The Strategic Role Of Hrm Within Organizations Commerce Essay


In todays highly competitive and rapidly changing environment, human resource management(HRM)using a traditional past practice approach is of diminishing value for modern organization simply due to the current speed, frequency, and magnitude of change. In light of these challenging conditions, corporations are giving renewed attention to the building and strengthening of business partnerships through the design of strategic human resource systems. As part of the renewed emphasis on maximizing human capital, HR practitioners are becoming increasingly involved in the strategic planning process by focusing on improving the development of their individual business and professional competencies.

The aim of the paper is to analyze contemporary developments in the HR function ,evaluate different models of HR practice and make informed choices about their appropriateness in different circumstances and environments, as well as bring forward the challenges and responsibilities associated with managing and developing people at work, then discuss HRM's relationship with the external environment and identify and analyze the key political, technological and economic developments generally associated with globalization and their impact on organizational structure, practice and strategy. This study is conducted to investigate practitioner perceptions regarding senior-level HR competencies in order to reveal the presence of gaps between individual and organizational expectations with actual competencies levels. To fully understand how the HR function has evolved into a capacity for strategic business partnership capable of providing strategic importance to the organization, it would be useful to review the historical evolution of the function.

2.0 Discussion on HR function, its development and the Challenges

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Dave Ulrich, known as the founder of human resource management, first put forward the concept of "human resource" (HR).Before this, human resource had been called "personnel management". Ulrich thinks, now the only remaining competitive weapon is organization (Ulrich, 1997), because those traditional competitive elements, such as cost, technology, distribution, manufacturing and product characteristics could be replicated sooner or later, and they could not ensure you are the winner.

HR is the treasure owned and can be used by the organization. It is the general name of education, ability, skills, experience, physical strength, etc., which greatly contribute to the creation of values. HR generally involves the following aspects. First of all, the essence of HR is the combination of mental and physical, which can be collectively referred to as labor ability. Moreover, the ability is able to contribute to the creation of wealth and become the source of social wealth. Finally, this ability also can be used by the organization, here "organization" could be big enough, like a country or region, also could be small, like an enterprise or workshop. HR has played a key role in the operation of the company and provided support for the business strategy as it involved helping the company survive.

Despite of the fact, people once questioned whether they should revoke the human resource department (HRM) in the company. Some commercial researchers and corporate executives both argued over this issue. And people began to doubt how greatly HRM contributed to the company's performance, because in many cases, HRM did nothing, and was powerless on a lot of things, yet spent much (Rousseau et al., 1994). But the fact is that no matter at present or in the future, managers has always been facing various competitive challenges, which requires the organization to improve continuously its ability, and ensure outstanding operations . Improving organizational ability is absolutely HRM's own business.

Therefore, the problems senior managers are facing are no longer the question "whether they should cancel HRM", but "how HRM functions itself. The answer is: HRM should draw up new functions and programs, no longer focus on such traditional activities as employee recruitment or salary and welfare, but focus on the outcome. That is to say, the significance of HRM does not lie in how many things it does, but how many it brings to the company - to what extent it help the business create value ,provide added value for customers ,investors and staff.

In brief, traditional HR function generally involves the following aspects. They are the organization management, the personnel information management, the recruitment management, the labor contract, the training management, the attendance management, the performance management, and welfare management, and the salary management (Gold et al., 2009). Nowadays, with the globalization of economy and the increasingly intense competition, manpower capital has become the main resources to obtain competitive advantages (Wright et al., 1994). As scramble for talents has begun to turn white-hot, traditional personnel management has not already adapted to the requirements of the development of situation. If today's businesses want to get core competitive ability so as to maintain sustainable competitive advantage, they speed up transformation into strategic human resource management (SHRM). Strategic Human resource management (SHRM) involves the effective management of people to achieve organizational goals. The word "management" in this context is a euphemism for "use". Indeed, SHRM is commonly defined as the "productive use of people in achieving the organization's strategic business objectives and the satisfaction of individual employee needs" (Stone, 1998).

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So far, HRM has experienced three phases of development. First of all, Personnel Management (PM) phase. The concept originated from America after World War II. In this phase, the scope of HR function was comparatively narrow, and personnel management work was limited to Staff recruitment and selection, assign, salaries, personnel archives keeping, etc. Later on, it evolved to include performance appraisal, training and the like. In addition, the status of HRM in the business was not high. Because personnel work was considered to have lower level, low technology content, and a kind of assignment which could be done easily by employees who had no special expertise. In other words, HRM was a place filled with unqualified staff that could not perform well in other departments within the company. Or worse, it was directly called "trash", even HR function itself had been devalued and contempt.

Secondly, Human Resource Management (HRM) Phase. Since 1970s, developed countries' personnel management has entered into a new stage along with the increasingly intense global competition and the increasingly prominent role of manpower capital. In this phase, CEO began to emphasize on the personnel management. Investment on the HRM has significantly increased. Requirement on the personnel workers qualifications seemed to be more and higher. The treatment also has greatly improved. Personnel officers began to have a huge say in issues decision-making. In 1983, among 500 American big enterprises, only 3 personnel experts filled the top positions. When it came to early 1990s, among American top 200 businesses, 96 personnel experts filled the position of CEO (Stone, 1998). Moreover, businesses have paid increasing attention to the training programs of all levels of manages and employees. In this period, the importance of manpower capital has been paid enough attention. The management of staff recruitment, selection, education, training, development plan, motivation, assessment and communication has been more systematic and standardized compared with the former phase.

Thirdly, strategic Human Resource Management (SHRM) Phase. In this phase, new concepts concerning "people-centered", "humanistic management", "human is the most precious wealth of enterprises" "The primary target of businesses is to fill their employees' development needs has reflected profound changes in the management values(Armstrong, 2000). On top of that, SHRM has been regarded as company strategies to be taken into account to formulate long-term human resource planning, recent human resource planning and human resource strategy in order to match and ensure the accomplishment of the enterprise's general strategic targets.

In the information age, business management has been experiencing a profound transformation, involving all aspects of business operations. Under the context of reform brought about by information technology revolution, human resource management (HRM) is gradually showing six trends: globalization, diversity, networking, flat, flexible, knowledgeable. Based on the fact, the challenges businesses especially multinational enterprises are facing can be summed up in two aspect: external and internal (Ferner, 1997).

External challenges are mainly caused by economic globalization and technology development. As international free trade develops, and economic globalization accelerates, international market competition will be unprecedented fierce, and scramble for talents is also unprecedentedly intensified. The development of multinational companies in the world is becoming the driving force for the world economic integration. However; the operations of multinational enterprises in different countries have brought integration and conflict of the multi-cultural human resources (Ramaswamy, 2000). Even those well-known multinational companies have to face the globalization of business, also cannot use single mode of management. They have to implement localization of the management system and managerial talents. The development of high and new technology has changed traditional situation of the industrial revolution, which directly makes laborers' status in manufacturing quickly rise. For knowledge innovation or the application of high-tech achievements, labor has surpassed capital again to become the main source of added value. In the era of knowledge economy, HRM of enterprises must break through the mode of industrial economy era. Only by this way, can they build a new incentive mechanism, maximize laborers' enthusiasm and creativity as well as form competitiveness of sustainable development.

The Internal challenges present in recruitment, training, performance management and labor-management. Today, HRM requires personnel recruitment have a clear planning. However, quite a number of enterprises do not have detailed recruitment plan in the recruitment due to lack of standardized recruitment procedures. The result is that interviewers repetitively go to local or cross-regional personnel-recruiting market to look for talents(Guest, et al., 2003), which is not only time-consuming, but also arduous, causing much higher recruitment costs and increasing the difficulty in hiring satisfactory talents. What's more, unfairness and injustice may happen in the process of recruitment. This phenomenon is particularly severe in China where concept "by the aid of nepotism" is deeply rooted in people's mind. Moreover, many businesses nowadays pay much attention to training form and quantity, ignoring the content and quality of training (Civelli, 1998). Besides, investment on training is rather lower. And employee training pattern is single to some extent, mostly focusing on short-term on-the-job training and lack of qualified training materials and high-quality teaching staff, so the training quality is very difficult to guarantee. In terms of performance management challenge, in HRM, if there is no attractive salary mechanism, developing and keeping outstanding management personnel, even the best staff management policy will finally fail. In order to stand out in the fierce competition, businesses will choose to abandon original unified wages and benefits standard and formulate new competitive standards according to industry or field characteristics(Croucher et al., 2006). But new standards should be applied to particular field, so the same enterprise sets-up variety of salary and welfare standard will become HR management of the new topic. So enforcing variety of salary and welfare standards in the same company is bound to become the new subject of HRM. Labor-management strife challenge as well. This problem has long been the subject of heated discussion. How to effectively deal with the relationship with the staff is no easy task for HRM.

3.0 Its relationship with the external environment

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External environment of HRM refers to various factors outside the company system which can produce impacts on the environment of HRM. Generally speaking, analysis of it can be conducted in political, technological and economic aspects. As this factors stand outside the scope of businesses, they cannot directly control them, on the contrary, they can only take corresponding measures according to external environment in most circumstances (Giardini et al., 2005).

The globalization of world economy and some other trend will urge enterprises to reform organization, management and application in the human resources department. Further globalization means more intense competition, and more intense competition means much more pressure-cutting costs, increasing yields, so as to obtain satisfactory results in a more economical way (Ferris et al., 1999). Take Dell for example, it manufactures and sells PC in China every year to reduce tariff and elude trade barriers. From helping Dell to reduce global human resource information flow costs to working out policies of staff selection, training and assigned personnel salary, it is a significant challenge for HR Department to manage global reform in the world first-class businesses.

In terms of technology, it is the crucial part of improvements launched by the business in order to enter into the frontier of industry. As technology itself together with human resources constitute the factors of production, they become interconnected in the resources allocation within the organizations. Advances in technology require organizations to provide education and training, to improve the quality of existing human resources, or to update individuals. The development of modern technology has simply provided advanced means for human resources development and management. It's so-called e-HRM, which refers to the processing and transmission of digitized information used in HRM, include text, sound, and visual images, from one computer or electronic device to another. E-HRM has the potential to change all traditional HRM functions. For example, employees do not have to be in the same geographic area to work together. Use of Internet lets companies search for talent without geographic limitations. Recruiting can include online job postings, applications, and candidate screening from the company's website or the website of companies that specialize in online recruiting, such as or

In addition to the above factors, political and legal factors can also produce effects on HRM. Political system, economic and social development planning, economic and industrial policies, social legal status, national labor legislation, relevant rules and regulations the government human resource development and management(Guzzo et al..,1994), development of union, Management altogether exert influences on organizations' human resources development and management to varying degrees. For instance, in most countries, unions have developed into a kind of political force which cannot be ignored, and unions even have their own political party. On the one hand, unions can influence the issuing and implementation of relevant government policies and laws through their own efforts; on the other hand, unions can also influence or participate in decision-making related to human resource management by different levels of consultation and collective bargaining, which will definitely produce impacts on HRM activities.

As discussed before, strategic human resource management dominates in today's theoretical research of HRM. There is a strong association between HRM and both productivity and financial performance (Guest et al., 2003). For instance, in order to develop core competitiveness ,many companies have introduced systems like advanced manufacturing technology, just-in-time inventory control, and total quality management (Noe et al., 2006). Nevertheless, these systems must be operated by people. In view of the situation, HRM should evaluate the employee skills required to operate these systems and go into HRM practices, such as recruitment, selection and training which enhance these skills in practice.

To maximize effectiveness, the HRM function should be extensively applied to the organization's strategic management process, which means that human resource managers should not only invest in the strategic plans and bring up programs to ensure that employees have those skills, behaviors, and attitudes, but also have a better understanding of the organization's strategic goals. The concept of organization itself must be reconsidered. Charles Handy in The Empty Raincoat(1994)states: Organization is more like a condominium, an association of temporary residents gathered together for mutual convenience. For strategic HRM, the HRM function gets involved in both strategy formulation and strategy implementation. The top manager first gives strategic planners information about the company's human resource-a direct function of the HRM practices ,which usually helps top managers choose the best strategy. Once the strategic alternative has been determined, the role of HRM changes to the alignment of HRM practices, helping employees develop necessary skills to implement the strategy.

4.0 Conclusion

This study examined linkages between business strategy and HRM practices, and it specifically investigated the relationship between HRM and its external environment. Triggered by the U.S. subprime crisis, global economy is facing serious challenges. Economic development and human resources management of many businesses are under the influence of the crisis. The financial crisis has caused mental instability and even people panic, worse still, the actions businesses take such as layoffs or salary cuts has directly affected the market demand for human resources and revaluation of them. Financial crisis will accelerate a new round of reshuffle of human resources industry (Gilmore, 1984). For human resources outsourcing services industry, some small domestic human resource outsourcing service providers will be forced to upgrade or even be cruelly eliminated because of low reputation and fund shortage so as to enhance the industry quality and core competitiveness. To retain talent is to retain the corporate revival of hope. The notion of modern organizations is flexibility, quality consciousness, customer orientation and improvement of their performance to remain competitive (Beardwell & Claydon, 2007). For those companies attempting to apply HRM to strategy formulation and implementation, and properly adjust HRM practices according to external environment, the experiences of other companies suggest that effectiveness can be increased by systematically melding human resource practices with the selected competitive strategy. Certainly, the success or failure of a firm is not likely to turn entirely on its human resource management practices (Beardwell & Claydon, 2007), but the HRM practices are likely to be critical. Business leaders seeking a source of competitive advantages for their business devote a significant amount of management time to planning. However, as Kamer (2008) indicated that many of the strategic planning models used are outdated because they do not include a human capital staffing strategy as a part of the planning process.