Strategic HRM in Organisations

INTRODUCTION

Human Resource Management (HRM) is one of the most importance function in any organisation. The basic function of HRM is managing the people, which in simple clarification is putting right people at right in right time. HRM involves the activities as recruitment and selection, training and development, reward and performance appraisal etc. of an employee.

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In this assignment, Care Quality Commission (CQC) will be taken as a chosen organisation. CQC is a government funded health care regulating body which is responsible for controlling and monitoring of health care service providers to make sure they abide by the standards and rules and regulations set by the government. Besides CQC is given authority to punish the service providers in case they do not meet the standards.

Task 1.1. Definition of Strategic HRM in organisations:

Human Resource Management (HRM) is one of the major functions in an organisation for managing people within organisation, focusing on the systems and policies of the organisation (Collings and Wood, 2009). HRM is primarily the systems and processes of recruitment, selection, training and development, appraisals and rewarding of the employees (Paauwe and Boon, 2009). Strategic HRM in today’s context, is a necessity for organisations which, according to Wright and McMahan (1992) is a planned human resource deployment and activities that enable an organisation to pursue its goals.

Various HRM models have been studied and proposed by different authors. Below is the discussion on some of them.

Devanne et al’s Matching Model of Strategic HRM

This model, proposed by Devanne et al (1984) is based on the philosophy of matching (or fit) of HR systems and organisational structure with the organisational strategy, where, HRM strategy and organisational structure follow and feed upon one another and are influenced by environmental forces. The limitation of this theory is that it assumes that organisational controllers act rationally. However, some theorists argue that strategic decisions need not necessarily based on rational calculation. As argued by Boxall (1992), excessive fitting can make a company inflexible and incapable of quickly adapting to external environment, failing to gain competitive advantage.

Fig. 1 Devanne et al (1984)’s Matching Model of Strategic HRM

Hard/Soft Model of SHRM

HRM, as postulated by Storey (1992), can be divided into ‘Hard’ and ‘ Soft’ HRM. The hard model is characterised by top-down approach where employees have little freedom to act. It can be argued that ‘hard’ HRM focuses on resource component of HR, as hard HRM is instrumental and employees are considered as commodities. In this model, the focus is in the numerical management of employees so that workforce can be closely matched with the requirement. In contrast, ‘soft’ HRM deals with the human aspects and enhances commitment and involvement of the employees. Perhaps, more appropriately it can be said that people are led, instead of being managed and people are involved in decision making process.

HR Strategies

HR Strategies outlines what the organisation intends to do regarding HRM policies and how they should integrate with business strategy. Dyer and Reeves refers HR strategies as ‘internally consistent human resource practices’. The purpose of HR strategies is to provide communication means to the intentions about how the human resources will be managed. Many different strategies are prevalent depending on the organisation. However, broadly the HR strategies are categorized into Overarching HR strategies and Specific strategies. The Overarching HR strategies describe the organisational intentions about how people should be managed to ensure organisation can develop and retain its people so as to make them committed and engaged. The Specific HR strategies set out the organisation’s intentions in specific areas as talent management, continuous improvement, knowledge management, resourcing, reward and employee relations (Armstrong, 2006).

There are various approaches to HR strategy that can be termed as resourced based, achieving high performance management, strategic fit, high commitment management and high involvement management.

In CQC, it is seen that it primarily focuses on the development of its people through continuous training and development programs. The standards and rules and regulations that are updated according to the need and situation initiates further knowledge advancement in the workforce that strengthens the efficiency of the staff. This gives the notion that CQC adopts the specific HR strategy.

Criteria for successful strategy: The successful strategy is the one which works with a sense in achieving what it plans to achieve, focusing to satisfy the needs of the business. The strategy need to be based on detailed analysis, not just mere thinking, and takes account the needs of employees and managers as well as those of stakeholders. As argued by Boxall and Purcell (2003), HR planning should focus on needs of the stakeholders involved in people management and the organisation.

Task 1.2 Importance of HRM in organisations

An organisation needs good human resources to build a good team of workforce. The main function of HRM includes recruiting people, give training, appraisals and motivate them as well as workplace safety and communication. Huselid, Jackson and Schuler (1997) did a study on human capital of the HR department by contrasting technical vs. strategic HR manager capabilities which led to the result that technical HRM effectiveness was not related to organisational performance. However, strategic effectiveness was related to employee performance, cash flow, and market value. Researches on Strategic HRM have often considered contingent relationships to achieve a fit between HR activities with strategic outcomes. Miles and Snow (1984) proposed a strategy typology (later described as contingency approach), that showed how corporate and business strategies could be matched with HR practices. This perspective means that a set of HR practice is dependent upon the organisation’s strategy. The importance of HRM in improving organisational performance is paramount. The linking pin between vertical and horizontal alignment in strategic HRM is the person-environment fit. Moreover, Werbel and Demarie (2005) proposed vertical linking between HR systems with corporate strategies through organisational competencies and horizontal link with HRM practices as means to improve organisational performance. Strategic HRM, hence links HR practices with corporate strategy and is believed that the integration between business strategies and HRM reflects in effective management of human resources, thus improving organisational performance.

Task 1.3 Framework of strategic HRM

The discussion on the framework of strategic HRM, here is done on the Harvard framework. Developed by Beer et al (1984), this model studies the solution for the problems of the personnel management. The model of Harvard framework suggests that HRM consists of two characteristics: 1) line managers accepts more responsibilities to ensure alignment between personnel policies and competitive strategy; 2) the personnel policies govern how activities are developed and implemented that enhances reinforcement. As supported by Boxall (1992), this model has the advantages of incorporating range of stakeholders; acknowledges a wide range of situational factors; puts emphasis on strategic choice and includes the employee influence.

Fig. 2. Harvard Model of HRM (Beer et al, 1984)

The Harvard Framework outlines four HR policy areas: Employee influence; Human resource flows; Reward systems and Work systems. These, in turn lead to ‘four C’s’ (HR policies that need to be achieved; Commitment, Congruence, Competence and Cost effectiveness. As argued by Beer et al (1984) the long term effects of benefits and HR policies has to be evaluated at individual, organisational and societal level, which in turn must be analysed using these four C’s. The Harvard model has considerable influence over the HRM practice, and the emphasis is particularly on the fact that HRM is the action of management rather that the personnel function, in particular.

Task 2.1 Analysis of the Human Resource Process

The human resource process fundamentally is the process of formulation, implementation and evaluation of the HR strategies.

Strategy Formulation

It is necessary to consider the interactive relationship between HRM and business strategy while defining approaches to formulation of HR strategies (Hendry and Pettigrew, 1990). The strategy formulation process is effected by various external and internal factors. As identified by Formbrun (1984) political, economical, socio-cultural and technological environment are the external factors that impact the formulation process. The changes in these factors can be brought by changes in economic conditions in specific sectors, better information processing, changes in workforce/demand forecasting and political influences which effect the settings of strategic direction. Organisational culture, employees and management, HR department and its expertise are the internal factors as identified by Truss and Gratton (1994).

Strategy Implementation

The success of strategy implementation is dependent on the competencies of the human resources. The linkage of vertical and horizontal fit conceptualized by Graton, Hope-Hailey, Stiles and Truss (1999) seem to fit here. In vertical fit, HRM systems like performance management, recruitment and selection, training and development need to be aligned with the HR strategy, whereas, in horizontal fit the HR strategy aligns with the people and the process. Evaluation is the final process of HR process that deals with review and evaluation of the

Strategy Evaluation

HRM systems effectiveness and the strategic integration. The results of HRM systems in achieving strategic objectives is considered as an important part of strategic HRM where, the alignment of HRM systems in achieving strategic objectives should be evaluated for determining the strategic integration of HRM (Tichy, Fombrun and Devanne, 1982). The information generated through evaluation process provide necessary ingredients for changes in implementation process and also, is important in the context of strategy formulation.

The strategic HR process can be understood by the following flowchart developed by Bratton and Gold (2007).

Fig.3. Strategic HR Process (Bratton and Gold, 2007)

Task 2.2 Assessment of the roles in strategic HRM

Different tier of workforce in an organisation has their definitive roles in executing HR strategies. The role of the top management is providing visionary leadership and define values and purposes to set direction. It develops the business strategies and provide directive guidelines in developing functional strategies for operations, finance, marketing, production, HR and customer service etc.

The front line managers, as appreciated by Purcell et al (2003), are the ones that ‘bring HR policies to life’. Purcell et al state that front line managers have great amount of discretion as their aspect of work is dealing with people. It is unlikely that the discretion to avoid putting HR ideas into practice will convert ideas into reality. Hence, the reluctance in managers to carry out ideas often result into failure of performance management schemes.

Ulrich (1998) views that ‘HR executives, to be fully fledged strategic partners with senior management, should impel and guide serious discussion of how the company should be organized to carry out its strategy’. It is necessary that HR must set clear priorities of its work since, a HR staff may be loaded with various initiates in sight like, global teamwork, payfor performance and learning development experiences. A strategic approach of HRM tends to trigger HR specialist in innovation where they introduce new procedures that can increase organisational effectiveness. Ulrich (1998) identifies four specific strategic roles of HR – business partner, innovator, change agent and implementer.

In CQC, The board of Directors develop and formulate the strategies of the organisation which is the basis for the Chief Executive to generate the HR strategies for CQC. The Chief Inspectors and Heads of concerned departments are responsible for execution and implementation of the strategies. The regular meetings and feedbacks from the employees as well as service users are considered in the process of evaluating the HR strategies.

Task 2.3 Analysis of the development and implementation of HR strategies

The process of developing HR strategy is a complex process. The HR leader has to set vision and goals for the HR team, thereby the HR team develops the HR strategy which is aligned with the organisation’s competitive advantage. It is of prime importance that the new HR strategy does not abandon the previous strategies, however, there should be manageable changes and the implementation should be measurable (Briscoe et al, 2012). The implementation plan is developed by HR team where all the employees and managers monitor the progress of the strategy and provide necessary feedbacks. The implementation of any strategy is a difficult part which needs to be approved from the top management and has to be managed by the dedicated team. As noted by Brewster et al (2011) top management do not expect for total change in the new strategy; they look for continuity with manageable changes. Financially the implementation is expensive to operate. The top management needs to be aware of the overall cost because the implementation can get disrupted if the financial part is not carefully managed.

The development of the strategic HR plan is always in alignment with the organisation’s business strategy. Many times it is seen that the HR team take negligible consideration of the business strategies while developing HR strategy. This can result into lack of vision of the strategy and difficulty in the evaluation of the strategy (Golden and Ramanujam, 1985). The following chart represents the alignment and procedures in developing HR plan.

Fig.4 HR and Business Strategy

Task 3.1 Identifying range of HR strategies

The human capital uniqueness and strategic value are considered as two important components in HR strategies. Organisations need to maintain different relationship with different types of people and develop different HR strategies to manage people differentially. Below is the discussion on different types of HR strategies as proposed by Lepak and Snell (1999).

Commitment HR strategy: The commitment HR strategies are for the employees with high uniqueness and high strategic value. Such strategies focus on internal development and long term relationships which develops employees to build knowledge and skills that are of prime value to the organisation.

Compliance HR strategy: This kind of strategy seems suitable for the employees with low strategic value and low uniqueness where, in order to reduce administrative expenses, he outsourcing strategies are taken like peripheral functions, employees on leave arrangements and use of temporary employees.

Collaborative HR strategy: Where the employees have high uniqueness but low strategic value, the strategy focuses on developing potential value in the employees and preserve the unique skills of those employees. Both the employees and organisation collaborate in using the unique skills for a shared outcome.

As discussed earlier, the range of strategies can be broadly differentiated into overarching HR strategies and specific HR strategies (Armstrong, 2006). The specific HR strategies focuses on developing the strategies for certain areas.

Learning and development management: In the area of learning and development management, CQC has the strategic goal of maintaining and developing required skills though continuous development programs and regular trainings on the functional skills of the employees and regularly updated governmental rules and regulations regarding health care policies.

Reward strategy: The purpose in developing reward strategy lies in maintaining a high degree of motivation among the employees in CQC. The appreciation and recognition of the employees on achievement of the expected outcomes has tremendous positive impact on the CQC employees.

Employee relation strategy: The nature of the operative function of CQC requires it to have a well managed inter relationship among employees across many departments. CQC organises frequent meetings and workshop programs among the employees from different departments to generate high level of collaboration and cooperation among the employees. The feedback system in CQC enables the employees for raising their voices in different aspects of their job roles.

Task 3.2 Assessment of HR strategies and their application in organisation

As discussed earlier, there are different types of HR strategies which are developed according to the prevalent situations and areas that need to be addressed. It is not necessary that there is one most effective strategy that can be applied in all organisations or is applicable all the time in the same organisation. The development of the strategies vary according to the necessity of the current situation that the business strategy directs. Another aspect of HR strategy application can be in terms of Hierarchy of strategy where the HR strategies can be categorised as corporate , business and functional level of strategy (Bratton and Gold, 2007).

The success of the HR strategy can be measured through the degree of achievement of the expected outcome. However, Bratton and Gold (2007) argues that here is no clear focus on test of HR strategies and performance link; the different models and strategies tends to assume the alignment between HR strategy and business strategy that will improve organisational competiveness and performance.

As discussed by Golden and Ramanujam (1985), there needs to be alignment between HR strategy with that of business or organisational strategy. As the vision and culture of organisation directs the business strategy. the HR strategy should be compliant with the HR vision and HR goal.

The HR strategy in CQC is primarily focused on the development of employees in the field of job efficiency and knowledge on the regularly updates of governmental policies of the health care service and its regulation. This can be assumed that CQC by adopting specific HR strategy, it focuses on people oriented activities. However, CQC being a government funded organisation, it does have the strategic approach in building rigid work norms and ethics, which at times, seems to create problem in managing day to day problems of the employees like delayed submission of inspection reports, lack of regular inspections of the service providers etc.