In this research, I choose to write about the strategic human resource management. My choice is dictated by the increasing need by companies to create a competitive advantage through their human resource departments. The choice is also due to the desire for a change from the traditional HR focus on employees rather than strategy in the discharge of their duties. This paper seeks to elaborately discuss and explain the need, benefits and implications of a transformation the human resource management of organizations from focusing on employees to strategy focus in the pursuit of organizational goals. It also seeks to explore the challenges faced by companies as they attempt to create competitive advantages through their HRM functions. The historical concentration of human resource managers on employees has seen many organizations collapse when the employees fail to measure up to the expectations of the human resource management. This paper aims at revealing the benefits of a strategic human resource management in any organization. The paper gives the response of a deep academic research about the strategic human resource management strategy. It discusses the implications of strategic human resource management in all aspects of an organization in its business life.
``Strategic human resource management business partnership role is an agreed priority within the human resource management literature.’’ (Fombrun, Tichy, & Devanna, 1984: 20). It is a deliberate attempt by specific human resource managements to devise their own independent mechanisms of adding strategic value to their organizations in a bid to attain recommendable organizational success. Strategic HRM seeks to develop credibility and elicit employee behavior which transforms into a sustainable comparative advantage. (Armstrong, 2005; Cascio, 2005; Lawler, 2005). The strategic human resource management has made the organizational HRM departments to be prioritized in many organizations due to the effect it has on the performance of such an organization. It aims at aligning employer employee goals in the same direction to avert instances of organizational conflicts which could derail the success of any organization no matter how strong or stable.
The adoption of strategic human resource management is however associated with some costs for the organization, just like any organizational transformation. It however seeks to bring the HRM function to sit in the general management of the organization. It diversifies the attention of the HRM function from being solely vested on the employee welfare but also to analyze and respond to stakeholder expectations about the employment relationship. In order for HRM professionals to play this role effectively, however, they must be willing to critically analyze HRM and its seemingly unabashed acceptance of both unitarism and the move towards a strategic role (Kochan, 2007).
Strategic human resource management is based on the strategic groups. Strategic groups are defined as, ``those groups of firms within an industry, which are characterized by similarities in their structure and competitive beliefs as well as their tendency to follow similar strategies along key strategic dimensions in a specific operating environment’’, (Panagiotou, 2006 p. 440) Such groups engage in similar strategies in order to compete effectively within the industry and shape the competition in the industry. Companies achieve sustainable competitive advantages by initially investigating the strategic group literature and evaluating where it adds insight and value to the SHRM approaches literature. Thereafter the findings from an in-depth empirical study of the HRM practices and strategies deployed across a global industry are used to highlight the role of strategic groups in constraining companies’ capacities to differentiate their SHRM approaches and practices. (Paauwe, 2008; Paauwe and Boselie, 2008; Tyson and Parry, 2008).
The growing interest in strategic human resource management has developed primarily because many of the traditional sources of competitive advantage that companies have been able to rely on, such as patents, economies of scale, access to capital and market expansion, are being eroded by the growth of market based competition (Nolan, 2002; Wright et al., 2007; Alleyne et al., 2008)
Strategic management emerged in the field of management and became a topic of research in the mid 1980’s. There is however a debate on the meaning of strategic human resource management (SHRM) and the term resource strategy. SHRM can be defined as, "the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals" (Wright and McMahan, 1992, p.298). It can also be defined as, ongoing efforts to align an organization’s personnel policies and practices with its business strategy (Boxall et al. 2007) SHRM in this context embarks on four key items as its building blocks.
First, organizations human resources are the primary item upon which the organization should capitalize in order to attain competitive advantage. Secondly, the activities depict Hr as the only mechanism through which the people of a company can be coordinated to attain organizational efficiency hence a competitive advantage. Thirdly, it explains the importance of pattern and plan in the discharge of HR functions to gain a competitive advantage. Lastly, the people, practices, and planned pattern are all determined, and relate to goal achievement.
Generally, SHRM is a big field which is made up of elements such as policies, practices, values, and culture. The various statements also imply that SHRM links, integrates, and coheres across different levels in organizations. Its overall purpose is to utilize effectively human resources in respect of the strategic needs of the organization. There has emerged a reasonable consensus in the recent past about the identification of the factors which maximize organizations’ performance as the major goal to be achieved within research on strategic HRM (Wright, 1998; Hall et al., 2009).The research in SHRM recently shows that it is of great importance to the success of any organization.
The recent importance attached to SHRM has seen a great adoption and use of the method in many organizations. SHRM has three main approaches for attaining a sustained success and competitive advantage to steer organizational success.The best practice approach suggests that organizations employ sophisticated or “high performance” practices across their human resources in order to achieve competitive advantage (Pfeffer, 1998; Huselid, 1995). This approach is however criticized for the way it presents the term sophisticated and the empirical basis suggested to launch the SHRM best practices. The approach suggests that superior HRM practices should be adopted regardless of different industrial and national boundaries (Marchington and Grugulis, 2000; Boxall and Purcell, 2003, 2008). This approach has been criticized on the international scene due to the ingrained national institutional and cultural conventions, which are seen to regulate the value of various high performance HRM practices in other countries (Brewster, 1991, 2006; Sorge, 2004). However, this does not mean that across a country all industries have the same HRM practices. It therefore implies that SHR managers could have rivals whose practices, products, managers, innovations and initiatives will be of specific interest to them (Panagiotou, 2006; Peteraf and Shanley, 1997)
The best fit approach suggests that, a firm’s market position and strategies drive and shape its HRM policies and practices. Within the approach there exist a number of theories that link specific strategy choices to HRM practices and policies ranging from simple (Delery and Doty, 1996; Miles and Snow, 1984; Schuler and Jackson, 1987) to more complex models (Fombrun et al., 1984; Hendry and Pettigrew, 1986) which envision a range of corporate characteristics (strategies, positions, portfolio characteristics) determining people management practices. This approach is however critiqued by its little attention on the external context as determining strategies and practices based on market positioning, cultural and institutional factors; and its inability to secure competitive advantage
The resource based approach of SHRM is mostly preferred to the best practices and the best fit approaches due to its internal focus based on creating competitive advantage through the leverage of valuable, rare, inimitable, non-substitutable and rent achieving (human) resources (Morris et al., 2006; Wright et al., 1994, 2004). It shows that human resources can fulfill the criteria of resources which deliver competitive advantage. It argues that strategic human resources” or “rainmakers” are the most valuable human resources who fulfill the RBV criteria of adding exponential supplementary value to companies. Capitalizing on internal resources to achieve competitive advantage is quite different from the best-fit SHRM approach because it surmounts the external views of the best-fit approach. (1992 in Wright et al., 2004 p. 11) This approach offers specific insights into the value of internal resources in securing successful international operations (Bonache and Fernandez, 1999; Harvey et al., 2000).
Drawing a conclusion from the above research, it is of great importance for all HR managers in all companies across the globe to choose a SHRM approach that best suits their organization and industry if they are to get the competitive advantage that ensue SHRM. A recommendation for the specific strategy to be chosen by any interested manager can be presented in the table below.
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