Strategic Human Resource Management - Essay Example

Strategic Human Resource Management Name Institution Date Introduction Best-practice approach to Human Resource Management and best-fit approach are strategies that are used in organizations as part of their plans to perform better. According to Akhtar et al (2008), human resources can be used as sources of continued competitive advantage by most organizations. This implies that effective utilization of human resources through the use of proper strategies by organizations can enable the organization to compete favorably and gain an advantage over other organizations. According to Armstrong and Baron (2002), the best practice and best fit models are part of the approaches that can be used to i9n developing human resource strategies. The best practice approach was stated to be based on the certainty that a set of best human resource management practices exist and adopting these practices leads to superior performance of the organization. Armstrong (2006) added that the best fit approach is keeps its focus on ensuring that human resource strategies are favorable to the circumstances of the organization, its culture, external environment and the operational processes of the organization. Therefore, in Armstrong’s view, the various human resource strategies should focus on the needs of the people and the organization. This paper shall discus how these two approaches can be used as strategies to enhance as sustained competitive advantage by organizations. Best practice approach Bruce and Benjamin (2011) stated that there are some best practices that can be used as a profitable choice by organizations to improve their performance. The best practices have been adopted from the list that was purported by Pfefer (1994). One of the practices includes employees’ security. This entails the assurance that employees will not be made redundant in times of economic downturns and when senior management make mistakes that he have no control over. Ismail et al (2010) stated that most organizations have shifted their emphasis on strategy from use of external factors like the position of the industry to the use of internal factors. These internal factors include the employees. It is these internal factors that are used by organizations to gain competitive advantage. Therefore, firms use their employees as resources that can propel them to competitive advantage. Management uses practices such as extensive training, selective hiring, delegation and information sharing in implementation of high performance practices. When management feels the people are not likely to stay long in the company, no investment is made on the people. Investment on employees is made when the employees will be beneficial to the organization in the long run. This means that employees will be used to help the organization gain the competitive advantage when the management practices are carefully selected so as to be used in making the employees better (Armstrong and Baron, 2002). The practice of selective hiring was also proposed in the Pfefer (1994) practices as best practice. Organizations seek to hire individuals who are suited to their culture, attitude and values. By and large, organizations look for individuals who will remain in the organization. It will then train the individuals in the skills and attributes that are best suited to the individuals and those that will make the individuals better performers. While this makes the employees to perform better, it also enhances their ability to work towards improving the position of the company on the competitive stage. Fernando et al (2008) stated that when human capital is selected based on the suitability to the organization; their performance will be increased since they work within the objectives of the organization. This makes the human capital an idiosyncratic resource and one that can be effectively utilized to enhance sustained competitive advantage. For every high performance system of management, Armstrong and Baron (2002) stated that the teams within the organization should be self-managed. This practice makes the teams to use peer-based control rather than hierarchical work control. Furthermore, it allows the employees to pool the ideas they have and produce solutions that are better and more creative. Cohen and Ledford (1996) purported that self-leadership in individuals is a great source of motivation and makes the individuals to work better. Another practice that is used by high performance systems is the practice of high compensation dependent on the performance of individuals. This greatly motivates the individuals to work to high levels of performance so as to get the extra incentives. Such measures work to give the organization a competitive advantage in the long run (Armstrong and Baron, pp. 69). In addition, training of individuals improves their skills and competency and makes them work with confidence and motivation since they have better knowledge on how to handle the problems they face. Lepak et al (2006) purported that human resource systems should deploy the strategy of developing the skills of employees. They further proposed that human resource systems have three unique policy domains for their human resources. These are oriented towards influencing the knowledge, skills and abilities of employees and motivating them. This demonstrates that training employees is an important strategy that organizations can use to enhance their competitive position. Tapping into ideas, efforts and skills of people helps organizations to perform better. To effectively achieve this, the organization should reduce the status differentials since these make the individuals feel less valued and less valuable. This practice of reducing the status differentials makes individuals feel better valued by their organizations. While this boosts their motivation, it promotes their ability to work with confidence and self-motivation. According to Ahmad and Schroeder (2003), organizations should make extra efforts to minimize the status differentials since this helps in keeping the individuals loyal to their organizations. In addition, when information is shared among individuals, it enhances the performance because first, sharing of the financial performance of the organization makes employees feel they are trusted. Second, Armstrong and Baron (2002) argue that it is difficult for employees to perform better when they do not have information on the required dimension of performance. Therefore, even motivated, trained and skilled employees need information on what is required of them by their organization. The strategy of best practice presents those practices that are deemed ideal to enhance the performance of an organization and give it a sustainable advantage. However, there are various other management practices that are used by management as strategies that enhance their competitive advantage. Therefore, use of certain practices alone while considering them as best practice cannot guarantee competitive advantage to an organization. McGuire and Cross (2003) suggested that distinctive competencies of organizations can be obtained through unique cultures of the organizations, and use of effective management systems to gain a sustained competitive advantage. The strategy of best practices therefore falls short in giving the precise means by which the best practice strategy can lead to a sustained competitive advantage. Furthermore, the practices cannot be suited to all organizations since every organization has its own set of practices based on its culture that can be used to propel it to be better than its competitors. This implies that using a set of practices that are deemed universal cannot guarantee an organization a competitive advantage over other organizations. Achieving a competitive advantage needs the business to implement activities that are rare, hard to imitate and these activities cannot be obtained from the best practice strategy. A successful strategy for one organization does not mean the same level of success for another organization (Armstrong, 2006). However, this does not imply that best practices and practices that have been proposed to be promoting success in organizations should be ignored. Best fit approach This approach ensures that the human resource strategies are favorable to the various circumstances of the organization, its culture and external environment. Going by Armstrong (2006), the focus of this strategy is that various human resource strategies should focus on the needs of the organization. This argument makes the approach more vital than the best practice approach since the approach is suited to the needs of the organization. Shields (2007) stated that under the best fit approach, there is no single way to configure the practices of human resource to attain strategic success. Shields (2007) contended that the practices that lead to the effectiveness of organizations and help it gain a competitive advantage are those practices that match the strategic objective of the organization best. They must also fit the external environment of the organization together with its internal culture, structure and its capabilities. Armstrong and Baron (2002) presented the model applicability of the best fit approach. Under this, it was purported that organizations should benchmark so as to identify the areas of innovation and development that have been practiced to good effect by other organizations. After learning about what works and what does not work from the comparable organizations, the firm should decide what works for it and what can be learnt and adapted to the organization so as to find what best fits the operational and strategic requirements of the organization. This starts with analysis of the needs of the firm in the business perspective. The needs should be identified with respect to the culture, technology, processes and structure of the organization. Identifying these needs gives the organization an overview of what should be done. Best practice approach can also be integrated with best fit so as to develop an approach that applies appropriate strategies aligned to the business needs that have been identified. Identifying the components of human capital management and policies on human capital that need to be used by the organization so as to propel it to sustained competitive advantage is an example of the best fit approach. This is because the organization recognizes the needs it has in terms of human capital. The human capital policies should be mutually compatible and they should be used to reinforce the effectiveness of other policies. Among the reinforced policies is that of sustained competitive advantage. This suggest that the policies have an internal fit tha makes them mutual. By having policies that are fit to each other and to the organization, the overall effect is the improved performance of the organization and the organization will be in a position to perform competitively. Becker and Gerhart (1996) stated that the economic environment changes continuously and organizations have to change with the changing economic, cultural, political and global environments. Besides, competition in the market is ever there and ever changing. Therefore, for the organization to compete, it has to improve continuously and improve its quality, speed and productivity in the market. Decisions made on human resources have to complement he changes that are occurring by matching up to the changes. This implies that there can only be one appropriate way of dealing with the changes: the best fit approach. It means that the strategies used on human resources have to be continuously adjusted so as to match the continuously changing environment. This approach is not the most ideal. It is limited by the fact that it is not possible to model all dependent variables and the difficulty faced in indicating the interconnection of the variables. Further, the approach is limited by the fact that changes in one variable affect other variables and therefore makes it difficult for one particular strategy to be used comprehensively in matching up other variables. Despite this, it finds more reasonable application as a strategic approach for enhancing competitive advantage. Conclusion The best practice approach presents those practices that have been deemed universally favorable to promote superior performance. However, these practices cannot be suited to every organization and it is for this reason that the best fit approach finds favour. While the best fit approach also has its cons, it provides a greater variety of advantages to organizations, making it the most realistic approach in ensuring competitive advantage. Not only does it provide flexibility to the system of the organization, it also recognizes that human resources have the potential to act as enablers for stability and change in the organization. Therefore, the best fit approach is suitable for a sustained competitive advantage. References Bruce, K., & Benjamin, M. 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