Human Resource Management Free Argumentative
- Pages: 9
- Word count: 2044
- Category: Empiricism Organizational Behavior
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With rapid change in the economic environment managers and scholars have been motivated to seek competitive advantages through new sources. The role of a skilled, motivated and flexible workforce has become more prominent than traditional attributes such as technology, economies of scale or natural resources. This is illustrated in the growth of Human Resource Management (HRM) literature, which focuses on strategies to stimulate economic performance by sustaining and developing core competencies within a workforce. With the aim of improving the productive contribution of individuals while simultaneously attempting to attain other societal and individual employee objectives HRM is a multi facetted approach (Schwind et al, 2010). High performance work systems developed through strategic HRM have been the focus of modern organisational theory because it is has considerable interdisciplinary application.
Within this field the focal point of these studies is the extent at which HRM policy affect performance (Huselid et al, 1997) . This research analyses current literature, both academic and popular, on the implementation and effectiveness of HRM under a resource based perspective focusing on three outcomes; Human resource benefits, operational improvement and financial growth. Academic literature has generated strong empirical evidence correlating strategic HRM concepts and improved economic performance. Therefore economic rationality suggests that HRM should be a highly-involved widely used work practice. Contrary to this the adoption of such policies has been slow and sporadic. This represents a gap in awareness or application and therefore HRM needs to be analysed in two dimensions; both academically and practically.
To assess the extent or limitations of HRM practice a resource-based view will utilised. RBV assumes a firm’s competitive advantage lies in the application of a bundle of tangible or intangible resources (Wernerfelt, 1984). This evaluation will be organised into three key objectives; human capital, operational efficiency and financial growth. Human capital is the stock of competencies, knowledge, habits and emotional satisfaction of a workforce. It is therefore a considerable factor in a firm’s operational outcomes such as productivity, quality of product and innovation. From these components financial goals such as sales growth, return on investment increase in capital may largely be derived. There is a clear pyramidal relationship structure between these three objectives and interactions between each layer are bilateral.
Finally all three layers have multiple internal and external environmental factors which is one of the critical reasons industry has apprehension for HRM research. The goals of this paper is to investigate the disparity in HRM theory and it’s application in the workforce. Human capital is critical in both labour and service based industries, it is both a tangible and intangible resource that defines a firm’s competitive advantage. Strategic HR policy aims to motivate and train individuals to develop a qualified, experienced workforce with increased capabilities. This is commonly achieved through the attraction and retention of talent, training, management and performance reviews, reward management and work design challenges. This is often collectively referred to as parental strategic management and has a direct impact on the workforce.
Indeed one indicator is the positive response to an online poll at HR Insight Blog that registered 74% of respondents found these strategies ‘directly affected their work practice’. This survey was undertaken by 1,500 candidates across a spectrum of industries. It’s validity is further supported with anecdotal evidence that candidates used to clarify their responses, one report stated “training is an essential part of my job development, it helps me cope with my work and I am more effective because of it”. Conversely Jessica Miller from the SHRM Blog suggests that the effectiveness of parental strategic management is curtailed by its design limitations. The alignment of the policy or practice defines how a convention ‘fits’ within a workplace structure, therefore ineffective strategy is usually preceded by poor structural fit rather than poor implementation.
Miller infers that “both good and bad parenting will have reciprocal impacts on a workforce”. Academic studies support these findings, Huselid (1997) performed a cluster analysis of four firms with different HR strategies. The weak clusters were characterised by poorly planned human capital goals that were irrelevant to the workplace. The high performance clusters reflected smart design supported with effective communication and above average levels of management support. The correlation of alignment and effectiveness of HR strategy is consistent with the prior work of Gehart & Milkovich (1992) that poor design is the underlying trait for 75% of failed SHRM policies. Human capital measurement is an elusive concept (Becker, 2002) and therefore empirical analysis has inherent inaccuracies.
However both the anecdotal and empirical findings both suggest parental strategic management has an immediate impact on the workforce. They also cohesively support the concept that design, rather than implementation, is the major factor in policy failure. Operational outcomes are those related to the goals of an organizational operation (Jiang, 2011). They are defined at a business unit level and are unique to a process or activity. Collectively they illustrate a company’s unique competitive advantage through innovation, productivity or product quality. Positive operational outcomes are supported by both a rich human capital and a strong supporting organisation culture. An organisational culture is comprised of structural and soft core elements that must act in synergy. Structural elements comprises the organisational breakdown of a company, typically this falls in one of three categories, functional, divisional or product based structures.
This characteristic of a firm is dependent on rigid factors and is resilient to change, SHRM therefore focuses on the soft core elements. The soft elements are typified by company codes of conduct, ethics and values. Developing a strong positive organisational culture has proven benefits, conversely weak clashing or differing cultures and subcultures will have a detrimental effect. That organisational culture effectively influences a firms outputs is an assumption implicitly held by many mangers and management research, although few empirical studies have provided detailed insight into this relationship (Gregory 2009). One limited study by the Human Synergistics International found humanistic encouragement had small correlations with productivity and quality of service. This study was limited to the fast food industry and does not account for innovative efficiencies or increased quality of product, further research is required to support the tacit beliefs of industry management. In contrast there is much anecdotal evidence to suggest culture has a major effect on operational outputs.
This is best exemplified by Google Inc, which invests greatly in their human capital and is consistently rated as the best company to work for by Fortune 500. They encourage workers to pursue extra curricular projects during work hours. From this scheduled ‘free-think’ time Google has developed some of their most popular products, such as Gmail, Google Drive and Google +. It also schedules an average 60 hours of employee training a year which allows the tech giant to remain relevant in what is an rapidly evolving industry. Both academic and popular research indicates SHRM has the capability to effect operational change however further research is required to determined the efficiency of this strategy. Future research should focus on drawing empirical relationships between specific cultural goals and operational efficiencies across a range of industries. It is hypothesised that certain industries will be greatly affected by cultural campaigns and others will be robust.
Financial growth is the increased positive flow of capital into a business. It is typically represented in the growth of sales, return on investment or reduced operational cost. It illustrates a company’s complete bundle of competitive advantages which include the sum efforts of the direct and indirect SHRM. With an increased focus on the RBV of firms empirical research into SHRM has made considerable progress (Barney, 1991). Several dominating perspectives have substantiated the mechanism of HRM as a critical factor in a firm’s performance. Snell and Dean (1992) note that human capital adds value to a firm through improved skills, knowledge and experience, business capabilities are enhanced through higher levels of productivity. This confirms a Tayloristic assumption that a skilled workforce will move towards a state of best work practice, minimising waste and maximising efficiency (Aitken et al 1985).
Indeed this is the tacit assumption that industry managers have today. A study by SingHealth indicated that 83% of senior management believed, “Investing in HRM has a significant influence on both operational and financial outcomes”. It is inferred that the gap in theoretical application and practical application is not due to a lack of awareness. Another examination of industry beliefs reveals that employee cited poor HRM as one of the largest factors in voluntary redundancy (Campbell et al, 1993). Therefore the benefits of SHRM are well known and improvements are desired. This high level research fails to capture the complimentary nature of HRM and does not attempt to gauge the effectiveness of policies. Future research should target specific practices and their ramifications from a human capital level through to a financial outcome perspective.
It is hypothesised that gradual resource consuming evolutionary changes are the core reason firms do not adopt more direct HRM practices. It has been long and widely asserted that people are the preeminent organisational resource and the key to achieving outstanding performance (Peters and Waterman, 1982). By adopting an RBV this study found a high correlation between academic research and industry knowledge. The broad concept that HRM is a fundamental mechanism to achieving human capital, operational and financial goals is universally accepted. This paper suggests that the shortfalls in HRM and it’s application are due to the design ‘fit’ and associated cost of implementation. Both theoretical and practical research fails to conclusively forecast the magnitude of policy effectiveness. Future research is suggested to focus on isolating specific HRM strategies and analysing their direct effects. In an economic environment of increasing competition the ability of a firm to harness it’s human resources effectively is paramount as such HRM research is fundamental to increasing companies competitive advantage.
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