Strategic Human Resources Management Concept and Issues

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Strategic Human Resources Management Concept and Issues. Fakultas Ekonomi Universitas Negeri Yogyakarta 2012. STRATEGIC HRM DEFINED . - PowerPoint PPT Presentation

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<p>Strategic Human Resources Management</p> <p>Strategic Human Resources Management</p> <p>Concept and IssuesFakultas EkonomiUniversitas Negeri Yogyakarta2012STRATEGIC HRM DEFINED Strategic HRM defines the organizations intentions and plans on how itsbusiness goals should be achieved through people. It is based on threepropositions: first, that human capital is a major source of competitiveadvantage; second, that it is people who implement the strategic plan; and,third, that a systematic approach should be adopted to defining where theorganization wants to go and how it should get there. </p> <p>Strategic HRM is a process that involves the use of overarchingapproaches to the development of HR strategies, which are integratedvertically with the business strategy and horizontally with one another. </p> <p>These strategies define intentions and plans related to overall organizationalconsiderations, such as organizational effectiveness, and to morespecific aspects of people management, such as resourcing, learning anddevelopment, reward and employee relations. </p> <p>THE MEANING OF STRATEGIC HRM Strategic HRM focuses on actions that differentiate the firm from itscompetitors (Purcell, 1999). It is suggested by Hendry and Pettigrew (1986)that it has four meanings: the use of planning; a coherent approach to the design and management of personnel systems based on an employment policy and workforce strategy and often underpinned by a philosophy; matching HRM activities and policies to some explicit business strategy; seeing the people of the organization as a strategic resource for the achievement of competitive advantage. </p> <p>Strategic HRM addresses broad organizational issues relating to changes instructure and culture, organizational effectiveness and performance,matching resources to future requirements, the development of distinctivecapabilities, knowledge management, and the management of change. It isconcerned with both human capital requirements and the development ofprocess capabilities, that is, the ability to get things done effectively. Overall,it deals with any major people issues that affect or are affected by thestrategic plans of the organization. As Boxall (1996) remarks: The criticalconcerns of HRM, such as choice of executive leadership and formation ofpositive patterns of labour relations, are strategic in any firm. </p> <p>AIMS OF STRATEGIC HRMThe rationale for strategic HRM is the perceived advantage of having anagreed and understood basis for developing approaches to people management in the longer term. It has been suggested by Lengnick-Halland Lengnick-Hall (1990) that underlying this rationale in a business is theconcept of achieving competitive advantage through HRM. </p> <p>Strategic HRM supplies a perspective on the way in which critical issuesor success factors related to people can be addressed, and strategic decisionsare made that have a major and long-term impact on the behaviour andsuccess of the organization. The fundamental aim of strategic HRM is togenerate strategic capability by ensuring that the organization has theskilled, committed and well-motivated employees it needs to achievesustained competitive advantage. Its objective is to provide a sense ofdirection in an often turbulent environment so that the business needs of theorganization, and the individual and collective needs of its employees canbe met by the development and implementation of coherent and practicalHR policies and programmes. As Dyer and Holder (1988) remark, strategicHRM should provide unifying frameworks which are at once broad,contingency based and integrative. </p> <p>AIMS OF STRATEGIC HRMWhen considering the aims of strategic HRM it is necessary to considerhow HR strategies will take into account the interests of all the stakeholdersin the organization: employees in general as well as owners andmanagement. In Storeys (1989) terms, soft strategic HRM will placegreater emphasis on the human relations aspect of people management,stressing continuous development, communication, involvement, securityof employment, the quality of working life and worklife balance. Ethicalconsiderations will be important. Hard strategic HRM on the other handwill emphasize the yield to be obtained by investing in human resources inthe interests of the business. </p> <p>Strategic HRM should attempt to achieve a proper balance between thehard and soft elements. All organizations exist to achieve a purpose andthey must ensure that they have the resources required to do so and thatthey use them effectively. But they should also take into account the humanconsiderations contained in the concept of soft strategic HRM. In the wordsof Quinn Mills (1983), they should plan with people in mind, taking intoaccount the needs and aspirations of all the members of the organization.The problem is that hard considerations in many businesses will come first,leaving soft ones some way behind. </p> <p>APPROACHES TO STRATEGIC HRM There are five approaches to strategic HRM. These consist of resource-basedstrategy, achieving strategic fit, high-performance management, high-commitment management and high-involvement management, as describedbelow. The resource-based approachA fundamental aim of resource-based HR strategy, as Barney (1991) indicates,is to develop strategic capability achieving strategic fit betweenresources and opportunities and obtaining added value from the effectivedeployment of resources. A resource-based approach will address methodsof increasing the firms strategic capability by the development of managersand other staff who can think and plan strategically and who understand thekey strategic issues. The resource-based approach is founded on the belief that competitiveadvantage is obtained if a firm can obtain and develop human resourcesthat enable it to learn faster and apply its learning more effectively than itsrivals (Hamel and Prahalad, 1989). Human resources are defined by Barney(1995) as follows: Human resources include all the experience, knowledge,judgement, risk-taking propensity and wisdom of individuals associatedwith the firm. Kamoche (1996) suggests that: In the resource-based view,the firm is seen as a bundle of tangible and intangible resources and capabilitiesrequired for product/market competition. </p> <p>The resource-based approachIn line with human capital theory, resource-based theory emphasizes thatinvestment in people adds to their value in the firm. The strategic goal will beto create firms which are more intelligent and flexible than theircompetitors (Boxall, 1996) by hiring and developing more talented staff andby extending their skills base. Resource-based strategy is thereforeconcerned with the enhancement of the human or intellectual capital of thefirm. As Ulrich (1998) comments: Knowledge has become a direct competitiveadvantage for companies selling ideas and relationships. The challengeto organizations is to ensure that they have the capability to find, assimilate,compensate and retain the talented individuals they need.</p> <p>Aconvincing rationale for resource-based strategy has been produced byGrant (1991):</p> <p>The resource-based approachWhen the external environment is in a state of flux, the firms own resourcesand capabilities may be a much more stable basis on which to define itsidentity. Hence, a definition of a business in terms of what it is capable of doingmay offer a more durable basis for strategy than a definition based upon theneeds (eg markets) which the business seeks to satisfy.Unique talents among employees, including superior performance,productivity, flexibility, innovation, and the ability to deliver high levelsof personal customer service, are ways in which people provide a criticalingredient in developing an organizations competitive position. Peoplealso provide the key to managing the pivotal interdependencies acrossfunctional activities and the important external relationships. It can beargued that one of the clear benefits arising from competitive advantagebased on the effective management of people is that such an advantage ishard to imitate. An organizations HR strategies, policies and practicesare a unique blend of processes, procedures, personalities, styles, capabilitiesand organizational culture. One of the keys to competitiveadvantage is the ability to differentiate what the business supplies to itscustomers from what is supplied by its competitors. Such differentiationcan be achieved by having HR strategies that ensure that the firm hashigher-quality people than its competitors, by developing and nurturing the intellectual capital possessed by the business and by functioning as a learning organization. </p> <p>Strategic fit The HR strategy should be aligned to the business strategy (vertical fit).Better still, HR strategy should be an integral part of the business strategy,contributing to the business planning process as it happens. Vertical integrationis necessary to provide congruence between business and humanresource strategy so that the latter supports the accomplishment of theformer and, indeed, helps to define it. Horizontal integration with otheraspects of the HR strategy is required so that its different elements fittogether. The aim is to achieve a coherent approach to managing people inwhich the various practices are mutually supportive. High-performance management High-performance management (called in the United States highperformancework systems or practices) aims to make an impact on theperformance of the firm through its people in such areas as productivity,quality, levels of customer service, growth, profits and, ultimately, thedelivery of increased shareholder value. High-performance managementpractices include rigorous recruitment and selection procedures, extensiveand relevant training and management development activities, incentivepay systems and performance management processes. A well-known definition of a high-performance work system wasproduced by the US Department of Labor (1993). The characteristics listedwere: careful and extensive systems for recruitment, selection and training; formal systems for sharing information with the individuals who workin the organization; clear job design; high-level participation processes; monitoring of attitudes; performance appraisals; properly functioning grievance procedures; promotion and compensation schemes that provide for the recognition and financial rewarding of the high-performing members of theworkforce. High-commitment managementOne of the defining characteristics of HRM is its emphasis on the importanceof enhancing mutual commitment (Walton, 1985). High-commitmentmanagement has been described by Wood (1996) as: A form ofmanagement which is aimed at eliciting a commitment so that behaviour isprimarily self-regulated rather than controlled by sanctions and pressuresexternal to the individual, and relations within the organization are basedon high levels of trust. The approaches to achieving high commitment as described by Beer et al(1984) and Walton (1985) are: the development of career ladders and emphasis on trainability andcommitment as highly valued characteristics of employees at all levels inthe organization; a high level of functional flexibility with the abandonment of potentially rigid job descriptions; the reduction of hierarchies and the ending of status differentials; a heavy reliance on team structure for disseminating information (teambriefing), structuring work (team working) and problem solving(improvement groups or quality circles). </p> <p>High-involvement management This approach involves treating employees as partners in the enterprisewhose interests are respected and who have a voice on matters that concernthem. It is concerned with communication and involvement. The aim is tocreate a climate in which a continuing dialogue between managers and themembers of their teams takes place in order to define expectations and shareinformation on the organizations mission, values and objectives. This establishesmutual understanding of what is to be achieved and a framework formanaging and developing people to ensure that it will be achieved. LIMITATIONS TO THE CONCEPT OFSTRATEGIC HRM </p> <p>The concept of strategic HRM appears to be based on the belief that theformulation of strategy is a rational and linear process, as modelled inFigure 3.1. This indicates that the overall HR strategy flows from thebusiness strategy and generates specific HR strategies in key areas. Theprocess takes place by reference to systematic reviews of the internal andexternal environment of the organization, which identify the business, organizationaland HR issues that need to be dealt with. </p> <p>But strategic HRM in real life does not usually take the form of a formal, wellarticulated and linear process that flows logically from the business strategy, asMintzberg (1987) and others have emphasized. The research conducted byGratton et al (1999) in eight British organizations established that In no case wasthere a clearly developed and articulated strategy that was translated into amutually supportive set of human resource initiatives or practices.</p> <p>Issues of Specific HR strategiestalent management how the organization intends to win the war for talent;continuous improvement providing for focused and continuous incremental innovation sustained over a period of time;knowledge management creating, acquiring, capturing, sharing and using knowledge to enhance learning and performance;resourcing attracting and retaining high-quality people;learning and developing providing an environment in which employees are encouraged to learn and develop;l reward defining what the organization wants to do in the longer term to develop and implement reward policies, practices and processes that will further the achievement of its business goals and meet the needs ofits stakeholders;employee relations defining the intentions of the organization about what needs to be done and what needs to be changed in the ways in which the organization manages its relationships with employees andtheir trade unions.examples of specific HR strategiesThe Childrens Society:Implement the rewards strategy of the Society to support the corporate plan and secure the recruitment, retention and motivation of staff to deliver its business objectives.Manage the development of the human resources information system tosecure productivity improvements in administrative processes.Introduce improved performance management processes for managers and staff of the Society.Implement training and development which supports the business objectives of the Society and improves the quality of work with children and young people. </p> <p>examples of specific HR strategiesDiageo:These are the three broad strands to the Organization and People Strategy:Reward and recognition: use recognition and reward programmes to stimulate outstanding team and individual performance contributions.Talent management: drive the attraction, retenti...</p>