Human Resources Management free essay sample

What is meant by a strategic approach to HRM? How can a strategic approach to HRM be a source of competitive advantage to an enterprise? Illustrate your view by reference to relevant literature and case studies drawn from GSN406 course materials. â€Å"The most powerful of the strategic configurations of power remains people you must work on developing an organizational espirit de corp that aligns the hearts and minds of your staff with the aims of the business†. (Boar 1997, p. 196) Acronyms used in this paper: This essay discusses strategic approaches to HRM and how they can provide those advantages. It begins with some relevant definitions, moves to a discussion of broad SHRM frameworks, then proceeds to show how strategic approaches can provide competitive advantages for organisations. The essay concludes with a selection of illustrative case studies, followed by concluding comments. Definitions 2. 1Human Resource Management There are a plethora of definitions for human resources management (HRM). Two definitions cited by Cornelius (2001, p. ) include: a) (HRM the) critical management task is to align the formal structure and the HR systems (selection, appraisal, rewards and development) so that they can drive the strategic objectives of the organization. (Fobrum, Tichy and Devanna in Cornelius 2001, p. 9) b) (HRM) is directed mainly at the management needs for human resources (not necessarily of employees) to be provided and deployed. There is a greater emphasis on planning, monitoring, and control, rather than on problem-solving and mediation. It is totally identified with management interests, being a general management activity and is relatively distant from the workforce as a whole. (Torrington and Hall in Cornelius 2001, p. 9) 2. 2Strategic management Viljoen and Dann (2000, p. 618) define strategic management as: The process of identifying, choosing and implementing activities that will enhance the long-term performance of an organisation by setting direction and by creating ongoing compatibility between the internal skills and resources of the organisation and the changing external environment within which it operates. Competitive advantage Viljoen and Dann (2000, p. 619) define sustainable competitive advantage (SCA) as â€Å"long-term advantage over the organisation’s competitors which is achieved by offering unique value†. Therefore, competitive advantage can reasonably be defined as per above, but not necessarily long-term/sustainable. Strategic approaches to HRM There are several broad approaches t o strategic HRM, which can be grouped into the following three frameworks: a) Universal (best practice): Focus is on broad aspects of the business environment. Suggest that a given set of HR practices or conditions will provide strategic/competitive advantage to any firm in any circumstances; b) Contingent (best fit): Focus is on specific business operating environments. Suggest that particular types of HR practices will provide competitive advantages for particular types of firms depending on their strategic environment and reaction to it; and c) Organisation-specific (unique): Focus is on the firm and its internal resources. Suggest that individual organisations contain unique and inimitable human capabilities that will provide sustainable competitive advantages. (Cornelius 2001, pp. 99-300) How SHRM can provide competitive advantage Based on the three broad frameworks, there are several approaches to how SHRM can provide competitive advantages to an organisation. They are discussed independently of each other below: a) Universal (best practice) Organisations create competitive advantages by integrating a suitable ‘HRM bundleâ€℠¢ of best practices into the firm’s overall structure. The ‘HRM bundle’ typically includes ‘high ground’ elements of HRM, some of which may include: †¢ A goal of employee commitment; †¢ A goal of organic structure and functional flexibility; †¢ A goal of quality; and A goal of integrating corporate objectives and HR objectives. (Guest 1987, p. 48) In theory, successful integration of the above practices into a firm will ultimately result in an environment in which HRM actually helps to determine strategy (rather than just implement it). The validity of this framework is commonly substantiated by drawing causal relationships between, for example, motivation and customer satisfaction, or other relevant factors (Cornelius 2001, p. 301). b) Contingent (best fit) As per the â€Å"best practice† framework, except that in this instance best practice is contingent on the firm’s situational environment. The competitive environment, industry and workforce structure interact to create a specific context in which HRM adds competitive advantages (Cornelius 2001, p. 302). c) Organisation-specific (unique) Dollinger (1999, pp. 56 et seq. ) uses the resource-based theory of sustainable competitive advantage to posit that intellectual and human resources are sets of attributes (i. e. the knowledge, training and experience of a firms employees), and that they can provide the firm with sustainable competitive advantages. The firm must control the resources, and they must satisfy one or more of the following criteria: Valuable |They allow the exploitation of a market opportunity | |Rare |Rivals cannot also have access to these resources | |Hard to copy |Rivals cannot simply duplicate or emulate the resources held | |Non-substitutable |No suitable substitutes for the resources held | Competitive advantages are best realised when the sets of attributes (e. g. of each individual employee) are strategically integrated in a manner that creates synergy (Wood et al. 2001, p. 6). This synergy is difficult for competitors to identify and duplicate because of the social complexity of individual organisations. 5. 0Validation of SHRM: Case studies of successful firms 1 SAP (Australia) †¢ Annual employee conference where everyone participates in developing the Company’s vision and strategy; †¢ Staff and managers jointly compile business plans; Staff and management jointly manage performance evaluations; and †¢ Bonuses linked to ‘rated’ customer satisfaction system; (Davidson and Griffin 2000, p. 471) 2 Delta Airlines (USA) †¢ HRM is a primary activity; †¢ Human resources are viewed as a core competency for competitiveness; †¢ HRM managers have â€Å"access to the top job† (i. e. CEO); and †¢ HR system correlates w ith resource-based theory of SCA (i. e. VRHN). (Swiercz and Spencer in Southey and Lewis 2000, p. 93) 3 Pepsi-Cola International Adopts a common values approach to HRM, to enhance competitiveness; †¢ Has a multinational vocabulary that unites staff from different cultures and countries; and †¢ Has identified 11 success factors for performance measurement and management. (Schuler and Huselid in Southey and Lewis 2000, p. 158) 4 Apple Computer (USA, Europe, Pacific) †¢ Adopted a growth/prospector/high-tech strategy for HRM; †¢ Facilitated rapid HR growth by â€Å"fattening† corporate structure to create opportunities while simultaneously maintaining innovative spirit; and †¢ Removed original founders in the best interest of the Co. nd its strategies. (Anthony, Perrewe and Kacmar in Southey and Lewis 2000, p. 120) 6. 0Conclusion Organisations can realise significant benefits by adopting a strategic approach to HRM (i. e. an approach that closely interfaces with the broader strategies of the organisation). This entails developing and implementing HR policies and practices that help to achieve organisational objectives, as compared to the traditional routines of personnel management. The policies and practices must be: †¢ constant enough to instill confidence in the employees; and flexible enough to contribute and adapt to changing organisational priorities and strategic directions.