10 pages/≈2750 words
Literature & Language
Human Resource Management (Research Paper Sample)
CRITICALLY EVALUATE THE CONTRIBUTION OF STRATEGIC HRM IF THE STRATEGIC BUSINESS PLAN IS FORMULATED AS: 1. A CLASSICAL (OR PRESCRIPTIVE) BUSINESS STRATEGY. 2. A RESOURCE-BASED (OR CAPABILITY) BUSINESS STRATEGY.
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Human Resource Management (HRM) is the function in charge of recruitment, organization of, and offering direction for individuals working within a business or a firm (Budhwar and Debrah 2001, p. 45). HRM is very critical function because all the undertakings in an organization depend on human resources to help in achieving the goals of the organization. As a result, business performance highly relies on HRM policies since the latter goes a long way in determining business strategies. To achieve the set goals and objectives in an organization, there is a need to manage the workers in relation to the set strategies (Budhwar and Debrah 2001, p. 45). This, therefore, calls for the concept of strategic human resource management (SHRM). This paper critically evaluates the contribution of strategic HRM in business plan formulation. The paper will discuss this from two perspectives; if the strategic business plan is formulated as a classical (or prescriptive) business strategy or a resource-based (or capability) business strategy.
SHRM is an evolving concept and currently; there is no consensus among the scholars over its meaning. However, in a broader sense, SHRM is concerned with integrating the individuals with the organization. It specifically deals with “incorporation of human resource management strategies into corporate strategies” (Budhwar and Sparrow 2002, p. 67). In any business, human resource strategies are primarily programs and plans that tackle and resolve key strategic issues in relation to the management of human resources. Consequently, they center on placing the HR practices, programs and policies in line with strategic business unit and corporate plans of the organization. SHRM, therefore, connects corporate strategy and human resource management, and stresses “the integration of the HRM with the business and its surroundings” (Christensen 2002, p. 13).
Researchers believe incorporating the HRM function with the business strategy leads to efficient management of human resources, enhancement in organizational performance and lastly success of a business in point. Additionally, it may aid the organization in attaining a competitive advantage by generating a distinctive HRM system that other organizations cannot imitate. This can only happen, however, if the HR department in an organization is future oriented, implying that it has to be forward thinking, and the HR strategies work constantly as a fundamental part of the overall business plan (Katou and Budhwar 2006, p. 87). If the HR is future-oriented, it compels the organization frequently to carry out analysis concerning the required HR competencies for the future. Thus, it activates the key HR functions such as compensation, development and procurement to meet such requirements (Claus 2003, p. 37).
The Contribution of HRM in a Classical (or Prescriptive) Business Strategy
A ‘classical’ Strategic Management Approach entails various steps. The first and key step entails setting up a mission statement and main objectives of the company or organization. This step helps to give the organization a framework within which it should carry out its operations. Another step is carrying out an SWOT analysis of the organization. The SWOT analysis involves examining the organization’s internal environment to establish its strengths and weakness in relation to among other factors, the present systems of management and capabilities and competencies. Additionally, it also entails examining its external environment to know the potential opportunities and threats (Budhwar and Sparrow 2002, p. 45). Other important stages in the classical strategic management approach are laying down precise goals, observing likely strategic alternatives of choices to help in meeting the goals and objectives of the organization, implementation/adoption of the selected choices, and finally regular assessment of the implementation process.
These steps from the beginning to the end form both the strategic planning phase and the consequent implementation of the choices made during the planning process. It is clear that all these procedures require human resources and hence HRM plays a very important role in this (Katou and Budhwar 2007, p. 45).
Even though the classical strategic management aims at following the above mentioned steps, this does not frequently happen in real life situations. Top decision-makers stick to these rational and formal steps while devising their business or organizational strategy. This is because they are faced with various pressures and reasons like scarcity or resources and time or too much available information. As a result, the HRM function employs individuals to work on such projects in an informal way based on limited resources, experiences, intuition and instincts. This leads to a form of strategy formulation referred to as “informal incremental process” that enables the strategy to materialize in relation to the emerging circumstances (Christensen 2002, p. 32). This is as opposed to the formal approach that enables decision-makers to deliberate hence thinking before taking any action.
Within the classical approach, SHRM aims at ensuring that all the employees in an organization work in a rational, clear, deliberate and planned procedure realize the set goals and objectives. In this case, they all work towards profit maximization. To ensure that this approach is successful, the organization should have clear goals and objectives and its internal surrounding should also be comparatively stable (Claus 2003, p. 36). Additionally, the there should be reliable information regarding both the internal and external environments and decision-makers should be in a position to evaluate it meticulously and create very calculated judgment to implement the best possible option. In this case, top managers are charged with strategy formulation while implementation is left to different departmental operational managers. This case illustrates the disparity between “first order” and “second order” strategy or decisions (). “The former demonstrates the formation of strategies by top managers while the latter, their implementation by lower-level managers” (Chandler 1962, p. 67). Further, it signifies the classic top-down approach of Chandler (1962) where the organization has a strategy that its structure follows. Since this approach aims at following a clear framework entailing various steps, SHRM will ensure that it allocates appropriate human resources to meet the strategies employed at every step.
There are various theoretical frameworks that try to explain the relationship between the strategy of the organization and the HRM strategy. This paper will focus on two of such theories including the Matching and Harvard model of SHRM
This model falls under the strategic fit of the human resource management and underscores the “resource” element of HRM. Further, it stresses the proficient use of human resource to realize the objectives of the organization. As a result, the model advocates that human resources should be acquired cheaply, utilized sparingly and grown and exploited to full potential. This model is mainly founded on Chandler’s (1962, p. 76) argument that the strategy of the organization determines it structure. The model suggests that there is a “tight fit” between the structure of the organization, its strategy and the HRM system. As a result, the key objective of this model is developing a suitable HRM system to create the business strategies and lead to their most effective implementation.
This model, however, faces various criticisms because it is believed to be very prescriptive. This is as a result of its postulations being strongly unitarist. The model stresses a “tight fit” the strategy of the organization and human resource strategies while utterly disregarding the employee’s interests, and therefore regards HRM as a function that is reactive, passive and implementationist (Claus 2003, p. 36).
The Harvard Model
This is synonymous with “the soft variant of HRM” and it bases its arguments on the view that it is possible to conquer some of the disapprovals of historical personnel management if general managers initiate a perspective of how they desire to see employees participate in and developed by the project. The Harvard Model was first used by Beer et al. (1984, p, 67) and it emphasizes the “human” element of HRM and it more mindful of the relationship between employer and employee. It underscores the interests of various stakeholders in the business and how they relate to the management’s objectives. The stakeholders include employees, the community, shareholders, unions, management and government. This element of the model offers some consciousness of the European context and other company systems that highlight “co-determination” (Chandler 962, p. 90). It also appreciates the impact situational aspects like labor market have on HRM policy options. This model explains HRM with regard to four policy sections including “, human resource flows, reward systems, employee influence, and works systems” (Christensen 2002, p. 45). All these are aimed at ensuring individual and societal well-being and organizational efficient. The model is, however, criticized for failure to clarify the complex link between HRM...
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