Human Resources Management (HRM) is one of the most multi-faceted, diverse, and demanding fields in the area of management. Since the past few years, the field of Human Resources management has witnessed pioneering changes. Nowadays, new strategies and methodologies are being constantly evolved and adapted in order to enhance the efficiency of human resources management. This paper provides a comprehensive analysis of the different types of HRM strategies and theories.
Yes, Human Resources Management (HRM) and practices should be aligned with the strategy of the organization
A strategy remains only as a vision unless it is successfully implemented in an organization. In the discussions related to Human Resources Management, the core focus is always on the vital changes that need to be implemented in order to create a resource-based model for strategic human resources management. The theory of strategic HRM focuses on the correlation between strategic management and employee associations within a firm. “Although there is evidence to suggest that HR is related to business performance, there is almost no evidence to document that the casual relationship is of the form HR – business performance rather than some other casual form.” (Kabst & Matiaske 2005, p.177). First of all, in order to create an all-inclusive theory of strategic HRM, various queries related to HRM as well as employees should be answered. An adequate theory of employment relations should be incorporated into the theory of strategic HRM.
Corporate, Business, and Operational strategies
The corporate strategy of a firm determines the various activities and their scope in a firm or an organization. The main principle of the corporate strategy is to create value for shareholders. There are, basically, four concepts of corporate strategy practiced by an organization namely; “portfolio management, restructuring, transferring skills, and sharing activities.” (Goold & Sommers Luchs 1996, p.298). The corporate strategy of an organization is closely linked to its HRM strategy. The corporate strategy of a firm is very much dependent on the companies’ autonomous acts, by which the firm/organization foresees and reacts to the complex pattern of changes surrounding it. It is pretty much obvious that a great degree of instability in the employer-employee relationship is detrimental to the corporate strategy of the firm. According to the latest surveys, outplacement is considered a better option in the situation of redundancy. “There appeared to be a move towards normative practices in the management of redundancy and in particular in the use of outplacement as a moderator of the potentially detrimental impact of the redundancy situation.” (Doherty et al. 1993). The corporate strategy of a firm and the creation and maintenance of a competitive gain in business is strongly co-related. “The composition of an operations strategy is discussed in terms of the decisions involved.” (Lowson 2003). It is the operational strategy of a firm that helps in efficiently managing the firm’s structure and its diverse operations. A firm’s corporate strategy is closely related to its operations management and thereby, to its operational strategy. The operational strategy of a firm decides on certain important issues such as the supplies, the technology that needs to be employed, the methods that are required for the production of goods, services, etc. The corporate strategy, which is at the highest level, integrates the company’s long-term plans. By charting out a good corporate strategy, a company/organization determines its close competitors i.e; the industries and markets that it will have to compete with. The business strategy of an organization is related to the performance of each of its business divisions and how they participate in a particular market to create competitive gains. The operations strategy is primarily concerned with the operations of the firm as a whole and plays a significant role in the accomplishment of the corporate and business strategies of the firm. “The difference between the corporate and business strategies can be conceptualized by asking the following questions: “what business or businesses should we be in (corporate)?” and “how should we compete (business)?.” (Lowson 2002, p.41). “The critical concerns of HRM, such as choice of executive leadership and formation of positive patterns of labor relations are strategic in any firm.” (Schuler & Jackson 1999, p.76).
Theories of HRM
A theory of strategic HRM should be built only after comparing the current nature of strategic management in the firm with the pay for work and bargaining capacity from the employment side. Human resource processes must be effectively incorporated into the business strategy of a firm as it is the HR strategy that supports the proper functioning of the firm. This could be done by identifying and addressing the HR-related issues in the normal functioning of a business. “How HRM contributes to management’s efforts to deal with the problems of viability and sustained advantage is the central question in the field of strategic HRM (SHRM). SHRM academics are interested in models and studies which link HRM to business performance or organizational effectiveness.” (Pinnington et al. 2007, p.72). The Normative Model of Human Resources Management includes various issues related to the characteristics of the labor force, the regulations in the labor markets, and the philosophy of management.
The Harvard model of HRM is dependent upon the situational factors and interests of the stakeholders. “The strength of the Harvard model is the classification of inputs and outcomes at both organizational and societal level, creating the basis for a critique of comparative HRM. A weakness of the model is the absence of a coherent theoretical basis for measuring the relationship between HRM inputs, outcomes, and performance.” (Bratton & Gold 2001, p.19). The Guest model theory of HRM lays focus on the three HRM end-products which mainly comprise Commitment, Flexibility, and Performance quality. According to the theory, if a balanced combination of these three factors can be achieved, then only behavioral change could be anticipated. The main advantage or strength of this model is that it focuses on HRM-related issues more deeply, instead of just focusing on the training and selection of employees and examines the key goal of strategic integration. However, a major flipside of this model is that it is more employee-oriented and less neutral for firms.
The Warwick model of HRM emphasizes that the corporate and business strategy of a firm as well as its HR practices are inter-dependent and inter-related. The main strength of this model is that it recognizes and confers significant environmental power on the HRM policies of the firm. It could be said that the new models of HRM theory lay stress on the distinctive nature of the strategic HRM theory. This theory also emphasizes the significance of the transfer of leadership powers in a firm. According to the strategic HRM theory, HRM practices differ from organization to organization. In every organization, there is individualism which is concerned with the employee and the place of work, and collectivism which is related to the firm’s relationship with the trade union. “At the low end of the individualism axis are employers who view employees as a ‘commodity’ and a cost that should be minimized; this style approaches the ‘hard HRM model’. At the high individualism end of the axis are those employers who recognize employees as being critical to the organizational success and invest in people; this style approaches the ‘soft’ HRM model.” (Bratton & Gold 2001, p.33).
According to the Behavioural theory of strategic management, “Behavioral HRM theories can predict when workers will adjust so that the predicted OM bottleneck may never occur, while OM models can identify which adjustments matter the most. HRM behavioral models frequently focus on elements such as individual capabilities and motivation and the effects of HRM practices, such as rewards and training, and their effects on job performance.” (Boudreau et al. 2003, p.182).
In today’s world, most of the organizations have integrated the HRM strategy with their business, corporate and operations strategies in order to increase their productivity and market share. In Norway, the Industrial Democracy surveyed the advantages of an improved workforce and came out with the astonishing find that it increased the production capacity of the firm. Redesigning of jobs for employees has been implemented in many firms because of the advancement in theories.
A regular feature which has evolved in the theory of strategic HRM practice is the re-organization of the workforce by segragating them according to the various job levels. This helps in assigning jobs to the right people who have the talent, skill and inherent capability to do it. Employing the appropriate number of personnel through the method of rightsizing is very important because an organization needs an optimal workforce and excellent human resources to remain competitive. Organizational effectiveness can be achieved through technological advancements and innovative human resource policies. In order to achieve effectiveness in organizational development, three strategies must be adopted namely; Human resources, System and Managerial strategies. “The personnel strategy could play a crucial role in enhancing the effects of human resources management (HRM) and entrepreneurship by supporting the main dimensions of HRM. The system strategy was used to facilitate technology innovation through knowledge management while the organizational strategy was adopted to create positive organizational culture and high performance systems.” (Wang 2005).
Training strategy is an integral part of the restructuring process. HR professionals study the character and behaviour of the employees in the firm and are competent professionals. An HR professional is expected to follow certain job ethics. The competency of a HR professional could be regarded as the sum total or cumulative sum of his various capabilities including his intelligence, education, job experience, work ethics and his interest in the organization.
The Towers Perrin Workplace Index is an employee research project of the Towers Perrin office. This index provides a worldwide illustration of employee outlook, his/her approach towards the job and the place of work. As part of their project, Tower Perrin has been conducting surveys about employee health care and such other matters related to the welfare of employees. Organizational repositioning is done by identifying the requirements and the benefits that are obtained through the repositioning and restructuring of leaders for competitive gains. HR practices must be followed strictly in firms and should be modified, if needed, according to new regulations. Some of the best practices which should be followed in firms are performance linked incentives, a fair evaluation of the performance of employees, healthy and safety working conditions etc. The ‘Matching model’ of HRM lays stress on the ‘best-fit’ concept in human resource management. The best fit concept of HR strategy could be categorized as: External fit and Internal fit. External fit refers to the operations strategy of the firm and internal fit is related to individual performance.
The role of leadership in integrating HRM policies and practices with strategy
The concept of ‘managerial leadership’ infuses and systematically arranges the theory as well as the practice of an organisation. Leadership is socially built through iteration of both leaders as well as followers. “Leadership has been defined in terms of traits, behaviour, contingency, power, and occupation of an administrative position. Most definition reflects the assumption that leadership involves a process where by an individual exerts influence upon others in an organisational context.” (Bratton & Gold 2001, p.56).
Leadership is a hierarchical form, which focuses on powerful relationship and gender dominance. Excellent leadership in an organization supports the development of a powerful organizational culture and an advanced level of commitment and co-operation among the workers. The different kind of leadership include: Transformational leadership, Charismatic leadership, Self leadership, and Principle cantered leadership. The type of leadership adopted by each organization differs. According to Barney, the Resource based SHRM requires a leader who develops, organizes and categorically segregates knowledgeable and well-experienced workers and unconstitutional human assets. As a matter of fact, we can easily purchase a technical asset but it is quite difficult to purchase the human asset!
The transformational leader motivates employees to work further to achieve a common goal. This kind of leadership gives importance to vision building and the phenomenal ability to communicate this vision to the subordinates. At the same time, it also acts as a motivation for the subordinates to turn the leader’s vision into a full-fledged reality. The new leadership hypothesis highlights that the shared leadership results in co-operation among the workers. The different types of leadership represent the unified frame of orientation on employer-employee relations.
The role of organizational culture in integrating HRM policies and practices with strategy
HRM policies and practices basically include Recruitment, Classification and recompense, Performance management, Monitory rewards and no monitory credits, Benefits and family friendly policies, Training, Employee protection and labor relation, HRM over sight and Managerial accountability.” The HRM system should be highly idiosyncratic and tailored to each firm individual situation” (Paauwe 2004, p.33).
HR policies and practices have a great influence on the culture of an organization. Organizations are ‘culture-bound’ and management practices have a great impact on the values and beliefs of an organization. The management culture developed in a firm/ organization could be adopted and applied in other organizations too. “If we accept the view that HRM approaches are cultural artifact reflecting the basic assumptions and values of the national culture in which organizations are embedded, international HRM becomes one of the most challenging corporate task in multinational organizations” (Harris et al 2003, p.39).
In order to construct, preserve and develop its corporate identity, multinational organizations should maintain steadiness in their way of managing people on a world wide scale. In order to be effectual locally, they should become accustomed to the manners as well as to the exact culture obligation of different societies.
The importance of the exchange which occurs between employer and employee
Exchange relationship connects not only labour, money and time but also includes various aspects such as capabilities, information, knowledge, learning, voice participation, and well being. Generally, people spend more than eight or ten hours in an organization. Hence, they will be greatly influenced by this kind of exchange relationship btween the employer and the employee.. “HRM is also about moral values. It is about achieving fairness and legitimacy. Fairness relates to the exchange relationship at an individual level. Legitimacy refers to the exchange relationship at a more collective level and relates to the relationship between the organization and society at large” (Paauwe 2004, p.4). People want to achieve a fair balance between whatever they are contributing to the organization and what they get as reward or return. This is not a mere exchange of money for time and labor. It is much beyond that. It’s about the legitimacy between the relevant stakeholders. It is to be noted here that the employer and the employee are two sides of a coin and not two separate, independent entities.
The role of HRM in supporting (or driving) Change Management
‘organisational change implies a temporal dimension’ – a movement in a direction that actualises a new reality that differs significantly from the current state of affairs’ (Naomi & Jennifer 2008, p.1). Since the last decade, most of the firms/companies around the world have evolved and adopted new operational strategies as a means for driving organizational changes. Some of the strategies or methodologies utilized by organizations include: Globalization, product modernism, process modernism, introduction of new technologies, changes in working hours, rewards, research ventures and human capital. There are two purposes of human resources within an economic organization. The first one is that the organization has to keep the business going at any cost while the second reason is that the firm has to consistently ensure that their new business venture works out successfully. The hard HRM focuses on the quantitative and calculative aspect of managing people, whereas the soft HRM stresses on pledge, suppleness, and quantity where the competitive benefit is maintained through the individuality of human resource. “Thinking about organizations as a system an impact of change on theory can be seen. A system might change in a process of irritation, bifurcation and centrifugation. Change in that case is an emergent product. It cannot be given a direction. But it can include a very dramatic shift into a new organizational culture or structure.” (Hansen n.d.). “People can see a restructure as just that – a change in structure, rather than an internal realignment that would help them and the business focus on”. (Cameron & Green 2004, p.182).
Human resource is an important resource whose importance cannot be sidelined because the development of an organisation depends upon how the human resource is treated in the organisation and the integration of the human resource management strategy with the business strategy. The corporate strategy and business strategy of an organisation is different and if human resource management strategy is integrated with the business and corporate strategy then the business can develop in leap and bounds. Human resource management is responsible for the welfare and proper treatment of employees in an organization including recruitment of people, performance assessment at work, providing compensation for labourers and solving work-related problems which could arise in an organization. Cultural differences in an organisation can be resolved through efficient HR strategy. Thus, in this paper we have discussed in detail the integration of different kinds of HRM strategies and methodologies and how they must be appropriately employed in an organizational context for the operation of a successful business.
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