The evolution of strategic human resource management

Introduction

In today’s unstable economic climate, most organizations have begun to recognise that their personnel are an incredible source of competitive advantage in the current market. Human resource departments have evolved from being a simple administrative player to become ‘strategic partners’ responsible for the direct contribution to organisation’s objectives.

Strategic human resource management (SHRM) is a relatively new field, which has evolved out of the parent discipline of human resource management. Traditionally, the notion of HRM was treated as purely as an operational matter.

Emergence of SHRM from Personnel Management

‘HRM has emerged from Personnel Management’ (Graham et al, 1998, p. 3), however, Guest (1989) states that HRM is simply the re- titling of Personnel Management (PM) and Foley et al (1999) states that HR practitioners needed to shred the ‘Cinderella image’ in a quest for professional recognition. The comparison of HRM and PM literature yields slight differences between their definitions. Graham (1998, p. 6) states, ‘PM is practical, utilitarian and instrumental, and mostly concerned with the administration and implementation of policies. HRM, conversely, has strategic dimensions and involves the total deployment of human resources within a firm’.

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According to Taylor (2007), “It’s a business objective, rather than an individual one, geared towards one thing: ensuring that an organisation is able to do what it sets out to do in the present and in the future plans, respectively. And this assumes that capability is based on an organisation’s sole source of value and competitive advantage in a developed economy: its people”.

Importance of SHRM

Organisations which invest in their human resources as their strategic and sustainable competitive advantage are the most successful ones. They recognize their personnel as the soul of their business. In addition, they adopt a set of practices and innovative technologies which are designed to develop, deploy and connect employees with professional skills and knowledge in order to achieve business priorities which represent the performance at an individual level (performance management) and as a consequence of that, the business performance (Deloitte 2007).

Human resource in any organization means the ultimate acceptance of its functions in the formulation and implementation of its strategies. In particular, human resource are recruiting, selecting, training and rewarding personnel to increase the capacity of a business to execute its strategies.

SHRM in practice

Breslin Nursing Bureau, a homecare agency, has been founded since 1986, and employs over 500 people.

SHRM helps the organization in achieving its objectives by;

1. Training the managers to effectively handle subordinates

2. Creating awareness regarding the importance of various means of effective communication

3. Planning an efficient and most importantly fair rewarding system

4. Preventing the phenomenon of square pegs in round holes

5. Maintaining motivational levels of employees at an optimum

6. Taking appropriate steps to counter tardiness, absenteeism and high turnover

7. Aligning employee goals with the organization

8. Quantifying the contribution of employee costs to the total costs of the organization and taking steps to optimize them

9. Proactively identify the strategic needs of the organization

Walker (1992) defined Strategic HRM as “the means of aligning the management of human resources with the strategic content of business” and Boxall (1994) expressed the view that “the critical concerns of human resource management are integral to strategic management in any business” (Armstrong, p248 1999)

There are two variation of HRM namely the ‘soft’ and the ‘hard’ model, which are described below:

Truss (1999: 40) states that ‘soft’ and ‘hard’ models of HRM are “diametrically opposed along a number of dimensions.”

At the same time other authors, like Armstrong (2000, page 8), qualify that the two models cannot be distinguished precisely. This seems to be true for at least some theoretical dimensions such as strategic integration. It is obviously true for the practical implementation of HRM models as in most organisations a mixture of ‘soft’ and ‘hard’ HRM elements can be found (Truss 1999, page 56-57).

In ‘hard’ HRM models people in organisations are a business resource and economic factor among others (Guest 1989, page 48; Legge 1995, page 66).

People are regarded as human capital in which the organisation invests, and from which the organisation expects return on its investment to achieve competitive advantage. Employees are seen as a resource to be utilized and, at the same time, as a cost to be minimised. The emphasis on ‘hard’ models is on “quantitative, calculative and business-strategic aspects of managing the headcounts resource.” (Storey 1989, page 8).

‘Hard’ models are strongly focused on the strategic integration of HRM with business goals (Legge 1995: 66). They highlight management interests and regard employees as a means to achieve organisational objectives. Therefore, people are strictly directed and controlled through quantitative performance management and HR databases.

‘Soft’ models stress the human resource aspect (Legge 1989: 26, Guest 1989: 48), or, as Truss (1999: 41) puts it more concisely, in ‘hard’ models the term ‘resource’ is underlined, while in ‘soft’ models it is the term ‘human’.

In ‘soft’ HRM employees are “valued assets” and a “source of competitive advantage.” (Legge 1995: 66) They are regarded as capable and worthy replace direct forms of supervision, pressure and control as they are typical for ‘hard’ HRM models and conventional personnel management (Truss 1999: 41; Guest 1991: 152).

This paper look at the features of three models of HRM namely, the Harvard, Warwick and New York models.

The Harvard model hinges on a multiple stakeholders theory whereas the Warwick model is a contextual model hinging on a political and change process theory and that the New York model is a contingency model hinging on a variation of the strategic matching theories.

The Harvard model of HRM sees employees as resources. However, they are viewed as being fundamentally different from other resources as they cannot be managed in the same way. The stress here is on people as human resources .i.e. are not like any other resources as the former can be motivated or de-motivated, they can cooperate with management or resist it. They can think, create, imagine, plan, learn, feel emotion and perform a huge number of tasks.

The model postulates that HRM emphasises that employees are critical to achieving sustainable competitive advantage, that HR practices need to be integrated with corporate strategy and that the specialists help organisational controllers to meet both efficiency and equity objectives (Bratton and Gold 1999).

The Warwick model on the other hand consists of inner and outer context and places more emphasis on strategy. However, Henry and Pettigrew (1992) argue that the Warwick model is based on the Harvard model only that the former concentrates more on strategy. Both are the same in that regard they argued. The Warwick model has business strategy content, while the Harvard model has business strategy in situational factors. The Harvard model has task-technology in the situational factors part whilst the Warwick model has task-technology in the inner context.

The New York model on the other hand (which happens to be a variation of the strategic matching theory) sees HRM as a menu of strategic choices to be made by HR executives intended to promote the most effective role behaviours that are consistent with the organisational strategy (Sparrow and Hilltop 1994).

Proponents of this model were Schuler and Jackson (1987) who stated that the strategic choices to be made by executives include Planning Choices, Staffing Choices, Appraisal Choices, Compensation Choices and Training and Development Choices.

Strategic HRM is essential an integrated process that aims to achieve ‘strategy fit’. A strategic HRM approach produces HR strategies that are integrated vertically with the business strategy and are ideally an integral part of that strategy, contributing to the business planning process as it happens. Walker (1992) defines strategic HRM as ‘the means of aligning the management of human resources with the strategic content of the businesses.

VERTICAL INTEGRATION:

Vertical integration helps in ensuring that the organisation has the best skilled, committed and well-motivated workforce which it needs to achieve its business objectives. This can be attained by linking HR strategies to basic competitive strategies. As defined by Porter (1985), these are innovation, quality-enhancement and cost leadership. Some of the steps involved are:

· To develop the required skills of its employees

· Allowing occasional failure

· Giving them more discretion – using minimum controls (empowerment)

· Providing more resources for experimentation;

· Assessing performance on the basis of its potential long-term contribution.

HORIZONTAL INTEGRATION:

Horizontal integration is accomplished by developing a coherent- a well-knit-range of interconnected and mutually reinforcing HR policies and practices. This may be achieved by the use of share process, such as competence analysis, which provides a common frame of references and performances management, which is concerned with role definition, employee development and reward.

VERTICAL INTEGRATION OF BT:

BT is the world largest telecommunication company, which is providing telecommunication services about 170 countries in the world. BT’s aim is to build long-term partnerships with their customers. With their support, BT’s aim to maximize the potential of their traditional business, through a combination of enhanced quality of service, creative marketing, innovative pricing and cost efficiency. At the same time, BT will pursue profitable growth by transforming their customers to new wave products and services, such as ICT (information communications technology), broadband, mobility and managed services. (www.btplc.com)

Approaches

Strategic HRM models demonstrate how an organization links its business strategies and HR function to achieve its goals. Though SHRM adopts resource based philosophy, there are three different models defined by authors (Bratton and Gold, 2004, p49). These models are Control based, Resource based and Integrative model.

Control based approach generally deals with control of work place and direct monitoring of employee performance. According to this approach, HR strategies and management structure are used as instruments and techniques to enhance labour productivity and thereby increasing profitability.

Resource based approach satisfies the human capital requirements of the organization (Armstrong, 2006, p117).It was observed by Bratton and Gold (2004) that sustained competitive advantage is not achieved by external market position but careful assessment of their own skills and capabilities that competitors cannot copy. Main objective of this approach is improving resource capability and effective utilization of resources to achieve the goals set by the organization. Within this model there are three different approaches by which organization can implement strategic HRM practices (Armstrong, 2006, p117)

High Performance management approach

High commitment management model and

High involvement management model

Conclusion

Some authors believe that Strategic HRM is an outcome and some believe that it’s a process. It was cited by Bratton and Gold (2004) that authors like Ulrich (1997) and Snell et al had different opinion on Strategic HRM. Snell et al believed that it’s an outcome designed to achieve sustained competitive edge through quality workforce. Ulrich (1997) also stated SHRM as an outcome of mission, vision and priorities of HR department. It was cited by Cerdin and Ashok Som (2003) that Strategic HRM is identified in three levels namely Strategic, Managerial and operational level. Strategic level looks to the long term future, Managerial level looks at the mid-term and the operation level looks at the short term focus. Different models and approaches were discussed in this assignment to understand the functionality of strategic HRM and how far organizations are able and keen to implement it to achieve competitive advantage.