Approaches of SHRM
Human Resource Management (HRM) encompasses undertaking management practices and decisions that have a direct impact on human resources of an organization. The market environment has become increasingly competitive characterized by a plethora of complex and dynamic operating environments. To maintain sustainability and competitive advantage, firms have to develop strategies focusing on the core competencies and points that differentiate them from their competitors (Becker, and Huselid, 2006). This form of using strategy to improve the competitive advantage is Strategic Human Resource Management (SHRM). While HRM focuses on the general management of human resources or people in organization, SHRM focuses on the effective nature of HRM. SHRM supports organizational change, entrepreneurial development, and technological. SHRM details the manner in which HRM aids organizations to achieve effectiveness including the methods these strategies are applied to execute effectiveness. Becker, and Huselid (2006) argues that SHRM is a distinctive approach used to manage human resources to bring about the competitive aspect from a competent and highly committed workforce. There is no doubt that linking human resource practices to strategic perspectives is a certain strategy that can be used to realize competitive advantage.
SHRM Theoretical Approaches
SHRM literatures have led to the development of four models of theorizing SHRM perspectives that include the universalistic perspective, the institutionalist perspective, the contingent point of view, and the resource based approach. Each of these models presents a different point of view for analyzing SHRM thereby providing a spectrum for developing a systematic and complete analysis for SHRM.
Contingency (contingent point of view)
This SHRM model proposes a model guided by interactivity whereby HRM contributions are analyzed from the single functional perspective and the groups of practice. The contingency model argues that the set of implemented human resource management practices and policies in an organization will help in the realization of the intended goals and objectives only if there exist an element of consistency with other strategies at the organization. According to this model, the external fit is what matters in linking the variety of generic organization strategies. Higher organizational performance is realized through the interaction between HR practices and organizational theory (Caliskan, 2010). Single individual practices is contingent with the level of a firm’s strategy thereby leading to higher performance.
This notion of an existing link between organizational strategy and performance leads to i) vertical integration where the objectives of the organization can be linked to the realization of the set goals and ii) core features of organizational strategies . The need for organizational effectiveness calls for the need for aligning a fit between HR practices and other organizational aspects. Equally, the strategic position of an organization should be implemented to determine the type of practices to be adopted by the organization. Examples of best fit elements include high quality internal and staff practices, maximum commitment from employees towards the realization of organizational goals, flexible organizational structure, and extensive use of organizational resources (Caliskan, 2010).
HRM critics have pointed out a number of problems based on the examination of theoretical assumptions of the contingency perspective and the nature of applying the approach in organizations. The contingency model relies heavily on determinism, lacks sophistication in describing the generic strategies leading to competitive advantage, and dependency on the classical rational-planning method in implementing strategies. Another criticism leveled against this approach is the failure to incorporate employees’ interest in their quest of realizing economic performance. Simply put, the contingency model relies on unitarism assumptions as opposed to aligning the plural interests in the organization. Another limitation of the contingency model is failure to emphasize on the internal organizational operations including the identification of unique characteristics and activities that contribute in strengthening the competitive advantage of the organization.
Arguments offered to remedy the above weaknesses include the need to provide support for fit hypothesis, align the positioning strategy to HR architecture, and adopting a strategy that recognizes internal contributions in the realization of competitive advantage.
Resourced Based View
The social architecture focus stresses more on behaviors and skills development and change, as opposed to values. It is extremely difficult to have a change in values (Becker, and Huselid, 2006). In this approach to SHRM, the core element considered is the resource based view. Therefore, the Human Resources role is to direct these skills and behaviors to enable an organization to tap effectively and optimally onto the hidden reservoirs.
Focusing on internal business contexts the competitive advantage is sustainably provided through the HR practices and issues. The definition and building of the organization’s core capabilities or competences, which edges out the competitors is the focus. The project ted argument is that present competition is emphasized by several companies. This implies that the management devotes much energy in the past preservation and not future creation (Becker, and Huselid, 2006). Therefore, this suggests that organizations can edge out their business competitors through concentrating on their core competencies identification and development. This implies that this approach is concerned by future creation, not anticipation. This is possible through regeneration of strategies, opportunity share competition. This further concentrates on the market share transformation and completion by the organization. Future creation depicts strategy as planning, learning and positioning inclusive of strategic architecture forgetting and foresight. In this case, strategy achieves beyond allocation of resources by attaining the resource leverage and stretch.
This approach to SHRM is crucial to an organization as it recognizes the value added to an organization by the organizational processes and human capital. These two aspects in mutually supporting and reinforcing each other become extremely powerful. The Human Resources role is to ensure achievement of Human Resource’s exceptional value adding in the organizations in competitive advantage building that, in their implementation ability of mutually and integrated HR system’s reinforcement. This ensures that once talent is recruited; it requires be managing, developing and rewarding for the organization to attain and exploit its maximum potential.
The resource based perspective focuses much on the business internal contexts rather than its external context. However, there are some arguments that the firms’ external contexts are also crucial in the effectiveness of this SHRM, and this is entirely omitted. It is recognized that, with a less predictable external environment, this perspective offers more added value. Resource based approach in this case omits a considerable business environmental factor by ignoring or putting less emphasis on the external environment as required. This limitation must be addressed for the approach to be inclusive and complete.
The approach tends to concentrate on the in the same factor variations amid firms, as the source of competitive advantage sustainability. This openly ignores the common base line’s significance and value cross industries’ trait, which accounts for a particular industry legitimacy. Therefore, there are strong similarities in the retail sector in how peripheral labor and mix of the core are employed by the industry. A periphery tending comprised of employees who are lowly skilled often demonstrate greater employee turnover rates. This is because of the assumption that these low skilled employees regard their jobs dearly as they have inadequate skills to seek other employment opportunities making them give their best in order to maintain their jobs.
Practically, the economic efficiency and performance are achieved through rightsizing in order to attain the same output from cheaper and fewer resources than through leverage which requires more output achievement from the given resources.
Best practice or Universalistic SHRM
The perception of best practice HRM resulted to the idea of adoption of HR certain best practices. Consequently, this would result in improved organizational performance as demonstrated in enhanced employee behaviors and attitudes, low absenteeism levels, high skills levels and turnover. Therefore, this leads to increased productivity and improved efficiency and quality.
The argument put forth suggests that all organizations will gain and experience organizational performance improvements if they recognize, be a committee to and execute a combination of the best HRM practices. There are various definitions of the HR practices combination to improve the performance of the organization. A universal set of these HR practices was advocated from certain quarters in order to improve all organizations’ performance to which they were adopted. Other models included high commitment and high involvement models to manifest the assumption that competitive advantage arises from a strong commitment to the values and goals of an organization.
The validity of the employed research methods of SHRM approach is questionable. In addition, there are various inconsistency related problems to this universal model that have raised sharp criticisms. The evidence given is vague making it extremely difficult to establish whether it is the HR practices that yield improved performance of the organization or whether the execution of the suitable HR practices resulted from financial success.
In vastly competitive markets characterized by tight financial margins and control, it is difficult to see the investment ability of the HR practices for organizations operating there. This means that although the HR contributes to business success, the best practice models contributions are not clear.
The importance of the institutionalist model in Strategic Human Resource Management (SHRM) is obtained from the perspective that organizational processes are an indication of the institutional environment. Institutional model is defined as the highly founded and culturally endorsed actions, expectations, and patterns within the organization (Becker, and Huselid, 2006). This model helps scholars and intellectuals to synthesize complicated organizational issues into a more relevant and comprehensive framework. The institutional model helps an organization understand and develop by analyzing its motivation, capacity, and environment. By exploring four major areas performance, motivation, capacity, and environment, the model provides a clear definition of a methodology to make a diagnosis of the organizational strength and weakness.
Strengths of institutional model in SHRM.
- In Strategic Human Resource Management (SHRM), focusing on the institutional field helps the organization understand and the importance of connecting and evaluating the organization to other similar organizations which have similar operational structure but not necessarily directly connected to each other.
- Institutional Isomorphism in SHRM is a very useful tool in evaluating politics and ceremony that infuse many modern business organizations. Based on three mechanisms of Isomorphism, the SHRM is able to detect political influences and problems that other similar organizations face in the institutional field. This will enable the organization create a more formal business organization based on the culture and myths of broader institutions.
- Through mimetic institutional isomorphism, the SHRM in an organization is able to duplicate systems of other organizations hence reducing uncertainty from poor organizational aims, or situations where the environment creates a symbolic uncertainty.
- The normative institutional isomorphism enables the organization produce positive results from professionalization, where the organization proceeds with creatively in the formation of the organizational field.
- The institutional model enables the human resource management in an organization to leverage resources in order to generate new and renovate the existing institutions. It enables an organization to implement significant changes.
- Through institutionalist model in SHRM, certain beneficial practices can be enforced in an organization. Policies and laws within the organization can be coercively enforced by applying the institutionalist model in the running of the organization. Through the coercive isomorphism, implementation of employee policy act, minimum wage legislation and equal opportunity act has been made possible.
- The institutionalist model in SHRM is very significant in that some unintended events in the organization can happen since not all outcomes in an organization are often planned. In such situations, the institutional paradigm will help in explaining the gap between planned organization outcomes and what happens because of the organizations practices.
- Institutionalist model in the SHRM makes it possible for the reputational and symbolic consideration in the Human Resource Management to improve analysis, which in turn add value to the definition of the relationship that exist between variables from the view of power mechanisms, business strategies and organizational change.
Weaknesses of institutionalist model in SHRM
Despite its significance in shaping the organizations operational processes, the institutional model in the SHRM has its own weaknesses.
- One key issue that has influenced the use of institutional model is the wide disagreement among the theorists over the actual meaning and definition of the core concepts in institutional fields. Others considers institutional fields as independent variables affecting the operational processes of an organization, in contrast to this, some theorists view the institutional fields to be a boundary setter to the organization.
- Initially the focus of the institutionalist model was to bring stability to the organization, however, with the current unpredictable internal and external business environment; the neo-institutionalist are now trying to understand how institutional forces change. Scott in the year 1995 postulated that the institutionalist pillars; regulative, cognitive, and normative are systematically independent making the co-evolution almost impossible (Hoffman, & Ventresca, 2002). This is viewed as a huge weakness to the institutionalist model in a sense that the model was perceived to be fundamentally stationary while the world politics which was intended to provide an explanation to it was almost intrinsically vibrant.
- Despite the approval of the institutionalist model in SHRM, the model is still underutilized; modification of the theory could assist in a more comprehensive analysis of complicated Human Resource problems.
- The weakness of the institutional model is its mechanistic exposure of the organizational reaction to normative and coercive pressures in the society. Furthermore, the implication to the response from the organization using the institutionalist model dismisses the capacity of the organization to respond effectively to such pressure in the society.
Generally, despite the institutionalist model being underdeveloped in SHRM, it has incredibly also contributed to the implementation of a more comprehensive presumptive framework that will assist organizations to attain the essential objectives in SHRM.
Becker, B. E. and Huselid, M. A. 2006. Strategic Human Resource Management: Where do we go from here? Journal of Management 32: pp. 898-924
Caliskan, E. N. 2010. The impact of strategic human resource management on organizational performance. Journal of Naval Science and Engineering 6(2): 100-116
Hoffman, A. J., & Ventresca, M. J. 2002. Organizations, policy and the natural environment: institutional and strategic perspectives. Stanford, Calif, Stanford University Press.