HR

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11STRATEGIC HUMAN RESOURCE MANAGEMENT

Strategic Human Resource Management

Strategic Human Resource Management

Organisations are striving to enhance competitive advantage by acquiring a larger market, more customers and more revenue among others (Braun and Warner, 2002). As a result of globalization, technological advancement and other issues, competition has increased in the business environment. Many companies have set some performance goals such as employee motivation, cost reduction, improving productivity and revenue level and attracting more customers in order to attain a competitive edge (Braun and Warner, 2002). The realization of performance goals is achieved through the implementation of effective human resource management in the workplace. Human resource management when used as the key success factor will bring about effective organisational performance (Braun and Warner, 2002). Human resources are among the most fundamental sources of organisations.

Therefore, human resource management is a source of competitive advantage since these people utilize assets in the organisations, realize objectives and enhance productivity (Reilly, 2012). Strategic human resource management is a revolution of the human resource management field. Strategic Human Resource Management is termed as the alignment of initiatives that involves how employees are managed with a company’s mission and objectives. Strategic human resource management is aimed at solving the challenges that face the management of human resources and improve organisational performance through people management (Campbell, 2007). Implementation of strategic human resource management can bring about higher organisational performance. This paper will detail out how managers use strategic HRM to increase individual and organisational performance.

Many business entities are faced with unpredictable market solution. Therefore, for these companies to create and boost competitive advantage in the ever-changing business environment, organisations are expected to continually enhance their performance (Carasco, Woocheol and Taesung, 2015). Over the years, organisations have come to recognize and appreciate the potential of the human resources to bring about competitive advantage. Related to this, many organisations are using measurement techniques like workforce scorecards so as to establish how human resources in the business entity add value (Harris and Emmanuel, 2001). The increase in the use of these measurement techniques has also been stirred by the research studies that show the correlation between strategic human resource management and employee and organisational performance. The existing positive relationship between strategic human resource management and organisational performance has undergone a tremendous debate in the last two decades (Jing and Huang, 2005). Studies are endeavouring to prove the ability of SHRM to bring about higher organisational performance and productivity.

The assumption underpinning human resource management practices is that the success of strategic human resource management to bring about higher performance and productivity depends on organisations (Noe et al., 2007). When appropriate and effective human resource policies and practices are implemented properly, then human resource will have a positive impact on organisational performance. Human resource management practices that can potentially influence behaviour and attitudes of employees can positively impact performance of an organisation (Fenton, Gooderham and Nordhaug, 2008). Strategic human resource management focuses on important practices including human resource planning, training and development, management-employee relationship, compensation policies and selection and recruitment to name a few. Managers use these practices in order to boost organisational performance (Harney, 2008).

Strategic human resource management allows the management to focus their attention on employees in order to gain competitive advantage (Gooderham, Parry and Ringdal, 2008). Strategic human resource policies increase performance in areas including quality, productivity and financial performance. Managers are the ones responsible for bringing about organisational performance. Thus, managers are expected to have the confidence to execute authority and responsibility within the organisation for this to be possible (Harney, 2008). Needless to say, managers should collaborate with all the employees in order to achieve required performance. Today, managers work jointly with their employees and agree together on what is to be done and how it should be done (Gooderham, Parry and Ringdal, 2008). Both managers and the employees take part in performance management processes.

Performance management is the process involving the measurement, feedback and open dialogue between the employees and the management (Thompson and Heron, 2005). It is concerned with the measurement of the performance achieved against performance expected. Performance management strategy does not only involve the managers but also the entire organisation (Xu & Thomas, 2011). Performance management entails a development process that involves the managers and employees which determines how the two parties can work together in achieving organisational performance. Strategic human resource management offers a platform whereby regular dialogue between the management and the employees occurs for further development of the organisation. SHRM brings about many benefits including its contribution to goal accomplishment, increases the feasible strategic options to an organisation, and creates competitive advantage and implements business strategies of an organisation (Brown, Treviño & Harrison, 2005). The connection between strategic human resource management and individual and organisational performance has been discussed by Michael Armstrong.

It has been seen that integration of human resource management and business strategy has the potential to enhance the management of human resources as well as improvement of performance (Gooderham, Parry and Ringdal, 2008). As seen earlier, organisations achieve higher performance by implementing Strategic Human Resource Management. Strategic Human Resource Management enables an organisation to identify and solve challenges that may be too complex to be comprehended by the top management. Managers also use SHRM to develop a motivated pool of employees and design an effective control system in an organisation (Richard, 2001). Developing a successful international workforce is very difficult to be copied by the competitors than technology or a large amount of capital. This gives an organisation a competitive edge and thus enables higher performance of the employees and the organisations in general.

Another way manager use strategic human resource management is through top management team networks. Top management team networks are very important since they enable information to be collected and managed effectively in an organisation (Voorde, Paauwe and Veldhoven, 2010). Organisations should be able to access and utilize required information to minimize uncertainty and risks and take action to enhance performance. Top management teams allow for effective information management. Information management entails information gathering, information processing and information distribution (Lengnick-Hall and Beck, 2011). Top managers have an impact on information flow in an organisation through gathering and redistribution of information across internal and external parties. Top management team networks offer information benefits that result in high organisational performance. Top management team networks entails the relations managers have with individuals inside and outside the organisation (Gooderham, Parry and Ringdal, 2008). Human resources policies and practices bring about higher individual and organisational performance by influencing employee-based firm capabilities as well as resources. Network-building human resource practices are used to manage top managers’ team networks, and such employee-based capabilities and resources have a fundamental impact on organisational and individual performance. Top managers’ team networks mediate the relationship between strategic human resource management practices and firm performance.

In addition, strategic human resource management in companies enables selective hiring and enhance the conducive working environment and employees’ performance. SHRM programs foster a collaborative business environment, thus contributes to the performance of an organisation (Lengnick-Hall and Beck, 2011). SHRM enables managers retain employees who are striving towards achieving goals and objectives. For this to be possible, human resource department in organisations coordinates activities in its business. SHRM makes a company’s culture clear and precise by arguing on the values that strengthen the company. For instance, Amazon has implemented strategic human resource management in order to solve the low retention incidents seen in the company (Jing and Huang, 2005). This has enabled them coordinate the employees well and motivate them which has increased retention rate significantly.

In a long time, Amazon has reported to having low employee retention. The company has aligned the human resource initiatives with the company’s mission and objectives. The company’s business model is based on scale, automation and efficiency (Jing and Huang, 2005). The human resource strategy of Amazon is aimed at attracting and retaining employees who will be able to accelerate and enhance key performance of the company. The company has implemented low-retention policies in its company’s objectives and goal. Low retention policy in the company plays a fundamental role in its human resource strategies. To start with, the company ensures that the recruitment and selection strategy is transparent and employees are comfortable in their working environment (Jing and Huang, 2005). Low-retention strategy is founded upon offering exciting and demanding jobs to the employees, improving the relationship between managers and employees and engaging employees in the day-to-day operation of the organisation. Implementing low-retention human resource strategy in the company’s culture has enabled Amazon increase employees commitment and engagement (Carasco-Saul, Woocheol and Taesung, 2015). This has led to higher individual and organisational performance.

According to Braun and Warner (2002), work performance in an organization is dependent on three elements: ability, motivation and opportunity. These elements allow employees to make contribution to the success of an organisation. When one element is zero, the resulting equation will be zero. This means that, employees can be motivated or can have capabilities, but lack of opportunity to express their capabilities will result to lower performance (Braun and Warner, 2002). According to the theory, human resource management strategies contribute to the organisational performance as well as employee’s performance by three interrelated models. First, by developing talents of the employees, second by increasing employee’s motivation through engagement and involvement and by offering an opportunity for the employees to utilize fully their talents and knowledge to their job descriptions (Carasco, Woocheol and Taesung, 2015).

In this model, the employee capability is the one that sets the bottom line for performance while motivation tends to influence the extent to which this capability develop into action (Braun and Warner, 2002). In addition, opportunity is the enhancement of the possibilities for the capability to be expressed and barriers that prevent motivated employees from using their capability to be removed. The task of the Strategic Human Resource Management practices is therefore to assist organisations attract as well as develop employees’ capabilities (Braun and Warner, 2002). This entails Human Resource Management practices that endeavour to modify performance behaviour including high-involvement practices that motivate employees by offering opportunities for involvement (Braun and Warner, 2002). From the model, we can see that managers can ensure higher individual and organisational performance by attracting relevant capabilities, motivating employee and by offering opportunities for these employees to blossom in their work.

Another way a manager can use strategic human resource management to increase individual and organisational performance is by use of problem-solving groups and team-based structures that offer employees some level of autonomy in establishing their work methods and avenues that enable better communication between the employees and the management (Carasco, Woocheol and Taesung, 2015). Such practices act as drivers for recognizing and minimizing barriers to employees and organisational performance. These practices assist employee retention by encouraging employee engagement and commitment to the organisation (Carasco, Woocheol and Taesung, 2015). This in return retains human capital for the employer and also improves productivity by minimizing torment employee turnover. Problem-solving groups and team-based structures lead to job satisfaction and employee commitment. Job satisfaction coupled with employee commitment is highly correlated to organisational performance (Braun and Warner, 2002). Committed employees connect psychologically with the employers and are more likely to enhance their efforts towards achieving organisational goals.

There is a group of researchers that have theorized strategic human resource management. The contingency approach to SHRM argues that the achievement of organisational and individual performance depends on the achievement of fit between human resource practices and other elements of a business (Richard, 2001). Organisations undergo different stages and human resource practices may depend on these stages. Human resource management may be implemented depending on the corporate as well as business strategy of an organisation (Richard, 2001). Therefore, it is important first to consider business strategy and then human resource practices for organisational performance to be enhanced. In line with the contingency theory, when a strategy works well in one organisation does not mean it will work well in another. Therefore, organisational and individual performance system must be designed according to organisational situation in order to achieve expected goals (Carasco, Woocheol and Taesung, 2015). Therefore, in order for strategic human resource management to bring about organisational performance, HR practices should be in line with business strategies.

Managers use SHRM to improve performance by attracting and developing high-quality workforce. Managers endeavour to match employees to the strategic needs of a company (Harney, 2008). They provide for the retention, training and development of skilled workforce who are able to deliver higher performance and innovation and who fit well with the culture and the strategies of the organisation. In addition, mangers can offer employees with interesting and challenging work which will enhance their job satisfaction and will encourage them to enhance productivity and performance (Harney, 2008). In many organisations, the management strive to create a performance culture that promotes greater performance that delivers increased shareholder value (Harney, 2008). Managers also motivate the employees to possess behaviours linked to risk taking, knowledge sharing and creativity.

To sum up, Strategic Human Resource Management is termed as the alignment of initiatives with a company’s mission and objectives. The characteristic feature of SHRM is the fact that it enhances the performance of an organization through its own people. Therefore, for an improvement of an organization to be noticed, both policies and processes that promote HRM should be put to work hence significantly improving performance of an organization. Managers use SHRM to improve individual and organisational performance. Managers use strategies such as training and development and strategic planning in order to improve performance. To manage team network is another way that managers use SHRM to improve individual and organisational performance. Also, managers collaborate with employees, motivate them and match employees to the strategic needs of a company which leads to greater performance for the organisation.

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