The Importance of Strategic Human Resource Management for Organisations

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Introduction

The purpose of this paper is to analyze the theoretical foundations of strategic human resource management (SHRM), to review its features and functions. In current conditions, personnel is becoming increasingly important for an organization because the effective functioning of any company largely depends on the people who work there. Nowadays, due to the fact that a clear and well-established system of personnel management is a powerful competitive advantage, enterprises have to pay significant attention to the formation of an effective human resource strategy.

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Evolution of SHRM

The incentive for the evolution of labor management was the economic upheavals in the world in the 70s – 80s of the XX century and the subsequent transition to a new technological method of production (Rotich 62). The third industrial revolution, which began in these years, led to the restructuring of personnel management on innovative principles. This requires increasing the technological and organizational flexibility of a firm, which is almost impossible within the framework of a technocratic organization and traditional methods of stimulating labor. According to researchers, “personnel management problems did not really become pressing until we had a large aggregation of people working together in one organization” (Oke 377). The need to attract a highly qualified workforce that is flexible, capable of making decisions, and involved in achieving the company’s overall goals required a review of the essential principles of labor management.

As a result, in the 90s, a fundamentally new approach to personnel management began to be approved. The objects of managerial activity are not people, their work, processes, but organizational cultures of various types. It is stated that “the primary actions of a strategic human resource manager are to identify key HR areas where strategies can be implemented in the long run to improve the overall employee motivation and productivity” (Malik 7). Modern managers consider the culture of their organization as an important strategic tool that allows them to focus all departments on common goals, mobilize the initiative of employees, and facilitate communication between them.

In the XXI century, personnel management involves the strategic management of personnel in a productive organizational culture. According to Dessler, “Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors that the company needs to achieve its strategic aims” (18). In essence, personnel management starts to transform into human resource management. The tasks and goals are changing, and the status of HR employees is increasing.

Analysis of SHRM and competitive advantage

Competitive advantage includes the organization’s resources and actions to avoid danger and maximize opportunities for the enterprise to achieve the desired position. Thus, strategic HRM that focuses on resources is the key to competitiveness. According to Boxall and Purcell, “Strategic HRM is concerned with the strategic choices associated with the organization of work and the use of labor in firms and with explaining why some firms manage them more effectively than others” (65). The concept of resource-based strategic HRM states that a competitive advantage can be gained if a company develops human resources that enable it to apply its knowledge more effectively than its opponents. Competitive advantage will be sustained when rival companies cannot replicate the unique, effective resources that the enterprise uses. The main features of the SHRM are its long-term nature, its relationship with the strategy of the organization as a whole, and the consideration of numerous factors of the external and internal environment that entail its adjustment.

SHRM involves finding, selecting, and attracting employees who are innovators and have initiative and a good level of contact, who are willing to take risks, and who are not afraid of responsibility. In this case, it is crucial to prevent staff turnover and ensure that the core team does not change. It is possible to note that human resources are one of the main factors that can bring a competitive advantage to the firm (Sondhi and Nirmal 2013). Researchers outline that if the organization invests in employees, they may then reciprocate with positive attitudes and behaviors toward the organization in order to maintain the exchange relationship (Kaifeng and Messersmith 2018). Since the final result of strategic management is to achieve the goals of the organization, an important place in the process of SHRM is assigned to the staff.

The choice of SHRM depends on various factors such as the organization’s life cycle, its development strategy, the size of the organization, as well as the characteristics of the external environment. Effective strategic human resource management is not possible if personnel’s work is built as purely administrative and is limited to solving operational tasks. Personnel is often seen as a cost that needs to be reduced, while it is the most crucial resource of the company that has to be managed competently. In most cases, strategic changes can only be initiated using the human factor, which will become more important in the future. The use of strategic HRM methods is becoming a widespread practice in managing the labor potential of enterprises. For instance, Toyota uses methods of SHRM based on a well-thought-out, market-based strategy (Liker and Hoseus, 2010). A special place is given to the assessment and formation of human resources, to their professional growth, and increasing creative and organizational activity.

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This increases the organization’s competitiveness, allows it to focus more on customer needs, and contributes to the company’s survival in an increasingly competitive environment. According to Browning et al., “An emerging source of competitive advantage for service industries is the knowledge, skills, and attitudes of their employees” (741). Besides, Faugoo’s study shows that “Indian global firms are responding to the challenges of globalization, by investing in HR capabilities of the firm, by developing the knowledge base, desired skills and attitudes of the employees, which results in higher firm performance and competitive advantage” (129). Competitiveness is ensured by a high level of professionalism and competence, personal qualities, the innovative and motivational potential of employees.

Conclusion

Nowadays, strategic human resource management is the most important component of an organization’s overall management strategy. An essential goal for achieving the competitive advantage of strategic HRM is to create opportunities through the selection of qualified personnel and motivated employees. HRM is aimed at meeting the business needs of the organization and the individual and collective needs of employees. Strategic HRM should take into account the interests of all groups in the organization, i.e., the interests of not only owners and managers but also its employees. Employees, as well as any enterprise resources, must be managed, it is crucial not only to organize their work correctly but also to form certain plans for the future. This plan has to be coordinated with the general goals of the organization, its main tasks, and features of functioning. A well-formed and effectively implemented HR strategy enables enterprises to manage their personnel effectively and, at the same time, provides a solid foundation for further development.

Works Cited

Boxall, Peter, and John Purcell. Strategy and Human Resource Management. Macmillan International Higher Education, 2011.

Browning, Vicky, et al. “Realising Competitive Advantage Through HRM in New Zealand Service Industries.” The Service Industries Journal, vol. 29, no. 6, 2009, pp. 741-760.

Dessler, Gary. Human Resource Management. 12th ed., US Hardcover, 2011.

Faugoo, Deepika. “Globalisation and Its Influence on Strategic Human Resource Management, Competitive Advantage, and Organisational Success.” International Review of Business Research Papers, vol. 5, no. 4, 2009, pp. 123-133.

Kaifeng, Jiang, and Messersmith Jake. “On the Shoulders of Giants: A Meta-review of Strategic Human Resource Management.” The International Journal of Human Resource Management, vol. 29, no. 1, 2018, pp. 6-33.

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Liker, Jeffrey K., and Michael Hoseus. “Human Resource Development in Toyota Culture.” International Journal of Human Resources Development and Management, vol. 10, no. 1, 2010, pp. 34-50.

Malik, Nadeem. “Emergence of Strategic Human Resource Management Historical Perspective.” Academic leadership: The Online Journal, vol. 7, no. 1, 2009, pp. 1-15.

Oke, Leke. “Human Resources Management.” International Journal of Humanities and Cultural Studies (IJHCS)​, vol. 1, no. 4, 2016, pp. 376-387.

Rotich, Kipkemboi Jacob. “History, Evolution, and Development of Human Resource Management: A Contemporary Perspective.” Global Journal of Human Resource Management, vol. 3, no. 3, 2015, pp. 58-73.

Sondhi, Vasudha, and Prerana Singh Nirmal. “Strategic Human Resource Management: A Reality Check.” Review of Management, vol. 3, no. 1/2, 2013, pp. 4-10.

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