Strategic Human Resource Management as a Current Issue in the Organisation - Term Paper Example

Strategic Human Resources Management Name Institution Table of Contents Table of Contents 2 Introduction 3 Theoretical and conceptual foundation 4 The Organisation 8 Analysis of factors 9 Internal factors 10 Organizational culture 10 Financial Resources 11 Technology 11 Human Capital 12 External Factors 12 Labour Market 12 Competition 13 Assessment of extent of strategic orientation 13 Resource based approach 13 Talent management 14 Employee engagement 15 Conclusions 17 References 17 Introduction In the contemporary business world, the organizations are facing stiff competition in various industries, especially due to the effects of globalization and the significant changes in the business environment, as well as technological advancements (Armstrong, 2006). The stiff competition has resulted in the need for strategies to add a competitive advantage to attract a larger market share. The desire for the organizations to gain a competitive advantage has resulted in the formulation of strategies to propel unique and quality production in the organisation. In the past epochs, the businesses viewed strategizing in the businesses as a source of competitive advantage but in the current times, the strategic planning is rather a necessity in the global scope. To survive in the market, the businesses have to incorporate strategic management in their businesses. Globalization has resulted in the high imitation of the businesses strategies in the struggle for the fittest in the industry (Armstrong, 2006). However, the organizations have understood that the strategic management of the human resources is the unique way to gain a competitive advantage of the organisation. The human resources being a critical part of the organisation have to be well managed to increase productivity and profitability. The proper management and exploitation of the human capacity in the organisation is cannot be easily imitated and neither are the benefits substitutable. In that regard, the organisation are considering the utilization of strategic human resource management as the means and the end to achieve long-term organizational goals through people by integrating strategies and congruence of the human resource policies and practices (Armstrong, 2006). Atlassian, an Australian information technology and software company, is a successful organization, which has been ranked among the best employers due to its proper and unique management of the human resources. The organisation has been profitable over the years, making huge profits through proper utilization of human capital (Luijke, 2012). In 2012, the organisation was awarded two HR Awards by the Australian Human Capital Magazine (Luijke, 2012). The awards are an evidence of the human capital unique management. The organisation has appropriately aligned its human resource practices with business strategies. In reference to Atlassian’s successful human resource capitalization, this thesis looks forward to analysing the factors influencing the choice of strategic human resource management. Additionally, the paper will examine the applicability of strategic human resource management and its utilization in the Atlassian Company. Theoretical and conceptual foundation The concept of strategic human resource management (SHRM) has been on the mainstreaming in the contemporary organizations. The approach has benefits towards the organization, especially improved organizational performance, as well as the increase in the overall productivity and profitability. Beer et.al. (1984) argued that the strategic human resource management has been on the emphasis, especially after the formulation of the Harvard human resource management model. The model brought about the inception of the strategic part of the human resource management. The Harvard model essentially brought about the congruence of the human resource management with the business strategies, as well as the overall outcomes (Beer et.al., 1984). The model essentially integrates the outcomes of the organisation with the strategic human resource management process. Additionally, it ensures that these strategies are contextual to the organizational objectives, goals and hence processes (Paauwe & Boselie, 2005). The integration process is highly dependent on the organizational management and leadership, as well as the corporate culture. Culture of an organisation influences its processes, as well as the pattern of production behavior, therefore, the outcomes of the practices of the organizational HRM department are influenced greatly by the culture that the company upholds (Paauwe, 2009). Fig. 1 Harvard HRM Model (Beer et.al., 1984) Prominent Australian writers and researchers in the field of human resource management have argued that the success of strategic human resource management is determined by the congruence between the HR strategy and the overall corporate strategy on a wider scope. The concept of strategic fit has hence been on the mainstreaming to assert the need of congruence between the two strategies. The proper development and knowledge transfer to the employees is a significant step towards the success of the human resource management. Collins (1987) feels that the organisation may require restructuring and employee repositioning in order to efficiently achieve benefits of strategic human resource management. According to Schuler and Jackson (1987), the organizational ability to retain its competitive advantage determines its growth, which hence facilitates the integration of the HR practices in the organisation. Delery (1998) later on argued that the organizational performance entirely depends on the employee. Therefore, he argued that the organisation should focus on proper management of its human capital for it to enjoy the benefits or higher organizational productivity. In his study, Delery (1998) focused on the discussion of vertical and horizontal levels of strategy fit. The alignment of the human resource policies and practices to form an integrated system is referred to as horizontal fit while the alignment of these practices with the overall organizational strategies is the vertical fit. The Australian HR professionals insist on the congruence and integration of the two fits in the organizational functions. The organizations many times are torn between the choices between the different human resource management perspectives, that is, soft or hard human resource management. The soft one involves the management of the employees through the engagement and their involvement in decision making as a way to motivate and hence increase organizational performance (Compton, 2009). However, the hard human resource management involves the management of the workforce by the control and greater accountability of each employee to their responsibility and hence ensuring individual productivity, which reflects in the overall organizational success. Storey (1992) in his study feels that either of the perspective may be effective dependent on the situation at hand. In that regard, he argues that the combination of the two perspectives is more appropriate since it incorporates both the hard and soft management processes and hence ensuring organizational success through maintenance of relationships and yet ensuring productivity. Prediction of the future HRM nature and structure is very difficult, however, it is a guarantee that the changes in the HRM is as a result of aspects such as technological changes, changes in the nature of the work as well as globalization. The human resources are an asset that the organisation cannot do without and hence heavy investment on them is essential for competitive advantage. The investment in the human capital essentially entails training and development, motivation, engagement and empowerment, proper remuneration, proper recruitment and selection of the right people as well as enhanced relations in the organisation (Compton, 2009). Talent management is a significant development stage in the strategic human resource management. Professionals and researchers have argued that knowledge in the organisation has largely surpassed and replaced materials, labour as well as money as the contribution towards income generation process of an organisation (Armstrong, 2006). In the industry, certain talents have proven to be rare but very vital. The employment of these talents in the organisation is key towards competitive advantage. The organization, therefore, is emphasizing on the acquisition of these talents and their proper management is essential in order to retain them in the organisation for productivity and competitive edge purposes (Compton, 2009). However, implementation of the SHRM in the organisation is not a one person’s job rather it takes the entire organizational stakeholders as shown in the preliminary framework below. The stakeholders are involved because the implementation of SHRM affects every sector of the organisation since the human resource department is normally the core of an organisation. An organisation shifting to SHRM may require a new set of leadership and management competencies of transformational leaders rather than dictatorial and controlling organizational leadership. The new leadership will hence facilitate the organizational capability to cope up with the dynamic market forces both domestically and globally (Compton, 2009). Fig. 2 Preliminary framework (Fishwick, 2011) The Organisation Atlassian Corporation Plc is a public organisation in the software industry based in Sydney, Australia. The organisation was instituted in the year 2002, by Mike Cannon-Brookes and Scott Farquhar who are the company’s Chief Executive Officers (Atlassian, 2016). It has developed steadily over the years and currently stands as a group of software enterprise, which is reputed, for its product development for project managers, content management as well as software development. The corporation is renowned for its team collaboration, JIRA, confluence, wiki products as well as issue tracking application development. In 2014, the company underwent through restructuring and hence its address was registered in London UK. Its offices are in four countries Amsterdam in Netherlands, San Francisco in USA, Sydney in Australia, Austin in the United States of America and Manila in Philippines (Atlassian, 2016). Over the years, the group of companies has employed approximately 1,500 employees and able to serve more than 50,000 customers and other millions of subsequent users (Atlassian, 2016). It is renowned for its customer satisfaction and employee satisfaction and motivation. Through its strategic human resource management, the organisation is a top success in the software industry globally. It has launched a tradition of for the employees to tackle a problem of their choice four times in a year, which is a motivating factor to its employees (Atlassian, 2016). Analysis of factors The organizations in the twenty first century have to be strategic in all their activities as well as all the departments not only for a competitive advantage but also as a necessity to thrive and grow in the business environment. The management has a responsibility to utilize the internal resources of the organisation to achieve the competitive advantage over its competitors (Armstrong, 2006). With the business environment’s dynamism, the organizations ought to thin globally and act locally in order to stand out and hence serve a larger market share. Additionally, the organisation has the responsibility to tap the external opportunities at its disposal while avoiding and countering the threats for sustained success. The choice of the management to formulate strategies in human resource management depends on various factors both in the internal and external environment of the organisation (Armstrong, 2006). Internal factors Organizations vary in terms of the factors in their internal environment due to the differences in the nature, structure, size and objectives of the organisation. The management, however, plays a significant role in the control of the interaction of the strategies in order to acquire added advantage. The internal factors are essentially managed in order to gain synergy, which hence translates to competitive advantage (Beer, 1997). The Atlassian Company has a number of internal factors influencing its strategic choice. Organizational culture The organizational culture at Atlassian is a learning culture that is customer as well as customer based. The organisation essentially concentrates on the satisfaction of all its stakeholders in order to improve its productivity (Dunphy, 1987). Being a culture that is relationship, as well as productivity oriented, the organisation can utilize its human capital to achieve the long-term goals. The strategic use of the human capital is essentially the key to competitive advantage since the people are the engine towards organizational success. Since the culture of the organisation is employee sensitive, the culture facilitates the strategy formulation in the human resource management. The culture will therefore facilitate the congruence of the human resource practices due to the high concern of the well-being of the organizational manpower. Financial Resources The strategy formulation and implementation in the organisation ought to cause many changes. These changes will require finances and hence financial resources are essentially a factor to consider during strategy choice. Atlassian is a company that is already well established in the market and currently operating as a star in the business portfolio (Luijke, 2012). Due to the high cash generation and high growth rate in the market, the organisation is able to fund its strategy implementation. The availability of the finances and the ability to source enough capital for organizational strategy implementation has given the organisation an added advantage in the industry. Operating in a highly demanding industry, the company requires many finances in order to make the necessary changes when need be. The organisation is financially stable and makes billions of profits annually hence able to stand by its strategies. Technology The technology has always been a major factor of consideration in strategy formulation and development. The contemporary business world is dynamic due to the technological advancements. The strengths and weaknesses of an organization’s technology highly determine its choice of strategic formulation. Atlassian Corporation is a company in the technological sector since it is a software and information technology organisation (Atlassian, 2016). Being the innovative and a high tech organisation, the organisation is majorly likely to formulate and efficiently implement the strategies. The organisation is a very innovative and hence it is able to implement quality strategies hence acquiring a competitive advantage. The effectiveness of the strategies is also facilitated by the advanced technology. Human Capital The human resources are vital for the success of any organizational strategies. The skills of the employees will determine the choice of the human resource management strategies. Atlassian Corporation has highly talented and skilled human resources. The formulation and implementation of the strategic human resource management approach is appropriate and likely to succeed. As a result, the organisation is able to utilize and develop its human capacity on deciding to manage strategically the resources (Luijke, 2012). External Factors The opportunities and threats of the organisation highly influence its choices especially in strategic choice. The factors are very many considering the factors such as SWOT Analysis, PESTEL framework, as well as the Porter’s Five Force Analysis. Atlassian strategic choice is influenced by several external factors concerning its threats and opportunities. Labour Market The employees are a critical part for the success of organization’s strategies. The acquisition of the skilled labour is entirely dependent on the labour market. The scarce the talents the stricter the strategy formulated. Atlassian faced a deficit of software developers in Australia and this resulted to the formulation of the initiatives and campaigns to get the required talents from other parts of the globe. The recruitment of the Europeans developers in 2012 resulted to the success of the initiative (Quittner, 2015). The scarcity of the talents and skills clearly influenced the organization’s strategy formulation and implantation. Competition The organisation opts to formulate and implement certain strategies especially human resource strategies in order to counter the stiff competition in the market. The competition in the organisation forces the organisation to strategize in order to gain a competitive advantage. Atlassian Corporation has many competitors both locally and globally. The stiff competition is the major propeller of the organisation towards strategic management. Proper management of people to gain competitive advantage is difficult to imitate and its benefits cannot be substituted whatsoever (Luijke, 2012). Therefore, strategic human resource being inimitable, is opted by the organisation to gain sustainable competitive advantage. Assessment of extent of strategic orientation Resource based approach The organisation seems to hold a high regards for its employees. The employees therefore seemed eager to give the information about their highly esteemed organisation. According to one of the employees, the organisation is not necessarily a bed of roses but it has given the employees the best working experience. One of the employees mentioned that the organisation is definitely the best employer for employees at all the levels of management (Armstrong, 2006). A keen analysis of the organisation has shown that it has a significant reputation in its high valuation and development of the employees. Having sourced information from ten employees, their description of the organisation to their workplace satisfaction seemed to range on the same comments. Clearly, the organisation understands the value of the employees and hence investing in their satisfaction and motivation hence improving their individual performance. Operating in a critical and dynamic industry, the human resource strategy is a key factor that can be utilized for a competitive advantage (Quittner, 2015). The organisation has utilized a strategic approach which is resource based which generally focuses on the relationship between the strategy, employees and the overall performance. The organisation has invested a lot in the development of the employees for it to gain a competitive advantage in the industry. The organisation has been listed among the most productive and fast growing organisation in the software industry in Australia (Quittner, 2015). The organisation has been able to align the human resources practices in that the resources produce quality and unique products, which is essentially the source of competitive advantage since it is not inimitable. Talent management Through talent management, the organisation is able to derive the value of the talented personnel in the organisation. The co-founders of the organisation themselves are young and highly talented and with quality expertise in the information technology. The top management in the company are skilled experts in the management skills which makes the organisation to be on the lead in the industry (Daft, 2008). In 2012, the organisation launched a recruitment initiative that resulted to the employment of the most qualified personnel in the field. The organisation launched the initiative entitled as “Europe We’re Coming to Steal Your Geeks” which was prospected to hire only fifteen software developers from all over Europe (Luijke, 2012). Australia had experienced a limited supply of developers and hence, the organisation plotted the strategy to gain quality and valued talents in the programming sector. The initiative being a success, attracted approximately a thousand highly qualified applicants and hence the company was able to acquire talent from a foreign labour market. The employees have unique skills and the unique HR campaigns and initiatives have resulted to the organizational success. Additionally, in 2011, the organisation launched an avant-garde hack house which recruited fresh graduates (Luijke, 2012). Afterwards, the graduates are equipped with developmental skills advancing their knowledge and skills for practical use in the organisation. The company has justified its employees to be very qualified and with valuable skills with the significant profitability of the organisation due to the unique production. The organisation also won the award for being named as the most innovative in the use of technology. It has gained been able to create a sustainable competitive advantage over the years due to the acquired valuable and very rare talents. The initiatives of human capacity recruitment have ensured that the organisation has gained imperfectly imitable employees who are non-substitutable. The proper management and retention of these personnel is the result of the successful innovative culture in the organisation. The organisation has been noted to value the learning and development of the employees having established a learning culture to maintain its competitive edge in the dynamic industry (Luijke, 2012). Dealing with the information technology which is a highly changing and demanding sector, the knowledge management, talent management as well as human capital management is on the emphasis hence improved productivity and innovativeness in the field. Employee engagement The organisation has high regards for its employees and therefore its practices and policies are inclined to the concern of the employees. Employees being the most vital aspect of organisation production, most organizations ought to ensure that they are well valued and utilized to gain a competitive advantage (Mochari, 2014). The organisation in this case, values its employees and their satisfaction and happiness is at the organizations heart. The organisation terms its employees as the throbbing main artery of the organisation meaning that it is the most important asset to the organisation (Quittner, 2015). The employee satisfaction and motivation is actualized through the involvement of the employees in decision making, to utilize and develop their capabilities. The organisation values the say of the employees hence the management keeps a constant eye on the employees engagement and participation in the organisation (Luijke, 2012). Through the constant engagement with the organisation, the company is able to check on the psychological contract of the employees and the employer and the fulfillment of both parties side of the contract. The fulfilment of the contract ensures high performance of the employees and this gives the company a competitive advantage (Mochari, 2014). The organisation launched an App that would ensure that the employees are engaged in the organizational undertakings. Such practices have therefore resulted to the sustained competitive advantage in the organisation, which hence has translated to the organizational success. In 2012, the organisation also was awarded the prize for being the most innovative organisation (Luijke, 2012). The company gave its regard to the most resourceful employees for their contributions to the organisation, which has then resulted to the success of the organisation. Conclusions Strategic human resource management is a current issue in the organisation, which is being applied in order to acquire sustained competitive advantage in the industry. Due to globalization, economic changes as well as changes in the organization’s environment, the competition has become stiff and hence the need for an added advantage in order to succeed in the market. The organizations are therefore, focusing on proper management of its human capital for it to enjoy the benefits or higher organizational productivity. The case study above highlights a successful organisation in the industry through its utilization of human capacity. To survive and gain the competitive advantage Atlassian has utilized and developed its human resources through proper engagement and talent management of the employees. The factors influencing the organization’s strategic choice are discussed to be either internal or external. The internals are the strengths and the weaknesses facing the organisation, while the externals being the opportunities or threats of the company. The factors are variant with the difference in the organisation. The Atlassian Corporation is a software company that has high regards in its employees hence they utilize them to excel and hence gaining its current position as the lead in the industry. References Armstrong, M. (2006). Strategic Human Resource Management: A Guide to Action, 3rd Edition. New York: Thomson-Shore, Inc. Atlassian. (2016). Atlassian Company. Retrieved from: https://www.atlassian.com/company Beer, M. (1997). 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