Strategic Human Resource Management
Essay title: Strategic Human Resource Management
Q. Critically analyse the article for the meaning of strategic human resource management and identify the factors impacting on strategic human resource management in contemporary organisations.
Before an argument can be put in place about whether human resource management (HRM) can be strategic, we need to be aware that human resources (HR) is more then maintaining personal functions. Corporate and economic developments since the 1950Ў¦s have dictated that businesses, to remain competitive, need to view HRM as an evolutionary process which combines the HR functions with the HR policies and strategies, with the business strategies and management teams, with all stakeholders (Unions and Governments) and with the organisation and understanding of the actual employees themselves. Strategic HRM is about aligning the abilities and desires of the employee with the needs of the business so that the corporate objectives can be met. HRM can no longer afford to be viewed as simply an administrative task. Corporations need to have ЎҐproactiveЎ¦ policies to attract and retain the right type of people to their business and in this ever changing and uncertain economic climate the management of employees takes on an even greater role.
Using the VIRO (value, rareness, imitability, and organisation) human resources can be proven to be strategic and therefore, provide firms with a competitive advantage through its people. The article by Barney and Wright (On becoming a strategic partner: The role of human resource management in gaining competitive advantage ЎV page 32) states that companies can achieve this competitive advantage on three levels, those being through the use of physical capital resources, the organisational structure and the human capital resources. The article by Schuler and Jackson titled ЎҐLinking Competitive Strategies with Human Resource Management PracticesЎ¦ states on page 208 that competitive advantage can be achieved through innovation, quality enhancement and cost reduction strategies all of which require certain specific employee behaviors to be achieved. The consistent theme with the articles is that the actions and conduct of the employees directly affects whether these forms of competitive advantage can be achieved. Strategic HRM focuses on influencing the behaviors of the employee so that their activities are aligned to achieving the corporate goals. The key is to identify the policies needed to influence and guide employees so that this, working towards a similar goal, can be achieved.
Value, first area covered by the VIRO model, focuses on minimising costs and differentiating products offered. If your product is a service then you can differentiate it by having well trained, competent and qualified staff that the clientele will like dealing with. To achieve this you may need to implement HR policies such as certified training programs. If your corporate strategy is to create value then the role of HR is to implement strategies that will achieve adding value. These may be to cut costs and improve production efficiency. HR may also add value to a firm by increasing revenues through increased employee satisfaction and responsibility ЎV linking an employees remuneration to their individual and over all company performance is one method to building an incentive for employees to generate revenues. The Barney and Wright article provided an example of where a strategic HR choice (paying aircraft on-time bonuses to employees) leads to both increased revenue (better service lead to more passengers deciding to use that airline) and decreased costs (passenger accommodation expenses due to late aircraft was reduced). If HR policies can add value to a corporation it clearly has a need to be included in the corporate strategies.
Rareness, the fact that a resource is limited, can also provide firms with a competitive advantage. The role of HR is to ensure that the characteristics of their human capital can not be found elsewhere (such as with a competitor). In other words HR needs to Ў§exploitЎЁ the rare characteristics of its workforce. For example, William M Mercer Pty Limited emphasises the fact that it is one of the greatest employers of qualifies Actuaries in the world meaning that if the rare mathematical skills of an Actuary are required then the client would contact Mercer and not a competitor who would not have the required skills. HR policies to achieve rareness include graduate recruitment programs and ensuring that the skill of these sort of people (those with the rare skills) are being used appropriately and not in a role that could be completed by some one less qualified and less rare.
Strategic HR should also focus on ensuring that the characteristics of a firm are not easily imitated or copied by others (imitability in the VIRO model). Creating a niche market for your firm can be achieved