Introduction

In the context of globalization, Human Resource Management (HRM) plays an important

role in dynamic, complex, uncertain economy environment than ever before. SHRM that

‘focusing on the linking of all HR activities with the organization’s strategic objectives’

(Raymond, 2010) will become a critical issue to business success. Globalization with

international competitive threats due to a large number of foreign competitors entering the

domestic market (D'Aveni, 1994; Hafsi, 2002) will cause three main challenges that have

great impacts on companies relating to SHRM. These are profitability, work-life conflict and

increasing competitiveness pressure. Accordingly, a fit SHRM can help an organization to

build significant bottom line, attract labor with the conditions insuring standard work-life

balance and enhance competitive advantages.

I. Strategic human resource management issues

HRM concentrates on the employer – employee relationship to help organizations to

archive their business goals or improve their performance (Raymond, 2010). We recognize

that HRM is a part of management category which means HRM consists of planning,

organizing, leading and control human resource. HRM is also considered as a major

discipline that ‘affect customers, business results and ultimately shareholder value’ and

therefore this is a great contributor to business success (Gubman, 1995). Strategic Human

Resource Management (SHRM) is defined as follows:

‘The process of linking the human resource function with the strategic objectives of

the organization in order to improve performance’ (John et al., 2003; Raymond, 2010)

HRM activities are implemented following the reasonable SHRM of the organization will

guarantee that employees contribute to archive its business targets (Raymond, 2010; Baird &

Meshoulam, 1988; Delery & Doty, 1996; Huselid, et al., 1997; Jackson & Schuler, 1995).

There are 13 activities including: (1) Job analysis defines a job in terms of specific tasks and

responsibilities and identifies core skill and essential criteria to perform it successfully (2)

Human resource planning is the process by which an organization attempts to ensure that it

has right number of qualified people in the right jobs at the right time (3) Recruitment (4)

Selection (5) Performance appraisal accompanied with the plan for performance

improvement (6) Human resource development activities focus on training employees for

effective performance (7) Career planning and development (8) Employee motivation

contribute to improve employees’ productivity (9) Remuneration (10) Benefits (11) Industrial

relations (IR) deals with employee attitudes and employee – organization relationship (12)

Health and safety program (13) Diversity management (Raymond, 2010).

II. SHRM as response to challenge of profitability, work-life balance and

globalization

1. The challenge of profitability, work-life balance and increased global competitions

Globalization which means, in short, developing market globally is a major trend of world

economy in 21st century. Marquardt (1998) suggested 11 factors that create the global

marketplace and global organizations including: (1) Global technology and

telecommunications (enhance by fiber-optics) (2) Satellites and computer technology (3)

Competitiveness of global corporations (4) Converging of global lifestyles and values,

accelerated by global languages (5) Emergence of global market drivers (6) Lowering of cost

doing business globally (7) Globalization of financial markets, resources and services (8)

Emergence of the knowledge economy and era (9) Workforce mobility (10) Privatization and

globalization of government services (11) Emergence of open and unrestricted (free) trade. It

is apparently that globalization increases market potential, trade and investment potential and

resource accessibility (i.e. the free flow of human and financial capital) of firms especially in

the developed countries of EU, NAFTA, ASEAN, etc (Raymond, 2010; Contractor &

Lorange, 1988; Fawcett et al., 1993; Jones, 2002; Levitt, 1983). There are also a number of

external influences accompanied with globalization to firms such as multicultural workforce,

foreign government policies and economic situations, cross – culture issue, increased global

competitors and so on (Raymond, 2010; Marquardt, 1998; Stening et al., 1997; D'Aveni,

1994; Hafsi, 2002). Research suggests that companies which lose their competitive

advantages in globalization context often consider SHRM issues as peripheral (Welch et al.,

1997). As a result, HRM strategies need to developed as an essential part of an organization’s

overall strategy (Debrah, 1994; Briggs et al., 1999; Grundy, 1998; Poole et al., 1996) to

archive competitive edge.

Along with gaining competency pressure is the demand of reducing cost and reaching

profitability for cost advantage of firms. At any time, profitability is always believed to be a

measure of business success (Littleton, 1928; Osmond; David, 2011). A profitable company

can spend a fraction of its profits on reinvesting in another segment or grow up its current

business. It also can improve the livelihood of its shareholders, employees and thus

encourage them to devote their time and creativity to get more profit (Osmond; Abowd,

1990; Gerhart, Milkovich, 1990). ‘This symbiotic relationship allows the business to

generate more profits from business operations and pay a fraction of these profits to

employees based on their performance’ said Osmond. Consistent with this some researches

show that companies with higher pay-for-performance initiatives retained better long-term

financial objectives than did those with lower pay-for-performance initiatives (eg. Leonard,

1990; Abowd, 1990; Gerhart et al., 1990). In contrast, loss can force the company into

closing underperforming manufacture, laying off employees, selling assets, the business to a

competitor or even bankruptcy (Osmond). To sum up, profitability involves crucially SHRM

and HR should be regarded as profit center (Ken, 2010).

Under competitive pressure, workforce are more expected to work harder and even

overwork but in harsh workplace norms that give employers unexpected results (Fox, 2008).

This situation is called the implication of work – life conflict that ‘is out of kilter when the

pressures from one role (i.e. work or life) make it difficult to comply with the demands of the

other’ (Greenhaus et al., 1985). The indicators prove that employees who have to suffer stress

from work – life conflict and decreased perception of control over work or non-work

demands will be less productive, less committed to and satisfied with their organization and

more likely to be absent and leave the organization (Adams, 1996; Boles & Babin, 1996;

Boles, Howard & Donofrio, 2001; Frye & Breaugh, 2004; Netemeyer et al, 1996) which

means higher labour turnover. In additional, ‘the costs of hiring and training new personnel,

as well as the costs of not having departed employees working toward organisational goals’

are really expensive (Boles et al, 2001). ‘Ernst & Young estimated that the costs incurred for

turnover in client service roles averaged 150% of a departing employee’s annual salary’

(Abbott, De Cieri & Iverson, 1996). There’re also the link between the provision of flexible

work options <HR policies and activities such as child care, telecommuting, maternity and

parental leave, etc> and reduction turnover (Capelli, 2000; Nord et al, 2002). All these things

point out work-life balance becomes HR policies and activities or a SHRM issue and affects

directly to business success.

In summary, according to these theoretical points mentioned above we can say that SHRM

plays a crucially important role for firms to deal with work-life balance, profitability and

increased global competitions. But the question is that how SHRM can help companies to

overcome these challenges and achieve their business objectives.

2. The role of strategic human resource management

Basing on theoretical SHRM presented, ‘merging business and HRM strategies is a critical

source of competitiveness for organizations’ (Ulrich, 1992; Galpin et al., 1997). Companies

can obtain achievements by making choices about HR activities that are compatible and

support the corporate strategy (Shuler et al., 1987; Pleffer, 1998). An executive survey of

Professor David Ulrich of the University of Michigan, a leading expert on HR competency

models, shows that competitive pressure (i.e. seeking for sales, talent and profits) in a fast

changing business world forces 60% of the executives to want the HR department to be

interdependent with others departments to increase the company’s core competencies and

competitive advantages (cf. Ken, 2010). HR managers, in turn, have a responsibility to ensure

that SHRM is totally fit in organizations’ strategies (Raymond, 2010). We can conclude some

major points relating to HR solution for business success in the globalization context that are

(1) view SHRM as integral part of an organization’s strategy and intense implementing HR

activities of SHRM (2) matching it with business strategy of an organization (3) the

requirements and role of HR manager in insuring fit implementation of SHRM.

As we mentioned before there is a variety of HR activities representing the core HRM.

Research of Chang and Chen (2002) pointed out that HR activities such as training and

development, human resource planning and performance appraisal had a critical impact on

employee productivity. Top firms such as BHP Billiton, Coca-Cola, Foster’s, General

Electric, Johnson & Johnson, Macquaire Bank, Microsoft and Stockland maximize HR

activities: focusing on selecting, developing and rewarding top talent; encouraging open

communication, teamwork and collaboration; and refusing to tolerate poor performance or

compromise their long-term objectives for short-term gains (Raymond, 2010; McNamara,

1999; Macquarie, 2003; Spreier, 2003). Guest (2002) found that job design, employee

participation and open communication, equal opportunities, family-friendly practices and

anti-harassment practices are with higher work and life satisfaction.

In the intensely competitive global market, companies which want to gain competitive

advantages will mainly follow three major business strategies such as: (1) cost reduction to

gain price advantage (2) differentiation that is tailoring a product or service to meet the

unique needs of a particular market (3) quality-enhancing to maintain customers.

Firms attempting to compete on price will emphasize the need for significant cost

reduction in any aspect of an organization’s functions (including HRM) (Takeuchi, 2009).

Minimizing overhead demand forces companies pursue retrenchment strategy that may

consist of a reduction in the number of employees and/or in wage levels, enhancing use of

temporary labour; maximize efficiency by using narrowly-designed jobs, close monitoring

and a minimal level of training and development (Takeuchi, 2009; Chow et al. 2009).

Innovative business strategy must match growth strategy in HRM which tend to depend

heavily on employee skills and commitment as key components in the value creation process

through careful recruitment, selection, higher performance-based compensation and

remuneration, etc (Mark et al., 1996, p.836; Sanz-Valle et al., 1999). For example, the study

of 194 Singaporean firms, 100 best companies to work for in the United States, Fortune 1000

companies, Taiwan and Korea firms found that companies with higher employee

compensation will have higher employee commitment and higher financial success (Khatri,

2000; Robert et al., 1993; Lawler et al., 1995; Bae et al., 2000; Huang, 2000).

Companies should focus on product quality regarding stability strategy in HRM. In this

case, overall HRM activities including recruitment and staffing, performance appraisal, and

training and development should be standardized to a large extent so that employees can be

developed with the skills necessary to produce high quality products or services satisfying

customer demands (Schular, Jackson, 1987).

A company can also combine strategies to made a particular strategy that is best fit for the

organization to achieve easily business objectives but have to ensure to adopt a particular

SHRM matching with organization’s strategy.

Regarding the role of HR managers, there are four main roles for the HR manager can be

identified: (1) strategic partner (2) administrative expert (3) employee champion (4) change

agent (Raymond, 2010).

Ulrich (1997) said they ‘play a strategic partner role when they have the ability to translate

business strategy into action’. These HR managers must ask, ‘Where are we now? Where we

want to be? How are we going to get there? What do we do when we get there?’ to contribute

to business decisions (Raymond, 2010). Therefore, HR managers must ‘develop business

acumen, a customer orientation and an awareness of the competition to be able to link

business strategy to HR policies and practices’. ‘There is evidence to indicate that there is a

growing awareness of the need for HR managers to become actively involved at the strategic

level and recognition that organizations that have a CEO who recognizes the significance of

HRM have a competitive advantage’ (Raymond, 2010; Fisher et al., 1999; Way, 2000;

Bartlett et al.).

A requirement of HR managers is becoming administrative experts that is able to: ‘re-

engineer HR activities through the use of technology, rethinking and redesigning work

processes; see HR as creating value; and measure HR results in terms of efficiency (cost) and

effectiveness (quality)’ (Ulrich, 1997; Way, 2000; Barlett et al., 2002).

The HR professional must represent to employee’s voice in management decision by

‘being fair and principled, by assuring employees that their concerns are being heard and by

helping employees to find new resources that enable them to perform their jobs successfully

(for example, learn how to set priorities, eliminate non-value-added work, clarify goals,

simplify complex processes, become involved in decision making, increase commitment,

share in economic gains and so on)’ (Ulrich, 1997; Yeung et al., 1994). These activities ‘will

help employees to contribute more fully because they will have the competence to do a good

job and the commitment to do right’ (Ulrich, 1997).

The HR manager needs to act as a catalyst for change within the organization by ‘leading

change in the HR function and by developing problem-solving communication and influence

skills’ (Raymond, 2010). Yeung et al. (1994) also expressed ‘It <HR function> has to be

transformed to deal creatively and pragmatically with emerging challenges. By

accomplishing new roles and acquiring new competencies, the HR function will become

more critical and strategic than ever before’.

Each companies can make a particular list of core business skill needed for HR manager

that can help them to perform SHRM flawlessly and therefore contributes efficiently to

business success.

Conclusion

In conclusion, strategic human resource management today becomes more important to

business success than ever before especially when companies have to deal with the

challenges coming from profitability pressure, work-life conflict and increased global

competition. Three main factors that we have to notice for high performance companies and

overcoming challenges are that (1) respecting and strong implementing HR activities

following adopted SHRM (2) Matching SHRM with business strategy (3) focusing on

selecting HR manager and promoting their role into organization performance. There is the

fact that human capital is always the key element to advance business plan and organizations

have to consider and adopt SHRM fitting with business strategy in order to obtain

organizations’ business objectives such as growth business strategy should be combined with

differentiation/innovation strategy in HRM, retrenchment business strategy supported by cost

reduction strategy in HRM, stability business strategy with quality-enhancing strategy in

HRM. Companies also can combine all these business strategy to attain their broad business

targets and therefore, SHRM with its important role also is adjusted flexibly to meet their

goals that are gaining profitable, competitive advantages with assuring work-life balance to

retain employees in the tense and brutally competitive market.

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