In today’s rapidly changing globalised business environment, human capital has become one of the keys to competitive advantage. Consequently, any good business strategy must fully utilise the inimitable assets of people through their knowledge, skills and abilities. This highlights the need for strategic human resource management (SHRM). The key assumption of SHRM is that organisational performance is affected by employees through a set of human resource (HR) practices (Pan et al 2006).
A review of the literature linking HR practices to business strategy shows two conflicting perspectives in SHRM. The universalistic perspective suggests that there is a universal set of best practices that any business can adopt to improve organisational
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Widely acknowledged illegal practices and certain generic practices aside, it is the unique context of each business that matters when developing a HR strategy. In addition, the intentions of best practice should benefit both shareholders and workers. But as with most models of best practice, there is little reference to the role of unions or the differing needs and objectives each group has in the workforce. For example, Marchington and Grugulis (2000) suggest that Pfeffer takes a unitarist view and doesn’t take into account the complexities of managing a diverse and differentiated workforce.
The best practice approaches are also not culturally sensitive. Models that tend to reflect the individualist values of the USA will not be suitable for more collectivist cultures such as Germany or Japan. National context and the differing labour laws of each country play a fundamental role in SHRM. This severely implicates the usefulness of a best practice model.
Contingency perspective
For the contingency perspective otherwise known as best fit HRM, there are no universal prescriptions of HR policies and practices. It is all contingent on the organisation’s context and culture and its business strategy. To gain a full picture of this perspective, one must examine both forms of best fit – internal and external fit.
Internal fit has already been shown to influence universalistic models. This notion of fit advocates bundles of
The ‘‘best fit’’ approach promotes the concept that strategic HR should be inextricably linked to the formulation and implementation of strategic corporate and business objectives (Wilton, 2011). This means that the HR strategy is concerned with matching the employee’s role behaviour with the company‘s mission, values and goals. Wilton (2011) explains this by giving an example whereby if a company‘s business strategy is based on delivering a high quality service, then the HR strategies and policies need to focus on the quality of its employees. This would be achieved by rewarding attitudes and behaviour that match this approach. Boxall and Purcell (2008) support this idea by highlighting that companies may fail if they do not adapt to their environment. The best fit approach therefore aims to improve organisational performance by integrating all activities in such a
Business environment is facing a rapid change that reminds the business management to focus on its core competencies to survive and sustain in the competitive environment. The core competencies can be developed by strategic human resource management. According to Armstrong (2006) employees are the valued assets for a company. The strategic human resource management is mainly developed in accordance to the fact that human resources need to be managed strategically for the company to enjoy sustainable competitive advantage.
Today 's fast-paced, competitive business environment has resulted in "rediscovery" of the human resource management function as a group that may be able to enhance firm competitiveness and performance by being "strategic" (Dyer & Kochan, 1995; Ulrich, 1997). Strategic Human Resource Management is a term describing an integrated approach to the development of Human Resource Strategy that will enable the organization to achieve its goals (Armstrong, 2005). Whiles strategy is an action that managers take to attain one or more of the organization’s goals. Strategy presents a general direction set for the company and its various components to achieve a desired state in the future. This results from the detailed
Strategy is defined as: a way of doing something, or a game plan or plan of action. As a HR manager you must possess the ability to look at things from a strategic approach (Anthony, Kacmar, & Perrewe', 2010). Over the years the whole approach to HR has changed drastically and continues to change. This approach requires an employer to see human beings as a resource to the organization. The development of people is now the most important asset of improving the performance of an organization; this is accomplished through improving designs and methods of Human Resource Management.
Wright and McMahan (1994) define strategic HRM as “the pattern of planned Human Resource deployments and activities intended to enable the organisation to achieve its goals.” A HR function should impact the success of an organisation; a policy must remain current and suitable to both the internal and external environment. Ulrich and Lake (1990) affirm, ‘HRM systems can be the source of organisational capabilities that allow organisations to learn and capitalise on new opportunities.’
The practise of Human Resources is moving from the traditional forms of managing people to a more strategic form whereby the Human Resources function is closely linked with organisational performance and success. This strategic form of human resources has increased the need for the Human Resource professional to understand the linkages between Corporate Strategy, Human Resource Strategy and Employee Integration.
The term Human Resource Strategy is well defined as - “Human Resource management (HRM) is a strategic approach to managing employment relations which emphasises that leverage people 's capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices.” [ Bratton and Gold,4e,p3]
CRITICALLY COMPARE AND CONTRAST THE 'BEST FIT', 'BEST PRACTICE' AND 'RESOURCE-BASED VIEW', MODELS OF HRM STRATEGY AND EXPLAIN HOW EACH APPROACH IS ARGUED TO CONTRIBUTE TO IMPROVED ORGANISATIONAL PERFORMANCE.
The "best-fit" approach questions the universality assumption of the best-practice perspective. It emphasizes contingency fit between HR activities and the organization's stage of development, an organization's internal structures and its external environment like clients, suppliers, competition and labour markets (Redman and Wilkinson 2009). HR policy should be minted by the appropriate context of individual employees and therefore support the overall competitive strategy. Aligning HRM practices to strategies can enable companies to create potential competitive advantages (Schuler and Jackson 1987 in Redman and Wilkinson 2009).
More firms’ business strategy can be better realized using the integrative model of HRM. Both employees and firms’ aspirations can be met if the right strategy is used. . HR professionals must be well trained to implement this strategy.
The area of human resource management has transformed passing through a long path which started as personnel management initially. Personnel management involves recruitment and to keep the record of payrolls, dealing with retirements, promotions and various other similar issues. With the passage of time, gradually, the personnel manager is supposed to have an important duty beyond the boundaries of HR sector of an organisation and within the organisational process of decision-making process. This particular area forms a link between practices of HRM and organisational performance (OP). It has been proposed that HR resources efficiently contribute towards profitability of organisation by enhancing or by maintaining company’s competitive advantage. This claim can be considered plausible because the human resources convert the physical investment in to productivity (Singh et al., 2012). Scholars have
As I propose how I would ensure the HR strategy is in alignment with the business strategy, I found while doing research that Ford motors is a multinational company operating in many different parts of America. Their cars are included in world’s most familiar cars. Ford Company is a composition of eight different companies, which are categorized into three different heads; first are Japanese cars, which fall under the name of Mazda, second is the American cars, which are under Ford, Mercury, and Lincoln. Third group of Ford Company comprises on European cars. Altogether, it makes Ford Motors, the world’s second largest manufacturers of cars, trucks and SUV’s. Japanese heads manufacture cars of all prices ranges and cover large part of the market, whereas American cars are of same price, and European cars like Aston Martin, Jaguar and Volvo are for the elite class. Their objective is to become the largest manufacturer of cars of world (Dyer & Reeves, 1995).
The purpose of this paper is to review academic literature of the different frameworks/models proposed by different researchers and eventually propose a framework of choice which will help leaders to better manage their Human Capital (HC) and understand how to incorporate HR policies into everyday decision making and long term planning. First we start by defining Strategic Human Resource Management (SHRM). We then look into what purpose it serves in an organisation. Then we look into the different models of SHRM how these models compare with each other. Literature review intends to develop a new framework which is a combination of two frameworks, The Harvard Model and the Warwick model of SHRM.
As the world is turning out to be more aggressive and unstable than any other time in recent memory, producing based enterprises are looking to increase upper hand at all cost and are swinging to more inventive sources through HRM practices (Sparrow, Schuler, & Jackson, 1994). HR practices has been defined by (Smallbusiness.chron.com, 2016) as “the means through which your human resources personnel can develop the leadership of your staff.”
Within this essay an in depth analysis will be conducted on the difference between Human Resource Management and Strategic Human Resource Management using contemporary perspectives. Human Resource Management (HRM) is the process of managing human resources in a systematic way. It is a practice devised to maximise the performance of employees and is concerned with the application of management principles to manage organisational personnel while paying attention to the policies and systems of the entity (Delaney & Huselid, 1996). Strategic Human Resource Management (SHRM) is a function of management which entails development of policies, programmes and practices related to human resources, which are aligned with business strategy so as to achieve the strategic objectives of the organisation (Patrick M. Wright, 1992). Its primary purpose is to improve the performance of the business and maintain a culture that encourages innovation and works continuously to gain competitive advantage. In this essay the Resource-Based View, High Performance Management and High Commitment Management perspectives of Strategic Human Resource Management and Traditional and Collaborative