Strategic Human Resource Management: Concept and Process

Prelim 3

Strategic HRM

defines the organization’s intentions and plans on how its business goals should be achieved through people

Strategic HRM based on first propositions

human capital is a major source of competitive advantage

Strategic HRM based on second propositions

people who implement the strategic plan

Strategic HRM based on third propositions

that a systematic approach should be adopted to defining where the organization wants to go and how it should get there

Strategic HRM

is a process that involves the use of overarching approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another.

AIMS OF STRATEGIC HRM

developing approaches to people management in the longer term

soft strategic HRM

will place greater emphasis on the human relations aspect of people management, stressing continuous development, communication, involvement, security of employment, the quality of working life and work–life balance

Hard strategic HRM

investing in human resources in the interests of the business.

SHRM focuses on actions that differentiate the firm from its competitors (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’.

fundamental aim of strategic HRM

is to generate strategic capability by ensuring that the organization has the skilled, committed, and well-motivated employees it needs to achieve sustained competitive advantage.

fundamental objective of strategic HRM

is to provide a sense of direction so that the business needs of the organization, and the individual and collective needs of its employees can be met by the development and implementation of coherent and practical HR policies and programs.

As Dyer and Holder (1988) remark, strategic HRM should provide

‘unifying frameworks which are at once broad, contingency based and integrative’.

Strategic Human Resource Management

should attempt to achieve a proper balance between the hard and soft elements.

RESOURCE-BASED APPROACH aims is to

develop strategic capability – achieving strategic fit between resources and opportunities and obtaining added value from the effective deployment of resources.

RESOURCE-BASED APPROACH

founded on the belief that competitive advantage is obtained if a firm can obtain and develop human resources that enable it to learn faster and apply its learning more effectively than its rivals.

RESOURCE-BASED APPROACH

concerned with the enhancement of the human or intellectual capital of the firm.

human capital theory, resource-based theory

emphasizes that investment in people adds to their value in the firm.

Resource-based strategy

is therefore concerned with the enhancement of the human or intellectual capital of the firm

Strategic fit HR strategy aims to

achieve a coherent approach to managing people in which the various practices are mutually supportive.

Strategic fit HR strategy

should be aligned to the business strategy (vertical fit)

Vertical integration

is necessary to provide congruence between business and human resource strategy so that the latter supports the accomplishment of the former and, indeed, helps to define it

Horizontal integration

with other aspects of the HR strategy is required so that its different elements fit together

High-performance management aims to

make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits and, ultimately, the delivery of increased shareholder value

High-performance management practices

include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes

US Department of Labor

• careful and extensive systems for recruitment, selection and training; l formal systems for sharing information with the individuals who work in 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 the workforce

High-commitment management

One of the defining characteristics of HRM is its emphasis on the importance of enhancing mutual commitment (Walton, 1985)

High-commitment management has been described by Wood (1996)

A form of management which is aimed at eliciting a commitment so that behavior is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on 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 and commitment as highly valued characteristics of employees at all levels in the 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 (team briefing), structuring work (team working) and problem solving (improvement groups or quality circles)

Wood and Albanese (1995) added to this list:

• job design as something management consciously does in order to provide jobs that have a considerable level of intrinsic satisfaction;

• a policy of no compulsory lay-offs or redundancies and permanent employment guarantees with the possible use of temporary workers to cushion fluctuations in the demand for labour;

• new forms of assessment and payment systems and, more specifically, merit pay and profit sharing

• a high involvement of employees in the management of quality

High-involvement management

This approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them

High-involvement management aims to

create a climate in which a continuing dialogue between managers and the members of their teams takes place in order to define expectations and share information on the organization’s mission, values and objectives

High-involvement management

This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved.

True

SHRM in reality, is often not a well-structured and linear process.

False

Studies found that in every case was there a clearly developed and articulated strategy that was translated into a mutually supportive set of human resource initiatives or practices.

True

Achieving strategic fit is a good idea but one that is difficult to attain.