Strategic HRM: A Literature Review

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Introduction

Human resources are the most important asset of a present-day organization since they ensure the viability of an organization and allow for obtaining other necessary resources and gaining profits. For human resources to be of the most benefit for an organization, they should be properly managed by organizational objectives. To help HR managers achieve this goal, researchers developed a concept of strategic human resource management (SHRM). SHRM means “the pattern of planned human resource actions undertaken to achieve organizational goals” (Martinson and De Leon, 2018, p. 160). While the general idea of SHRM seems to be reasonable and beneficial for organizations, this field still needs thorough research to develop feasible solutions addressing various contexts, issues, and influences on stakeholders. This paper aims at reviewing three recent articles on the topic of SHRM and discussing their relation to the SHRM theories and concepts. In the end, the author of this work will provide a personal opinion on the reviewed articles.

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Evaluation of the Articles

SHRM is a relatively new development in the field of human resource management. It emerged at the end of the twentieth century and has been evolving for the last thirty years. Wright and Ulrich (2017) aimed at summarizing how SHRM had developed over time and what issues it still had to resolve. According to Wright and Ulrich (2017), scholars identified the need to align HR activities with business goals in the late 1970s, which gave rise to the development of SHRM and the beginning of research in this field. Breakthrough in the area of SHRM occurred when researchers found the link between HR practices and firm performance. It resulted in an increased number of empirical research proving that high-performance HR practices led to the better financial performance of organizations; yet, critics argued that this relation was not inevitable (Wright and Ulrich, 2017). Thus, the authors found that SHRM began to develop as a means of aligning HR practices with business needs in order to increase firm performance.

Further, Wright and Ulrich (2017) identified current theoretical paradigms of SHRM, the most popular of which included the resource-based view (RBV), social exchange theory (SET), and human capital theory. Their finding also showed that, currently, researchers continued to explore the relationship between HR practices and firm performance, but the focus shifted toward mediating mechanisms that influenced this link (Wright and Ulrich, 2017). Furthermore, Wright and Ulrich (2017) found out that, although there is an association between HR practices and organization performance, scholars still did not explore what exact practices contributed to it. Researchers discussed the concepts of fit and flexibility and discovered little evidence of the effect of fit on organizational performance. However, flexibility was widely explored by scholars, and it was found that it is beneficial for a firm to invest in it only in the time of change.

In the end, the authors of the article provided suggestions as to further research in the field of SHRM. Wright and Ulrich (2017) recommend increasing research reliability by using various data sources and raters and controlling for endogenous variables. Further, they suggested researching SHRM in the global context, identifying specific human capital characteristics influencing firm performance, integrating SHRM research with strategy research, and enhancing real-world relevance of scholarly studies (Wright and Ulrich, 2017). The implementation of these recommendations is supposed to make research have practical significance and guide practitioners in managing human resources effectively.

The second article is devoted to the vertical and horizontal alignment of HR practices. Martinson and De Leon (2018) aimed at measuring the impact that horizontal and vertical alignment of HR practices had on supporting the strategic goals of an organization. They studied how HR practices focused on workforce planning, compensation, and work-life balance influenced employee satisfaction and intentions to continue working for the selected organization. Their findings showed that the mentioned HR practices, which were directed toward achieving the organization’s strategic goal of talent management, predicted employee satisfaction and retention (Martinson and De Leon, 2018). Moreover, researchers discovered that the combined use of the three types of HR practices resulted in decreased turnover intentions (Martinson and De Leon, 2018). These findings indicated that both vertical and horizontal alignment of HR practices led to better organizational outcomes and helped to achieve strategic goals.

The third article under review discussed the issues that SHRM was supposed to address but failed to do so. Brewster, Gooderham, and Mayrhofer (2016) reviewed the most cited articles on the topic of SHRM and found out that the majority of the studies were US-centric. It means that the findings of these studies cannot be generalized and considered relevant to the organizations throughout the world. Furthermore, the studies used cross-sectional data; as a result, they could detect only short-term outcomes of HR practices, while identifying long-term effects was impossible (Brewster, Gooderham and Mayrhofer, 2016). Researchers also noticed an inconsistency in operationalizing HR practices and defining firm performance. They criticized scholars’ excessive focus on firm performance and neglect of such important issues as the impact of SHRM on stakeholders other than company owners, as well as global problems, such as employees’ poor quality of life, criminal organizations, and corruption (Brewster, Gooderham and Mayrhofer, 2016). The article calls for HRM researchers to focus on global organizational issues and address the identified gaps in this research field.

The authors of the reviewed articles used various research methods. Wright and Ulrich (2017) presented a thorough review of the literature related to the topic of SHRM in order to describe the emergence of SHRM and the current state of research in this field, identify gaps in research and propose recommendations for future studies. Brewster, Gooderham, and Mayrhofer (2016) also completed a literature review, but these scholars chose the 16 most cited journal articles related to the topic of HRM. Their choice is justified since their purpose was to analyze the most influential articles, the findings of which constituted the basis for other research in this field. Martinson and De Leon (2018) used a different research methodology, namely, developing hypotheses and testing them using responses of 83,559 US Government employees to an annual survey. Control variables included a race, age, and pay, and the analysis of employees’ responses was performed using logistic regression (Martinson and De Leon, 2018). Overall, all the authors used research methodologies that were appropriate for the purposes of their work.

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The articles under consideration are all innovative to some extent. The study by Wright and Ulrich (2017) is valuable for its comprehensive review of the development of the HRM, and its innovative idea is in suggesting directions for future research, namely, increasing real-world relevance, paying attention to context, and integrating with strategy research. Although the article by Brewster, Gooderham, and Mayrhofer (2016) also provides recommendations for SHRM research, it does it in a different, more convincing way. The innovative idea of this study is that SHRM research does not fulfill its full potential, and it should shift its focus from firm performance toward pressing global problems, with which many organizations in the world are faced. The study by Martinson and De Leon (2018) is empirical, so it differs from the other two studies discussed above. Yet, it is also innovative in the field of empirical HRM research since it is a large-scale study that managed to assess both vertical and horizontal alignment of HR practices intended to help an organization achieve its strategic goals. Thus, each of the three studies contributed innovative ideas to research in the field of SHRM.

Relation to the Topic of Strategic HRM

The articles under review fit well into the background established by other research devoted to the topic of SHRM. One of the core principles of SHRM is regarding employees not as human resources but as qualities and capacities that can become an organization’s source of competitive advantage (Leopold and Harris, 2009). These employees’ capacities, which include knowledge, skills, talents, and abilities, are commonly referred to as human capital (Boon et al., 2017). According to the resource-based view, human capital can be a source of competitive advantage if it provides “valuable, rare, inimitable, and nonsubstitutable resources” (Jiang, K. and Messersmith, 2017, p. 3). In this regard, Wright and Ulrich (2017) mentioned two types of human capital: general and specific human capital. General human capital includes such characteristics as health and education, and, since these attributes are valuable for all firms and portable, they cannot be a source of competitive advantage (Wright and Ulrich, 2017). Only specific human capital consisting of skills and knowledge applicable within a particular organization contribute to a firm’s competitiveness (Wright and Ulrich, 2017). HR managers should keep it in mind while creating training and development HR practices.

While human capital serves as a major source of competitive advantage, it should be remembered that it is provided by people whose life consists not solely of work and who do not like to be managed. Managing human resources is problematic because all people have various identities, tend to defend their interests, and go to work to use an organization for their purposes just as it uses them (Leopold and Harris, 2009). Martinson and De Leon (2018) discussed the outcomes of this problem in their article. According to these researchers, since “human capital is ‘owned’ by the individual within whom it resides,” it cannot be guaranteed that it will be surely available in the future (Martinson and De Leon, 2018, p. 162). As a result, HR practices should be directed toward employee retention to avoid negative consequences of high turnover rates, such as a decrease in financial performance, quality of customer service, safety, productivity, and managers’ psychological well-being (Martinson and De Leon, 2018). Yet, not only the willingness to avoid the consequences of turnover should guide HR managers. HR practices should be humane and respect employees’ feelings and human needs.

The organizations’ choice of HR practices is influenced by multiple factors. In general, HR practices include activities devoted to enhancing recruitment and selection, training and career development, performance appraisal, and compensation and benefits (Fahim, 2018). However, depending on the organization’s reliance on human resources and risk levels of its operational environment, it may choose between low-commitment and high-commitment HR strategies (Leopold and Harris, 2009). The type of organizations also influences the choice of HR strategies; for example, HR practices appropriate for private sector organizations often do not suit public sector organizations (Knies et al., 2018). Although the impact of organizations’ characteristics on the choice of HR strategies seems to be undeniable, there is still controversy between the proponents of ‘best fit’ and advocates of ‘best practice’ (Armstrong and Brown, 2019). The first group claims that HR practices should be based on context and organizational circumstances, and the second one believes that there are practices universal for all organizations (Armstrong and Brown, 2019). Even though universal HR practices seem appealing to both researchers and practitioners, it is unlikely that there are actual activities that can fit any context.

The authors of the reviewed articles emphasized the importance of considering the context in the process of developing HR strategies. Brewster, Gooderham, and Mayrhofer (2016) mentioned that HRM differed depending on the country, the scale of business operation, and the industry. Wright and Ulrich (2017) paid particular attention to the importance of contextual factors for HR strategies in international organizations. Thus, it may be concluded that the choice of HR strategies and practices is a challenging process requiring the consideration of many factors that determine the organizational environment.

One more significant point regarding the development of HR practices is their vertical and horizontal alignment. HR practices should fit into the organization’s business situation and managerial debate, and, at the same time, they should align with each other without inconsistencies (Leopold and Harris, 2009). Martinson and De Leon (2018) referred to the alignment of HR practices with business circumstances as vertical alignment and the consistency among HR practices as horizontal alignment. Wright and Ulrich (2017) referred to the same concepts as vertical fit and horizontal fit, respectively. While Wright and Ulrich (2017) superficially covered these concepts, mentioning that there was little empirical evidence of the effects of vertical and horizontal fit, Martinson and De Leon (2018) devoted the entire study to them and found the empirical evidence of their positive influence on employee retention. The authors of the third article did not pay attention to the concepts of vertical and horizontal alignment since these concepts were not essential for the purpose of their work.

The authors of the reviewed articles used different approaches to treating the topic of SHRM. Wright and Ulrich (2017) provided an overview of how the field of SHRM developed over time and gave a summary of its major theories and concepts, such as the RBV, SET, and human capital theories, as well as the concepts of vertical and horizontal fit and flexibility. Brewster, Gooderham, and Mayrhofer (2016) criticized SHRM research for an overemphasis on a firm’s financial performance and disregard of national context and global issues. Finally, Martinson and De Leon (2018) focused their attention on vertical and horizontal alignment and their influence on employee satisfaction and retention. The definitions of key SHRM concepts and theories are consistent throughout the three studies.

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Personal Opinion

From the reviewed articles, I learned that the development of HR practices that would fit the firm’s business circumstances and be consistent with each other is crucial to organizational success. At the same time, it is a challenging process requiring the consideration of multiple contextual factors. The most interesting point for me was that the current state of SHRM research was imperfect since research disregarded pressing global HR problems and lacked practical applicability. I found it interesting because, in my opinion, it is important to search for flaws in popular methodologies and directions of scientific thought to be able to improve them and turn attention to critical issues. With regard to unclear points, I failed to understand what Wright and Ulrich (2017) meant by the multilevel nature of SHRM. As far as I understand, the authors wanted to show that SHRM is related to all levels of an organization, from individuals to the entire industry. However, the whole argument that the researchers were trying to make appeared to be vague to me.

While reading the articles, I noticed that scholars were highly concerned about the applicability of research results for practitioners. I share this concern because I believe that research should be aimed at providing feasible solutions to problems, with which HR managers are faced in their practice. Therefore, if I had the chance to ask three questions from the authors, my questions would be related to the link between research and practice. First, I would ask if there was a possibility to conduct context-specific research that would help develop context-specific HR strategies. My second question would be as follows: if such research were possible, would its results be generalizable for the specific context? Finally, I would ask, to what extent it was practicable and ethical to test applicability and impact of particular HR practices in the real-world organization environment.

Conclusion

To sum up, SHRM is intended to align HR practices with organizational strategic goals, as well as achieve the consistency among these practices. Researchers frequently relate SHRM with firm performance, proving the positive relationship between high-performance HR practices and organizations’ financial outcomes. The reviewed articles treated the topic of SHRM differently, but, on the whole, they identified existing gaps in SHRM research and demonstrated the importance of vertical and horizontal alignment of HR practices.

Reference List

  1. Armstrong, M. and Brown, D. (2019) Strategic human resource management: back to the future? Brighton, UK: Institute for Employment Studies. Web.
  2. Boon, C. et al. (2017) ‘Integrating strategic human capital and strategic human resource management’, The International Journal of Human Resource Management, 29(1), pp. 34-67. doi: 10.1080/09585192.2017.1380063
  3. Brewster, C., Gooderham, P. N. and Mayrhofer, W. (2016) ‘Human resource management: the promise, the performance, the consequences’, Journal of Organizational Effectiveness: People and Performance, 3(2), pp. 181-190. doi: 10.1108/JOEPP-03-2016-0024
  4. Fahim, M. G. A. (2018) ‘Strategic human resource management and public employee retention’, Review of Economics and Political Science, 3(2), pp. 20-39. doi: 10.1108/reps-07-2018-002
  5. Jiang, K. and Messersmith, J. (2017) ‘On the shoulders of giants: a meta-review of strategic human resource management’, The International Journal of Human Resource Management, 29(1), pp. 1-28. doi: 10.1080/09585192.2017.1384930
  6. Knies, E. et al. (2018) ‘Strategic human resource management and public sector performance: context matters’, The International Journal of Human Resource Management, pp. 1-13. doi: 10.1080/09585192.2017.1407088
  7. Leopold, J. and Harris, L. (2009) The strategic managing of human resources. 2nd edn. Harlow: Pearson.
  8. Martinson, B. and De Leon, J. (2018) ‘Testing horizontal and vertical alignment of HR practices designed to achieve strategic organizational goals’, Journal of Organizational Effectiveness: People and Performance, 5(2), pp. 158-181. doi: 10.1108/JOEPP-10-2016-0057
  9. Wright, P. M. and Ulrich, M. D. (2017). ‘A road well traveled: the past, present, and future journey of strategic human resource management’, Annual Review of Organizational Psychology and Organizational Behavior, 4(1), pp. 45-65. doi: 10.1146/annurev-orgpsych-032516-113052

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BusinessEssay. 2022. "Strategic HRM: A Literature Review." January 11, 2022. https://business-essay.com/strategic-hrm-a-literature-review/.

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BusinessEssay. "Strategic HRM: A Literature Review." January 11, 2022. https://business-essay.com/strategic-hrm-a-literature-review/.