (Lawler III & Mohrman, 2003). Good human capital management is a prerequisite for successful execution of business strategies.
According to Ulrich (1998), the modern HR professional must perform four complementary roles. The first role, administrative excellence, is important because it is an immediate way of contributing to the overall efficiency of the organization. As administration expert, he must rethink how work is done throughout the organization. The second role HR professionals must realize is that of employee champion. The HR manager must play the crucial role of employee advocate. He should be the employee's voice in management discussion, offer employee opportunities for personal and professional growth; and provide resources that employees need to meet the demands put on them. The new role might also involve suggesting, that employees be given more control over their own work schedules. This is the issue of employee empowerment.
Two additional roles the modern HR professional must realize are those of strategic partner and change agent. Being a strategic partner calls for an on going evaluation of the alignment between
current HR practices and the business objectives of the firm, and a continuing effort to design policies and practices that maximize this alignment. HR practitioner should be held responsible for defining an organizational architecture - that is, identifying the organization's way of doing business. Such framework as looking at the organizational components - strategy, structure, rewards, processes, people, style and shared values may be adopted. This new knowledge will allow HR to add value to the executive team with confidence. Being a change agent the HR manager must play a key role in implementing and managing organization change, assessing potential, sources of resistance to change, and collaborating with line managers to overcome these barriers. The HR professional's role as a change agent is to replace resistance with resolve, planning with results and fear of change with excitement about its possibilities. These last two roles - strategic partner and change agent - are of particular interest to us because they represent the emerging strategic dimension of HR function - SHRM.
In addition to the above roles the HR practitioner needs to be a model and take on the specific
role of integrating people strategies with business strategies in a way that advances the bottom line. Metzler (1998) adds that: the HR manager must play an active and guiding role in enabling the organization to choose its human resources well, invest in these people, support that growth and respect their needs, while fostering innovations needed to achieve the strategic business objectives. The HR professional operating under the SHRM system must chart roles that include early and active involvement in key strategic business choices. He must become the partner of decision makers in the organization, and sharing accountability for organizing and performing work. He must carry out effective monitoring to see that everyone in the organization, and at every organizational hierarchy, stay focused on share strategic priorities. He must challenge old ways and constantly promote innovation to enhance corporate performance and the firm's competitiveness.
The traditional HRM practices, which are concerned with the management of people in an organization, have contributed significantly to organization bottom line. HRM offers traditional and administrative support services in the organization, in terms of staffing, recruitment, training and development, compensation and benefits. It generally concerned itself with attracting, developing and maintaining effective workforce.
The emergence of SHRM as a paradigm shift generated more value-added core responsibility, and emphasized the need to integrate HR practices with business strategy. SHRM is a strategic business partner model, which strongly beliefs that critical organizational capabilities or performance behaviors are necessary for the attainment of a particular business strategy or goal. SHRM is a more radical and systematic approach to the management of human capital, placing more emphasis on organizational performance rather than individual performance. It is this approach that helps to create a fit or congruence or integration of HR practices with business strategies that enables the organization to achieve sustained competitive advantage.
The RBV of the firm highlights the strategic position of the human capital, as an organizational asset, that contributes significantly to the overall performance of the organization, when adequate investment is made on the human resources. The HR practices must be properly aligned with the strategic goals of the organization. To function as a strategic business partner and a change agent, to successfully handle the emerging challenges of SHRM, the HR practitioner must possess the requisite strategic skills and core competencies. The skills and competencies required include among others, being highly knowledgeable about business and its environment, developing a strategic vision, global operating skills, understanding and applying the ICT regime, organizational effectiveness skills, change management skills and ability to understand and manage conflict as well as possess internal consulting skills.
In the conclusion we can say that both the Strategies Intended and Emergent are important and should be taken along in order to lead these market changes. Most of the companies adopt intended strategy these days and fail to offer any thing when they have to face emergency changes like the recession of 2006. Hence to formulate strategies for both types will help companies to score the planned future success. The example of 3M is very common in this regard they give the employee empowerment formula which then makes them more strategic.