Why Strategic Human Resource Management (SHRM) is so important?

Nowadays, Strategic Human Resource Management becomes very important for the organizations in the business world environment. The purpose of this assignment is about what the Strategic Human Resource Management (SHRM) is and why SHRM is so important? How is human resource management (HRM) strategic to a firm’s viability and how it might help to lay a basis for sustained competitive advantage? And what are the strategies for the managers to pursue their goals for labor productivity and organizational flexibility in socially acceptable ways.

1.0 Introduction

HRM has existed in one form or another since the beginning of time. Certain HR functions, even though informal in nature, were performed whenever people came together for a common purpose. During this century, the processes of managing people have become more formalized and specialized.

1.1 Definition of SHRM

SHRM it can help organizations determine the best use of human resources to meet organizational goals and can facilitate the integration of HR policies and practices with each other and with the business strategy.

(Source: http://www.humanresourcemanagement.co.uk/resourcemanagement.htm)

1.2 Understanding of SHRM

Strategic human resource management (SHRM) takes the ideas one step further by emphasizing the need for HR plans and strategies to be formulated within the context of overall organizational strategies and objectives, and to be responsive to the changing nature of the organization’s external ‘environment’ (i.e. its competitors, the national and international arenas). A strong implication of SHRM theory is that HR plans and strategies should be developed on a long-term basis, taking into account likely changes in the society, industrial relations systems, economic conditions, legislation, global and technological issues, as well as new directions in business operations.

(Source: http://www.globalhrm.com/articles/strategic1.htm)

1.3 Competitive Advantages

People is the source of competitive edge, there are different ways of competing are significant for managing human resources because they help determine needed employee behaviors. That is, for competitive strategies to be successfully implemented, employees have to behave in certain ways. And for employees to behave in certain ways, human resource practices need to be put in place that help ensure that those behaviors are explained, are possible, and are rewarded.

Example of a firm’s human resources to gain competitive advantage.

Nordstrom exists in the highly competitive retailing industry. This industry is usually characterized as having relatively low skill requirements and high turnover for sales clerks. Nordstrom has attempted to focus on individual salespersons as the key to its competitive advantage. It invests in attracting and retaining young, college-educated sales clerks who desire a career in retailing. It provides a highly incentive based compensation system that allows Nordstron’s salespersons to make as much as twice the industry average in pay. The Nordstrom culture encourages sales clerks to make heroic dfforts to attend to customers’ needs, even to the point of changing a customer’s tyre in the parking lot . the recruiting process, compensation practices, and culture at Nordstron have helped the organization tomaintain the highest sales per square foot of any retailer in the nation. (Source: Black, J. A., & Boal, K. B. (1994). Traits, Configurations and paths to sustainable competitive advantage.)

Consider that human resource strategies, including recruitment and selection, depend on whether an organization’s strategic management style can be classified as one of strategic planning (maximum competitive advantage through the pursuit of ambitious long-term goals, which subsequent investment in the long-term development of employees.)

2.0 Importance of SHRM

2.1 SHRM – model

Figure 1.0 a Strategic Human Resource Management Model

(Source: Strategic Human Resource Management, 1999. Pp 40-59.)

This model derived both from consideration of the theory, and from the collective practical experience in human resource management. It is used as the guiding framework for SHRM practice in several organizations. It is represented as a linear process, when in reality SHRM is multidimensional.

2.2 Emphasis on Strategic Human Resource Management (SHRM)

Top management has generally recognized the contribution of the HR program to the organization, there has been a growing need for HR managers to assume a broader role in overall organizational strategy. HRM in the near future will play a vital role in creating and sustaining the competitive advantage of an organization. One international study suggests that this role will require strategic HRM to be:

* Responsive to a highly competitive workplace and global business structures

* Closely linked to business strategic plans

* Jointly conceived and implemented by both line and HR managers

* Focused on quality, customer service, productivity, employee involvement, and teamwork and workforce flexibility.

(Source: http://www.hrmguide.net/hrm/chap6/ch6-links4.htm)

While the shift from personnel management to SHRM was required by the need for a more professional approach, and increasing demand of organizations for more strategic, integrative and accountable approaches to HR activities. And also the further development of SHRM concepts is to equip practitioners with more appropriate frameworks to guide their innovative practices.

3.0 SHRM and Different Strategies

3.1 Human Resource Planning

Strategic planning is the process of setting major organizational objectives and developing comprehensive plans to achieve them. It involves deciding on the major directions of the organization, including its structure, strategies, policies and the contributions of its various resources. An important part the strategic planning process is the determination of necessary labour requirements and the prediction of likely sources.

(Source: Peter Boxall and John Purcell, Strategy and human resource management (2003),)

Advantage and Disadvantage of HRP

Advantage: There is a wide variety of benefits can be derived from well-prepared HR plans. Human resources in organizations will be better used, employee and organizational objectives can be more closely matched, and substantial improvements can be achieved in both productivity and profitability. For example: the good planning can bring high market position, credit-debt ratios and the quality of human resources (number of employees, skills levels) to the organizations. And also bring more opportunities compares with competitors. For example: likely product or site diversification, and newly discovered labour markets. (Such as university graduates, part-time workers, high unemployment levels).

Disadvantage: On the other hand, weaknesses could cover inflexible organizational structures, poor market unmotivated employees. And also include restrictive government legislation. For example: such as fringe benefits tax, payroll tax. And systems analysts, technical specialists in highly competitive labour markets.

Above all, the benefits and drawbacks of HRP are related to organizational success. Both the internal and the external environments of organizations increasingly affect the nature and complexity of HR plans in positive and negative ways. HR planners need to provide long-term and contingency strategies to ensure that organizational and employee needs are effectively match.

3.2 Recruitment and Employee Selection Strategies

Recruiting is the process of attempting to locate and encourage potential applicants to apply for existing or anticipated job openings. Put simply, recruitment strategies attempt to create a pool of appropriately qualified and experienced people so that selection strategies and decisions can be initiated. During this process, efforts are made to inform the applicants fully about the selection criteria, i.e. the required competencies, which will lead to effective performance and the career opportunities the organization can provide for them. (Source: Ian B. & Len H., Human Resource Management -, (2nd edition) 1994,)

Organizational Recruitment Strategy

Do you just fill holes in your organization by banging a job ad in the newspaper, or do you have a recruitment strategy that anticipates your company’s needs and produces the candidate with the best possible fit? Strategic recruitment builds for your company’s future – by David Reddin.

The recruiting process typically yields a number of applicants whose qualifications must be assessed against the requirements of the job. Making a selection from among applicants from within or outside the organization to fill existing or projected job openings is a major HR process that has far-reaching effects on the continued viability of the organization. (Source: Ian B., Len H. & Tim C., “Human Resource Management” 2004, FT Prentice Hall Published. Pp 395-420.)

Recruitment requires effective planning to determine the specific HR needs of the organization. Also to be determined are the requirements of the jobs to be staffed that establish the qualifications of the applicants to be recruited and selected. Employers find it advantageous to fill by means of internal promotion as many openings as possible above the entry level.

In the process of making decisions, all ‘can do’ and ‘will do’ factors should be collected and weighted systematically. And also the final decision-making will be based upon these in formations. The goal of selection strategy is to select a better choice of individuals who will be successful on the job.

Today, greater attention is being given to the selection processes than ever before. Typically, effective selection processes will begin with an examination of the organization’s strategic direction together with the accompanying human resources or people plan.

3.3 Management of Performance

Performance review takes place every day in every organization. If an organization wants to maintain its productivity then Performance review programs which must be developed. For example: Supervisors are constantly observing the way their subordinates carry out their assignments and forming impressions about the relative worth of these employees to the organization.

As Lowry (2002) argues, the management of employee performance is usually seen as a necessary function of the managerial cadre. Centrally, it links a number of themes, including the extent to which the organization has identified strategic goals reflecting the needs of the business and the degree to which these are communicated to and shared by each employee. (Source: Huselid, M. A. (1995). Academy of Management Journal, 38: 635-672)

Performance management involves a formal and systematic review of the progress towards achieving these goals.

There is an elements cycle of the process about performance management that implemented by HR managers to create organizational advantage. The cycle consists of five elements which provide a frame-work to developing continuous improvement. These elements are presented as a common link between organizational and individual performance which underlies the development of a committed, motivated, loyal workforce. For example: in simple terms, it is suggested than the cycle indicates a system within which performance objectives are set, outcomes are then measured, results are fed back, rewards are linked to outcomes and changes are made before new objectives are set for which the outcomes can be measured.

4.0 Organizations infrastructure

4.1 Training

Training: a planned process to modify attitude, knowledge or skill behavior through learning experience to achieve effective performance n an activity or range of activities. Its purpose, in the work situation, is to develop the abilities of the individual and to satisfy the current and future needs of the organization. (Source: Manapower Services Commission, 1981)

The emphasis on developing the skills of employees and the future needs of the organization may be in conflict. For example, many organizations prefer to train employees in firm-specific skills rather than transferable skills, and thus these two objectives may prove mutually exclusive, or only partly achievable. In a recent survey the authors conclude: much of the training reported was for organizational rather than individual development, suggesting that many employees would not regard the training they receive as training at all, since it neither imparts transferable skills nor contributes to personal and educational development. (Source: Rainbird and Maguire, 1993)

Training is different of individual needs; the importance of training in recent years has been heavily influenced by the intensification of overseas competition and the relative success of economies such as Japan, Germany and Sweden where investment in employee development is considerably emphasized. Technological developments and organizational change have gradually led some employers to the realization that success relies on the skills and abilities of their employees, and this means considerable and continuous investment in training and development.

For SHRM, training is important for the enhancing organizationally efficiency by people and the skills. According organizational needs, training is seen as a key instrument in the implementation of HRM policies and practices, particularly those involving cultural change and the necessity of introducing new working practices.

4.2 Learning and Developing

The meaning of Learning Organization

Walton states of the concept of the learning organization: ‘ Perhaps more than anything else it has helped to put HRD on the strategic agenda.’ But the concept is evolving and remains fairly abstract or, as a senior consultant engagingly described it: ‘quite fluffy’, what follows is necessarily a considerably simplified consideration of the concept.

‘Ordinary people’ have the potential to contribute the knowledge, skills, attitudes and creative thinking that organizations need for survival, flexibility and development. Moreover, individuals’ learning and development continue within the organization, so here we shall examine how human resource managers can provide an environment in which the capacity to learn and adapt can be harnessed to benefit the organization. (Source: Cappelli, P, & Singh, H. (1992). Integrating strategic human resources and strategic management. (pp. 165-192), Madison, WI: Industrial Relations Research Association.)

Employers benefit from – indeed, depend on – their employees’ naturally occurring learning. Some recognize this and encourage, facilitate and extend those aspects of their employees’ learning that are essential for the organization and support them informally or undertake formal employee development activities. Employees learn for themselves how to carry out their jobs, or improve their performance; how to make job changes or achieve promotions; how to become managers and develop others.

It is important To manage people effectively and fairly, and in a way that benefits the organization, (you will have the opportunity to consider them in greater depth in the section on controversial issues.) , it is necessary to understand how the processes of learning and development can be facilitated in the organization and, indeed, ow the organization can itself learn. This is the subject of this section.

The attributes that today’s organizations need for their survival was examined – in particular, the needs for quality and continuous improvement, flexibility, adaptability, and the exploitation of knowledge. Individual employees therefore must engage in a continuous process of learning how to learn, and managers must learn how to facilitate this.

On the other hand, some employers ignore the significance for the organization of this learning, and do little to foster that learning and development. In these cases, employee development is not a planned or systematic process.

Conclusion

SHRM is a model for practice, which requires interpretation and adaptation by HR practitioners to ensure the most suitable alignment or ‘fit’ between HR and business strategies and plans.

In necessarily, the impacts of both the external and internal organizational environments, HRM strategy will enable the ‘adaptation’ of human resources to meet the long-term goals of the organization. Thus the HRM strategy of one organization may involve more selective recruitment or the multi skills of employees, while another may require rightsizing, job redesign or the elimination of manual or repetitive job functions.

The success of an organization depends largely on the performance of its human resources. To determine the contributions of each individual, it is necessary to have a formal appraisal program with clearly stated objectives. The performance standards that are relevant and reliable are essential foundations for evaluation.

We have suggested that, in an increasingly competitive environment and with HR socialists, to help employees achieve their career objectives, and ensuring effective relationships between HRM and strategic organizational objectives. HR professionals should understand the process by which individuals typically make career choices and be aware of some of the more scientific approaches to career selection that may be used. How to choose an organization and how to keep one’s career in perspective are other questions that should be addressed.

A major challenge for HRM researchers is to continue not only to examine the value added of different HR strategies, but also to predict the magnitude of the value added of the HRM function for organizational outcomes more accurately and to make their research result meaningful to HR practitioners.

The future directions of SHRM are necessarily based upon both the historical development of the profession and challenges posed by economic, social, political and cultural changes in the industrial environment.

References:

Alan R.N.; Robert L.C. and Terence E.M., “Strategic Human Resource Management”, 3rd Edition, 1999, an International Thomson publishing company ITP. Pp 38.

Manapower Services Commission, International joint ventures, HRM, and viable knowledge migration, International Journal of Human Resource Management, 1981, 5(1), 22-53.

Rainbird and Maguire, the Global Challenge: Frameworks for International Human Resource Management, McGraw-Hill/Irwin, and Boston, 2002, PP 245-260

Ian B., Len H. & Tim C., “Human Resource Management” – a contemporary approach, (fourth edition), 2004, FT Prentice Hall Published. Pp 395-420.

Ian B. & Len H., Human Resource Management – A Contemporary Perspective, (2nd edition) 1994, Financial Times Pitman Publishing.

Peter Boxall and John Purcell, Strategy and human resource management (2003), Published by PALGRAVE MACMILLAN.

Black, J. A., & Boal, K. B. (1994). Strategic resources: Traits, Configurations and paths to sustainable competitive advantage. Strategic Management Journal, 15: 131-148.

Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38: 635-672

Cappelli, P, & Singh, H. (1992). Integrating strategic human resources and strategic management. In D. Lewin, O. S. Mitchell, and P. D. Sherer (Eds.), Research frontiers in industrial relations and human resources (pp. 165-192), Madison, WI: Industrial Relations Research Association.

Barney, J. (1991). Firm resources and sustained competitive advantage, Journal of Management, 17: 99-120.

Barney, J. B., & Hansen, M. H. (1994). Trustworthiness as a source of competitive advantage, Strategic Management Journal, 15: 175-190.

Bloom, M. C., & Milkovich, G. T. (In press). The relationship between risk, Incentive Pay, and Organizational Performance. Academy of Management Journal.

Bloom, M. C., Milkovich, G. T., & Zupan, N. (1997). Contrasting Slovenian and US employment relationships: The links between social and psychological contracts. CEMS Business Review, 2: S95-S110.

Brief, A. P. & Aldag, R. J. (1989). The economic functions of work In G. R. Ferris & K. M. Rowland (Eds.), Research in Personnel and Human Resource Management (vol. 7. pp. 1-23), Greenwich, CT: JAI Press.

Brewster, C., Tregaskis, O., Hegewisch, A., & Mayne, L. (1996). Comparative research in HRM: A review and an example. The International Journal of Human Resource Management, 7: 585-604.

http://www.humanresourcemanagement.co.uk/resourcemanagement.htm

http://www.hrmguide.net/hrm/chap6/ch6-links4.htm

http://www.globalhrm.com/articles/strategic1.htm