Critical Perspective of Strategic Human Resource Management - Coursework Example

Strategic Human Resource Management (Authors name) (Institutional Affiliation) Abstract The essay is focused on the critical perspective of strategic human resource management. The essay assesses the role of the human resource department in the process of strategic human resource management. The various models of human resource strategies which include the “Hard” model and the “Soft” model as choices to a company have also been discussed in the essay. The assay moreover outlines the importance of strategic human resource management to the successes of implementing the overall objectives of a company. Introduction Strategic human resource management is defined as the management of the company’s human resource with an aim of achieving the goals set forward by the company. It came about due to managers recognizing the importance of effectively managing their employers as a source of competitive advantage to the company. It is focused on the issues concerning the employees of the company such as hiring and firing, salaries, incentives and benefits, training and overall administration. Components of strategic Human resource Management Systems/holistic perspective Strategic human resource management is different from the traditional human resource management because it main focus is on the overall performance of the organization and not the individual. It also applies human resource systems in finding solutions for the company’s problems. Human resource strategy aligned with business strategy The human resource fit is defined as the process of aligning the human resource activities to the business strategy in order to aid in achieving the goals and objectives of the company. There are two types of human resource fit which are the vertical fit and the horizontal fit. The vertical fit is the extent through which the human resource management practices are aligned to the strategic management process of the firm. The horizontal fit on the other hand refers to the extent through which the human resource management practices are consistent with business strategy. The company’s business strategy is influenced by external and organizational factors. The external factors include the market situation, the nature of the competitors in the market, the labor market which is the availability of qualified workforce and government restrictions in terms of policies and laws (Randall 2007). The organizational factors on the other hand are derived from the various departments of the company. The organizational factors that are derived from the human resource department include employee competencies, human resource policies and practices, cultural factors, management of the employees and structural features. Human resource as a strategic business unit Successful strategic human resource management involves the company recognizing the human resource department as a strategic unit and involving the department in formulation of the business strategy. The inclusion of the human resource manager in formulation of the business strategy is very important. It means that the company values the employees and views them as a competitive advantage. The nature of strategic human resource management is that it is a proactive way of managing the employees of the organization. It involves careful planning of strategies to meet the overall needs of the company’s workforce. Successful satisfaction of the employee needs means that the company will be able to meet its own goals. The needs of the employees can be met through training programs or simply introducing alternative work practices to ease the difficult situations experienced by employees in managing their private life and work. However when planning for the employees it is important to keep in mind what the employees want and what the company can offer for example small medium sized companies can easily offer commissions to employees while large sized companies can provide for training programs and salary increments. Flexibility and adaptability in tune with external and internal environmental changes There is great emphasis on ensuring that there is strategic flexibility along with strategic fit. Flexibility can be defined as the ability of a company to adapt to the dynamic nature of the market environment. There are two types of flexibility they are resource flexibility and coordination flexibility. Resource flexibility is the ability of a company to use their resources to a variety of purposes. It involves the ability of a company to switch its resources from one use to another. This activity could be costly, difficult and time consuming. Coordination flexibility on the other hand is concerned with the ability and the speed of the decision making system to facilitate the movement of resources from one use to the other. The success of coordination flexibility is dependent on the relationship between the human resource department and the line department. Focus on core competencies and capabilities The most important aspect to strategic human resource management is employee development. Good employee development begins from the interview process where the company identifies prospective candidates who will fit to the company’s objectives. Employee development is the process of improving the abilities of the employee in performance of his/her duties. The employee is expected to learn new skills that will enable him to successfully deliver on his/her roles and responsibilities. Stakeholder perspective Human resource management practices involve the interactions of complex system of actors. The company is viewed as a part of a circle of stakeholders who influence the practice of the company. Due to the fact that each stake holder tries to increase and protect his interests there are many conflicts that arise from their activities. Understanding the stakeholder perspective through the use of the stakeholder analysis thus enables the human resource department to manage the conflicts between stakeholders who are considered employers with their employees. Leveraging Technology Human resource automation and outsourcing also contributes to effective functioning of the human resource department for example human resource information systems provide managers with important information such as the employee behaviors that can be useful during the strategy formulation. Focus on long-term future The purpose of the strategic human resource management is to focus on the future by developing human resource strategies that are aligned with the future objectives of the company. The human resource achieves this by acquiring and developing key employee competencies that will maintain the competitive advantage of the company. Implementation This is characterized of activities undertaken by the human resource manager in implementing the various human resource management systems in relation to the strategy. The systems which include recruitment, performance, compensation, training and career development need to be incooperated to the human resource strategy. This process is referred to as the vertical linkage. Horizontal linkage on the other hand involves aligning the policies and practices of the company to the business strategy. Temporal linkage deals with sudden changes taking place within the organization such as mergers and involves the human resource manager intervening to increase the effectiveness of the process (Pfeffer 2005). Models of Human Resource Management “Hard” model This model argues that employees should be considered as resources of the company. This model supports the integration of policies, systems and human resource activities with the company overall business strategy. This model views the employees as a factor of production to the company and should therefore be passive. The company considers the employees as an expense to the business and should therefore be acquired and deployed as numbers and skills at the right price. In relation to this model the human resource department controls all the activities of the employees in order to achieve maximum employee productivity. The human resource manager organizes the tasks, space and even the movement of the employee in order to utilize his/her full potential (Colbert 2004). The managers make use of bureaucratic controls and technical controls. Bureaucratic controls are defined as a set of rules and procedures that govern the work practices of the employees. Technical controls on the other hand employ the use of management systems or machinery such as cameras to monitor the employee behaviors. “Soft” Model This model is focused on the “human” aspect of employees. This model argues that employees should be viewed as assets opposed to the view that they are a cost to the company. The employees’ knowledge and professions can serve as a competitive advantage to the company. Each employee possesses distinct competencies that enable him/her to be very productive in execution of his/her roles. The company therefore is viewed as a collection of competent individuals. This model therefore emphasizes on the company’s internals strengths as a competitive advantage (Budhwar 2002). It exploits the company’s distinctive organization of work practices. The company should use collective skills to ensure success of its business plans. The employees moreover are proactive rather than passive in the production processes. This model is advantageous due to the fact that it increases the participation, commitment and involvement of the employees in the production process thus increasing the chances of a successful business strategy. Best fit or Best Practice Best practice Best practice otherwise referred to as universalistic approach is used to describe the relationship between human resource activities and performance. The approach has shown that there are certain human resource activities that positively impact on the performance of the employees. Activities such as employee training and employee selection greatly affect the company’s productivity and performance. The best practice approach further implies that human resource practices have the most influence on the performance of the company rather than individual practices. This approach emphasize on the company’s need to create a high level of internal consistency by reducing status distinctions, sharing financial & performance information and by providing high compensations for employees who are high performers. This approach is supported by the human capital theory that argues that employees posses skills, knowledge and abilities that are economically profitable to a company. Thus it states that a company should invest in increasing its employee skills and abilities as a way to increase its performance and productivity (Kazim 2002). Best fit The best fit approach state that the human resource practices must be aligned with the business strategy to be effective. The business strategy however determines which activities of the human resource it will adopt. The best fit approach is advantageous as it allows the company to be flexible to changes in the environmental conditions such as the life cycle from start-up, growth, maturity and eventually its decline. Best fit activities include adapting to the organizational size, improving employee skills and behaviors, supporting human resource practices and acknowledging and evaluating the human resource outcomes. Contingency approach & fit This approach argues that in order for a company’s set of policies and practices to be successful they should fit to the company’s strategies. The approach suggests that human resource management policies and practices should be dependent on the competitive product strategies. Therefore there is a great need for external fit. The contingency approach is therefore aimed at organizational performance by emphasizing the alignment of human resources strategies to the organizational strategies (Barney 2011). Resource Based Value (RBV) and Strategic Human resource Management. Resource based value of a company is described as the application of a tangible and intangible resources in creating competencies. A resource can be described as any factor that a firm can use to create value and gain competitive advantage. An effective resource should possess certain characteristics such as it should be unique, valuable, rare and difficult to substitute. A valuable resource is defined as a factor that enables a company to derive competitive advantage against its competitors or significantly reduce the threats associated with it. For a resource to be valuable however it should be rare. The resource should also be difficult to imitate. Other companies should find it very difficult to duplicate a similar resource. This will enable the company to have competitive advantage with regards to the resource. A valuable resource should also be non-substitutable. The competing companies should not be able to produce a product that can be used as a substitute. This will considerably drive the prices of the business down. Understanding the resource based view needs further focus on core competencies and capabilities. Core competencies are defined to as a collection of skills that a company possesses and that enables them to satisfy the needs of their customers. Core competencies do not necessarily have to be products as they can also include the employees or effective functioning of the company. Core capabilities on the other hand are factors that are unique to the company. They include factors such as the technological components of the company, the educational knowledge of the employees, the human resource practices and systems and the culture of the company. Resource Based Value and Knowledge and Learning The best process of employee development is through basic training of the various activities of the company. Training can occur outside the work place through educational institutions that offer courses that are related to their field of work. Employee development is important to a company because it prepares employees to do their jobs and also keeps them motivated as they are encouraged by their new experience and profession. Mentorship is also an important aspect of strategic human resource management. Mentorship helps the new employees of the company to familiarize with the activities of the company and also to believe in the company’s vision and mission. Mentorship involves a more experienced employee guiding a new employee otherwise referred to as a protege or a mentee. It is an educational model that involves the mentee being offered spiritual, emotional and financial support by his/her mentor with the aim of turning them into leaders. Resource based value and human resource strategy The task of the company is to be able to maintain its competitive advantage through its strategies. The resource based view thus focuses the strategies of the firm in developing the human capital rather than just relating the employees to the strategic goals. According to the resource based approach a firm’s ability to maintain a profitable market position is influenced by its ability to acquire and keep its advantage in production and distribution. Resource based value therefore emphasizes on constant monitoring of employees in order to achieve the overall objectives of the company. The behaviors of the employees should also be developed in order to ensure that they maintain the overall culture of the company. The culture of the employees also greatly influences the success of the business strategy. The most important factor however is the existence of the necessary competencies that are required for the achievement of the company’s overall business objective. It is thus the duty of the human resource manager to acquire, manage and build these competencies for success of the business strategy. The structural features analyze the organizations structure in terms of features that may limit the implementation of the human resource strategy. The human resource manager is tasked with reviewing the policies and strategies that are important for the successful implementation of the business strategy. Policies and practices are described as written rules that govern the behavior and conduct of the employees in performing the company’s duties (Boxall 2003). These policies and practices are very important because they develop the culture of the company. The people management issues are focused on the employee and are concerned about factors such as employee performance, motivation and employee satisfaction. The human resource manager assesses the role of these factors to the successful implementation of the business strategy. It is equally important to align these factors with the overall company business strategy as they greatly affect the performance of the company in the market (Wright 2005). References Singh, K. (2003). Strategic HR orientation and firm performance in India, International Journal of Human Resource Management, 14 (4): 530-543. Budhwar, P.S., & Sparrow, P.R. (2002). Strategic HRM through the cultural looking glass: mapping the cognition of British and Indian managers. International Journal of Human Resource Management, 23 (4): 599-638. Colbert, B. A. (2004). The complex resource-based view: Implications for theory and practice in strategic human resource management. Academy of Management Review, 28(3): 341-358 Wright, P. M., Gardner, T. M., Moynihan, L. M., & Allen, M. R, (2005). The relationship between HR practices and firm performance: Examining causal order. Personnel Psychology, 58: 409-446. Pfeffer, J. (2005). Producing sustainable competitive advantage through the effective management of people, Academy of Management Executive Colbert, B. A. (2004). The complex resource-based view: Implications for theory and practice in strategic human resource management. Academy of Management Review, 28(3): 341-358. Ericksen, J., & Dyler, L. (2004). Toward strategic human resource management model of high reliability organization performance, Center for Advanced Human Resource Studies, Ithaca, NY Combs, J. G., & Smith, K.G (2006), Knowledge exchange and combination: The role of human resource practices in the performance of high technology firms. Academy of Management Journal, 49: 544-560 Boxall, P. and Purcell, J. (2003) Strategy and Human Resource Management, Basingstoke: Palgrave Macmillan Storey, J. and Salaman, G. (2005) Managers of Innovation, Oxford: Blackwell. Randall S. Schuler (2007), Strategic Human Resource Management. Wiley Kazmi, A; Ahmad, F (2002) Differening Approach to Strategic Human Resource Management Journal of Management Research Issue 3 p133, 8p Barney, J. B., Ketchen, D. J. & Wright, M. (2011). The future of resource-based theory: Revitalisation or decline? Journal of Management, 37(5), 1299-1315 Read More