STRATEGIC HUMAN RESOURCE MANAGEMENT
Course
Tutor’s Name
Institution
14th, December, 2012
Table of Contents
Introduction. 3
Steps in Strategic Human Resource Management 4
Theoretical Perspectives on Nature of HR Strategy. 6
Understanding the Contribution of People to the Organization. 12
Conclusion. 13
Works Cited. 14
Strategic Human Resource Management
Introduction
Strategic human resource management entails the processes and activities performed by the human resources in conjunction with line managers in resolving problems related to the organization. It involves the decisions regarding organizational policies that are concerned with human resource systems. Implementation of organization policies, employee activities, and decision made by management affect outcomes. The outcome is thus determined by the ability of the human resource management to make appropriate decisions. In the late 1980’s, organizations realized the crucial role of employees as a capital asset in achieving the organizational goal. This led to identification of human resource management practices such as recruitment, training, and career development as significant in enabling an organization to compete effectively. In the contemporary world, organizations are increasingly acknowledging the significance of strategic human resource management. Therefore, organizations are taking human resource management practices more seriously due to the realization of the importance of humans in organization success. Strategic human resource management entails creating an appropriate work environment to ensure that employees perform their best toward achieving the organizational goals. This paper focuses on steps in the strategic human resource management process. The paper will use TESCO as an example to illustrate and discuss three theoretical perspectives on the nature of HR strategy and demonstrate how the contribution of people to the organization might be understood and enhanced.
Strategic human Resource Management is part of HRM that focuses on issues that affect people working within an organization. The aim of SHRM is to increase the skills possessed by employees by equipping them with the knowledge to deal with problems that arise within and outside the organization but affect the organization. As technology becomes more advanced, the business world is increasingly becoming competitive. This requires organization to develop dynamic organization structures and create more complex business environment to continue competing effectively. According to Armstrong (2009), organizations have to identify their areas of competency and adjust them to enable them compete effectively. When the workforce of an organization is managed appropriately, the goals are met and an organization is able to compete effectively. For effective management of an organization, the work force must be aligned in a way that they are able to use their qualifications and capabilities in performing their duties. TESCO is a business organization that deals with retailing business. Therefore, employees are crucial since they affect customer retention (Haerifar, 2011).
Steps in Strategic Human Resource Management
Implementing strategic human resource management involves identifying the areas of Human resource that require improvement for enhanced productivity of the employees. Due to the need for strategic management of the human resources, the field of Strategic Human Resource Management (SHRM) has grown rapidly. Human Resource management includes all the practices and decisions, which influence people within an organization. Strategic Human Resource Management entails the significance roles of the HRM in influencing the efficiency of an organization (Armstrong, 2009). Developing strategic human resource management entails a number of steps. The process allows organization to understand available resources, and the resources that they require. Moreover, organizations are able to establish ways of using their human resources efficiently. Efficient utilization of the human resources entails addressing the needs of the workforce sufficiently. Development of a strategic human resource management plan is crucial and enables organization meet its needs. Moreover, an organization is able to hire qualified employees who can perform their duties more effectively (Caliskan, 2010).
The initial stage of establishing a SHRM plan involves identifying the issues facing human resources. Such issues include performance management, human resource flow, commitment work systems, reward systems, and employee involvement. These issues should be examined from a global perspective. Moreover, the plan should include aspects dealing with internationalization of market integration, technological advancements, cultural diversity aspects, and economic changes. The plan should ensure that the human resources are aligned to the organization elements such as labor market, knowledge management, and integration of skills (Torrington, Taylor, Atkinson, C. & Hall, 2008).
To be able to develop a strategic human resource management strategy, it is important to identify the forces that drive an organization, which may include technology, competition, as well as other market conditions. Moreover, it is crucial to identify the implications of the driving forces on the employees, to enable the organization create an appropriate environment to enhance employee performance. Tesco is the biggest supermarket in United Kingdom. However, other competitors are coming up. Therefore, human resource development entails identifying the opportunities as well as the problems that are likely to tamper with the organization HRM plan. The problem and opportunities may arise due to the condition characterizing the business environment, upcoming projects, and revenue situation. Moreover, the organization should consider all factors that affect the employee hiring process (Allen & Wright, 2006). TESCO deals with retailing of household goods. Therefore, the human resource plays a critical role in enhancing the success of the organization (Haerifar, 2011).
Another step in SHRM development involves identifying the current and future demands of human resources. This entails considering the number of employees that may require in future and possible job functions that may arise within an organization. Moreover, this should include the plans regarding the training of employees to enable them perform their duties effectively (Lengnick-Hall, et al., 2009). The other step entails assessing the human resources that an organization has. This should include the skills, weaknesses, and strengths possessed by the employees. This enables the organization to determine the measures to take in ensuring that the employees perform effectively. Additionally, the organization is able to identify possible problems that may arise when employees adopt challenging positions. The organization is also able to assess the business environment and other aspects of the organization such as culture and determine ways to exploit all the available resources for organizational success (Torrington, Taylor, Atkinson, and Hall, 2008).
The other step entails making plans on how to meet the needs of the current human resources. This enables the organization to determine if to increase the workforce. If the workforce is insufficient, the human resource management may consider introducing overtime or hiring temporary workers. In case the workforce in greater than required, the organization should consider reducing the number of employees using strategies such as layoffs, terminations and giving early retirement to some employees (Ulrich, 1997)
Theoretical Perspectives on Nature of HR Strategy
Theoretically, there is no specific definition of SHRM. The definition varies depending on the different schools of thoughts. Most scholars consider SHRM to be an extension of HRM. However, most scholars agree that SHRM helps a company develop strategies to enable it compete effectively. Scholars have developed several theories on human resource development strategy based on observation made on organizations. Most of such theories are transferable and can be used in understanding organizations. Actually, there are three theoretical perspectives on SHRM. The three perspectives are universal approach, contingency or fit approach, and configurational or resource-based perspectives (Marchington &Wilkinson, 2005).
Tesco is a multinational company that operates in different countries characterized by cultural differences. It is thus important for Tesco to have a strategic management scheme that addresses the challenges facing the employees who have to operate in nations with cultures different from theirs. However, Tesco has managed to use different theoretical approaches in developing rare and efficient human resources resulting in its competitive advantage (Haerifar, 2011).
The Universalist approach is a holistic approach that links all the aspects on organization performance. This approach was developed after realization that some Human resource practices affect performance. Such practices include selection and training of the employees, which affects productivity and organization performance. This approach considers labor management as one of the most important aspect in organization success. This theoretical perspective does not rely on competitive strategies of an organization (Syed & Jamal, 2012). The Universalistic approach is closely related with the Guest’s theory of human resource management. The theory is based on the four policy goals of human resource management, which include strategic integration, quality enhancement, flexibility, and commitment. The theory proposes that policy goals are closely linked to HRM policies. Therefore, for strategic HRM, the HRM goals should be based on the company policies. However, critiques argue that the guest theory suggests unattainable goals (Boxall, Purcell, & Wright, 2007).
According to Syed and Jamal (2012), the Universalistic approach proposes that firms create internal consistencies to ensure that the organization human resource practices fit with each other for increased organization performance. This will enable organization exploit the skills, abilities, and knowledge possessed by the employees. Tesco invest greatly in ensuring that there is improved employee efficiency and output and reduced absenteeism. This results in increased productivity. Moreover, the quality of services offered is high and the product is high. Moreover, Tesco embraces the HRM practices, which include recruitment, selection, compensation, employee participation, training and internal labor market (Pardo & Moreno, 2009).
In the recruitment and selection process, Tesco has a selection criterion that ensures that the selected candidates are appropriate for their roles. Moreover, the system imparts the expectation of the organization on the employees. Additionally, the system ensures that the rest of the organization acknowledges the significance of recruited employees in achieving the organization goal. Tesco has a compensation system that enables Tesco to compete effectively since it encourages the employees to maximize on their efforts. Moreover, the system enables Tesco to retain its employee and attract competent applicants. Tesco encourages the employees to participate in the decision-making by seeking their opinion regarding inclusion of different products. Employee participation is known to influence performance since they become motivated since they assume that their capabilities are acknowledged (Haerifar, 2011).
Internal labor market, which determines the horizontal and vertical movement of the employees, affects performance. This is because it determines employee satisfaction and the level of knowledge and experience gained by the employees. Moreover, mobility of employee reduces organizational costs since it reduces recruitment intervals and training costs. Tesco has not utilized this tool effectively since there is minimal employee mobility. Therefore, the SHRM should focus on increasing mobility opportunities to motivate the employees increasing their retentiveness. Training is another HRM practice that influences employee’s performance. Through training, employees improve on their skills. Tesco uses training programs such as workshops to ensure that employees are skilled and more productive. Moreover, employee commitment to their work is enhanced (Marchington & Wilkinson, 2005).
Marchington and Wilkinson (2005) posit that the fit or contingent approach is grounded a framework that indicates how selection, development, appraisal, and reward process can be used in enhancing employee performance. Through use of decisions, an organization is capable of influencing the behaviors of the employees. The weakness of the contingent approach is its failure to address the issue of possible lack of an approach that can enables employee behavior as well as performance. Moreover, contingent approach is characterized by unitarist assumptions. This theoretical approach conceives HR strategy in terms of its ability to generating certain employee behaviors. In addition, the approach addresses the ways of identifying the employee behavior that may be required in accomplishing particular business strategy (Donaldson, 2006).
Furthermore, the approach pinpoints HR strategy as important in identifying HR policies that can be used in behavior reinforcement. Tesco’s management strategy is less formal, which enables the employees to cope with challenges arising from their work. This is because less formality enables the employees to be flexible and respond to changes that characterize the retail market. Therefore, Tesco adopts the contingency ideas since the management acknowledges the need for flexibility in their planning, organization, controlling and leading practices to be able to succeed in different circumstances (Haerifar, 2011).
The resource based approach deals with the relationship that relate the internal performance with the performance of an organization. The focus of this approach is on the ways that sustainable completion can be enhanced through development of human capital. An organization should focus on developing strategies that cannot be copied by its competitors. Such development should be based on changing the behavior of the employee on aspects such as skills, knowledge, attitudes, and competences. This enables an organization to match the competencies of the organization to meet the organizational requirements. This approach encourages organizations to focus on using the available resources to enhance competitiveness of an organization (Martin-Alcazar, et al., 2005).
Resource based theory aims at demonstrating the conditions that makes human resources limited. For example, Tesco exploits it human resources in attaining a competitive advantage over its competitors. It ensures it focuses on value, rarity, inimitability, and organization. Tesco does so by ensuring that it employs competent employees and equips them with unique skills to enable them serve people from different cultures. Good customer service results in customer satisfaction. Moreover, Tesco has established a unique and easy to use online sales website. This has enabled Tesco attract numerous online customers. Therefore, resource based theoretical approach can be used by organizations to create unique human resources leading to improved organizational performance and viable competitive advantage (Torrington, Taylor, Atkinson, & Hall, 2008).
Tesco creates value on its human resources reduction of the number of employees to ensure that the work force is not excess. Moreover, the working schedules are flexible, which enables Tesco to create maximum revenue using the available workforce. Enhanced customer service ensures customer referral, and retention. Therefore, the Human resource contributes to organization success through customer-added-value. Tesco has greatly focused on developing human resources with rare characteristics, which give it a competitive advantage over its competitors. The retail industry in UK is quite competitive. However, Tesco invest in every salesperson. Tesco employs young and competent graduates with passion in retailing. For horizontal integration, Tesco provides high enticement based compensation system. This motivates the employees to maximize on their efforts while attending to the clients. Indeed, Tesco has managed to invest in its human resource through integrated approach, which has created a standardized labor pool giving Tesco a competitive advantage (Haerifar, 2011).
Although organizations gain a competitive advantage when they develop rare human resources, the competitors can copy the rarity resulting in increased competition. However, nurturing characteristics that cannot be easily copied by the competitors enables an organization create a good history that gives it a competitive advantage in the end. Such characteristic include the organization culture, which shapes the behaviors and practices of the workforce enabling an organization to compete effectively (Martin-Alcazar, et al., 2005). Tesco’s success is partly attributable to the culture that the organization has developed. The management always encourages the employees to do their best in meeting customer demands. Moreover, Tesco is popular for offering wide variety of products. The packaging of Tesco products is unique and admired by most of the customers who have remained loyal (Haerifar, 2011).
Organization has enabled Tesco capitalize on its strengths and human resources. Moreover, Tesco has been able to exploit the rarity, value, and inimitability of its products including the human resources. Tesco has been able to identify appropriate systems to use in training their workforce. However, Tesco has focused more on vertical integration with less focus on the horizontal integration. There is thus need for the human resource to establish ways of linking employee resourcing, development, recompensing, and performance to the employee relation approaches (Haerifar, 2011).
Understanding the Contribution of People to the Organization
Human resource management is concerned with the factors that affect performance of all the members of an organization. Therefore, understanding the role of all the people contributing in the organization performance forms a crucial part of HRM. Therefore, the core role of HRM is to ensure satisfaction of the employees through effective management practices. In case of Tesco, employees are the major contributors of the organization since they determine the level of customer satisfaction and the performance of the organization. Moreover, they enable the organization to improve its competitive advantage. Therefore, employees can be considered as the determinants of organization success (Kiessling & Harvey, January 2005).
Ulrich (1997 posits that the major role of the HRM is to hire people, enable them develop career wise and compensate the people for their services to the organization. Therefore, organizations should design strategic organization management schemes that enables the employees to integrate with other aspects of the organization such as technology for enhance organization performance. Moreover, Organizations should invest in tasks such as team building, organization restructuring and training programs to ensure that the work environment is appropriate and the employees are equipped for their roles. Since HRM is concerned with maximizing organization performance, the managers should make appropriate plans to ensure that the customers give maximum profits to the company (Torrington, Taylor, Atkinson, and Hall, 2008).
Conclusion
Strategic Human Resource Management refers to how human resources can make use of their capabilities in ensuring that an organization achieves it long term goals. For an organization to succeed, the goals of the human resource department and other organization resource must align to the organization goals. Therefore, SHRM plays a critical role in ensuring the success of any organization. In the recent past, there has been increasing concerns about global competition, increased globalization of technology, and productivity. Therefore, organizations are required to change their management strategies especially on human resources. SHRM focuses on how organization can improve how they manage their human resource to enable them enhance their performance and become more competitive.
The HRM practices, which include recruitment, selection, compensation, employee participation, training and internal labor market, are important in enhancing performance of any organization. Tesco has been able to utilize most of these practices, which has enabled it to remain competitive. Resource based theory aims at demonstrating the settings that makes human resources limited. This encourages organizations to exploit human resources in attaining a competitive advantage over its competitors. This entails focusing on value, rarity, inimitability, and organization. Since people or the employees are the major asset of an organization, HRM should focus on equipping the employees with appropriate skill to enhance their performance. Moreover, the employees should be compensated appropriately to ensure they give their best.
Works Cited
Allen, M. & Wright, P 2006, Strategic Management and HRM, CAHRS Working Paper Series, 4(1), pp. 1-28.
Armstrong, M 2009, Armstrong’s Handbook of Human Resources Management Practice, Kogan Page, London.
Boxall, P., Purcell, J. & Wright, P 2007, The Oxford Handbook of Human Resource Management, Oxford University Press, London.
Caliskan, E 2010, The Impact Of Strategic Human Resource Management On Organizational Performance, Journal of Naval Science and Engineering, 6(2), pp. 100-116.
Donaldson, L 2006, The Contingency Theory Of Organizational Design: Challenges and Opportunities, In: R. Burton, ed. Organization Design: The Evolving State-Of-The-Art, Springer, New York, pp. 19-39.
Haerifar, P 2011, Performance Management in Tesco, GRIN Verlag, . London.
Kiessling, T. & Harvey, M January 2005, Strategic global human resource management research in the twenty-first century: an endorsement of themixed-method research methodology, The International Journal of Human Resource Management, 16(1), pp. 22-45.
Lengnick-Hall, M., Lengnick-Hall, C., Andrade, L. & Drake, B 2009, Strategic human resource management: The evolution of the field, Human Resource Management Review , Volume 19, p. 64–85.
Marchington, M. & Wilkinson, A 2005, Human Resource Management at Work: People Management and Development (CIPD), John Wiley & Sons, London.
Martin-Alcazar, F., Romero-Fernandez, P. & Sanchez-Gardey, G 2005, Strategic human resource management: integrating the universalistic, contingent, configurational and contextual perspectives, The International Journal of Human Resource Management, 16(5), pp. 633-659.
Pardo, I. & Moreno, V 2009, Looking into the black-box: analysis of the effectiveness of human resources strategy, Zb. rad. Ekon. fak. Rij. , 27(1), pp. 31-56.
Syed, Z. & Jamal, W 2012, Universalistic Perspective of HRM and Organisational Performance: Meta-Analytical Study, EuroJournals, Inc., Volume 13, pp. 47-57.
Torrington, D., Taylor, S. Atkinson, C. & Hall, L 2008, Human Resource Management, 7th Edition, Financial Times/Prentice Hall, London.
Ulrich, D 1997, Human Resource Champions: the Next Agenda for Adding Value and Delivering Results, Harvard Business School Press, New York.
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]