Strategic Human Resource Management
The human resources function is one of the most important functions in any organization. The role of the function is to ensure that the available human resources in an organization are utilized optimally for the success of the organization. Many studies conducted in the past have shown that the human resources department, if managed strategically, can enhance organizational performance greatly. In particular, the concept of strategic human resources management is currently considered as one of the core organizational practices that can boost productivity among employees while at the same time enhancing the overall performance of the organization. The practice of strategic human resources development is linked to effective management in the organizational context as well as to a variety of challenges. At the same time, it has specific goals within any organization and achieving those goals depends on the level of interaction between the SHRM function and the other organizational functions.
Understanding how SHRM works can be an essential starting point for boosting effective competency utilization in any organization. This begins with understanding what the goals of SHRM are and how they help the function to realize the organizational goals and objectives. The ensuing paper explores the practice of SHRM in organizations with the objectives of:
- Explaining the goals of strategic HRM in an organization
- Providing an overview of the role of strategic HRM in the organization
- Explaining how strategic HRM impacts organizational performance
- Highlighting some of the challenges faced in the practice of HRM in an organization and the potential for solution
- To explore how technology has changed the practice of HRM in organizations
These objectives will be accomplished in three major sections of the paper which include an overview, literature review section, and the results and recommendations section. The literature review section will help to formulate hypothesis for the paper and subsequently to find a clear course of discussion for the same.
The Human resources function performs the role of personnel management in any organization. This role include practices such as advertisement of organizational vacancies, recruitment and hiring of employees, training of employees, assignment of employee roles and responsibilities, management of employee complaints and management of employee behaviors among others (Cania, 2014). With these practices, the HRM function can be said to be in control of the organizational behavior and as such, has the power to influence the organizational culture. Because of these roles in the HRM function, it is considered to be an essential driver of organizational performance both in terms of behavior and in terms of actual asset outcome. Effectiveness of the HR function determines the overall productivity of the work place as well as the discipline of the employees. Where the HRM function does not perform its initiatives optimally, achieving organizational goals can be a challenge as productivity can be reduced. The roles of the HRM function are also interlinked to each other. For instance, the recruitment process may be successful but if the role assignment does not consider the key competencies of each member of the organization, the function may not utilize all the available competencies optimally. Wrong employee placement results in reduced productivity due to lower capability to handle assigned roles (Cania, 2014).
Based on the functions of the HRM department in the organizational context, the function has to perform effectively through any possible strategy. In the contemporary times, the strategy that is encouraged in the organizational context is described as strategic human resources management. This strategy implies that the available competencies are to be utilized to the best of their capacity in order to ensure that organizational goals and objectives are met. Strategic HRM focuses on the use of available opportunities and talents to improve the effectiveness of all the other departments in an organization (Wagh, 2017). This involves various concepts including applying a coherent strategy for the design and management of the organization’s personnel, operations based on an employment policy as well as a work force management strategy; having a workable philosophy underpinning all the systems in operations; matching the function goals to explicit organizational goals and enhancing the organization’s competitive advantage through the use of the available resources (Cania, 2014).
The functions of the HRM department are thus varied and also more capable of resulting in effective or poor organizational performance depending on how the function is managed. The ability to address the challenges faced in the function with effective and sustainable solutions can be the beginning of enhanced organizational performance. The performance of the organization in this regard, is described as the value that can be gained through the organization, both financially and in terms of employee behavior versus relative to the expected value. While the financial value is easy to quantify and to observe, the behavioral value is more difficult to quantify. This brings about a challenge to the HR department in that the organization spends on the employees yet cannot categorize them as assets (Walsh et al., 2010). Instead, the employees appear as expenditures in the company balance sheet yet have great value in the organization, and can even be considered to be the greatest assets to the organization.
Strategic human resource management is applauded as an effective strategy for boosting organizational performance. In the management of organizational personnel, effectiveness in employee handling can translate into better relationships between employees and customers and subsequently greater value in terms of finances. Bagga and Sanjay (2014) assert that the primary goal of strategic HRM is to improve the productivity of employees and to identify operational areas where there is need for long term improvements. The achievement of this goal requires that the HR function be aligned to the goals of the organization making it essential for the function to consider this as one of its objectives. The other key goals of SHRM thus include: to enhance the organizational performance and the management of human capital; to develop a nurturing organizational culture so as to foster innovation, competitive advantage and flexibility in the organization’s operations. Strategic HRM also aims at linking the HR function with the general organizational objectives and goals (Bagga & Sanjay, 2014). Wagh (2017) also describes other goals of the strategic HRM function. These goals include: to create an effective organizational culture; to improve the employee value proposition; and to utilize the available talents and opportunities for the benefit of the organization. Strategic HRM also purposes to emphasize the organizational code of ethics and subsequently enhance employee behavior. At the same time, the function monitors the societal impacts of the business and puts in place strategies to enhance this impact (Wagh, 2017). In its efforts to improve societal impacts, strategic HRM pursues sustainable CSR and also enforces discipline among the work force.
Strategic HRM and Organizational Performance
Organizational performance can be difficult to understand based on the broad definition that is associated with the concept. In all the definitions of the term, it stands as a dependent variable, a function of many organizational features including organizational culture, behavior and the functioning of different departments. At the core of organizational performance, it consists of variables such as behavior and actions that are in alignment with organizational objectives (Cania, 2014). Quantifying organizational performance is thus dependent on the capacity of different functions to perform effectively in aligning the independent functional goals to the overall organizational goals. The organizational performance is evaluated based on a given expected outcome and in comparison to the outcome realized. Cania (2014) defines the outcomes as multidimensional, encompassing the behavioral aspect as well as the results achieved. Monitoring the organizational behaviors is thus a crucial starting point of organizational performance. This is because as the performance evaluation considers the output, directing the organization towards effective performance entails monitoring the system inputs to ensure they can be essential in achieving the desired performance outcomes. Both inputs and outputs are thus important in the organizational performance system.
In tandem with the position provided by Cania (2014), Agarawala (n.d) asserts that the management of organizational performance has to apply a strategy that will be able to check all the business components. Agarawala further describes the key outcomes associated with organizational performance. Such outcomes include: the HR related outcomes such as employee turnover, absenteeism from work, job satisfaction levels and the organizational commitment; the organization related outcomes such as the productivity of employees, service quality, efficiency of service delivery, and customer satisfaction; financial outcomes such as profits return on assets, the sales volumes and returns on investment; and capital market related outcomes such as the market shares, organizational growth and the share prices (Agarawala, n.d). Considering each of these outcomes independently clearly defines the need for effective human resources management as each of the outcomes is linked to the HR department to some extent. For instance, the productivity of the organization is the sum of the productivities of the work force. Similarly higher market shares can only be gained through effective marketing, which relies on the work force available.
Challenges to Strategic HRM
The role of strategic HRM in the organizational context implies that the function also faces multiple challenges when it comes to the need for effective performance. Stankiewicz (2015) highlights some of the challenges associated with strategic HRM. The first challenge is cited to be the organizational culture. On the one hand, the organizational culture is essential for effective performance of the strategic HRM function. Where the organizational culture is supportive, strategic HRM can achieve all its goals when applied appropriately. On the other hand, lack of a supportive organizational culture can hamper the achievement of SRHM objectives in the organization. Furthermore, the needs of organization’s professionals may also hinder the achievement of strategic HRM goals. These are the unfulfilled needs which reduce commitment to the work place objectives and dampen the productivity of the employees. Provision of a suitable work environment entails satisfaction of the needs of the employees while at the same time addressing the organizational needs. Providing sufficient equipment, information and training for employees can be a significant step towards achieving the SHRM goals in the organization.
Walsh et al (2010) also mentions the challenges faced in working with human assets. According to Walsh et al (2010), the characteristics of human assets in an organization can be a challenge to strategic HRM. Stankiewicz (2015) defines this challenge in terms of personal attitudes and values in the work place. The divergence of personal attitudes and values from those encouraged in the work place environment can result in great challenges when it comes to working together. Issues such as employee resistance to change as well as lack of adherence to organizational code of ethics arise due to the lack of tandem between individual values and attitudes and those of the organization. Such challenges can only be addressed through effective employee training and job positioning. In addition to this, the performance of the human capital cannot be effectively quantified (Walsh et al., 2010). Contrary to other departments such as the sales department, the performance of strategic HRM cannot be valued in terms of the productivity of the available man-power. The value added to an organization by the work force cannot be quantified financially. This is made worse by the fact that the employees cannot be indicated as an asset in the balance sheet but can be indicated as expenses. The employees are not company property and cannot thus be considered assets per se, but their contribution to the organization makes them all the more valuable as other assets are. Another challenge to strategic HRM is that it is difficult to predict employee behaviors. Although an inevitable investment, employee behavior cannot be measured, predicted or even observed at times. This not only makes it challenging for the HRM personnel to justify their expenses but also reduces zeal towards employee satisfaction (Walsh et al., 2010).
Based on the literature review, the paper argues that:
- The strategic HRM function is a nexus between the organizational behavior and the organizational performance.
- Despite the challenges faced, several factors can facilitate the performance of strategic HRM.
- The main objective of strategic HRM is to utilize the available human resources optimally for the achievement of the organizational goals.
Results and Recommendations
The organizational performance is linked to various aspects of strategic human resources management. From the literature review, it is observable that the organizational performance, hinges on factors such as employee behavior, financial outcomes, market performance and the organizational culture to a large extent. At the same time, it has been established that the organizational culture is developed to nurture flexibility, innovation and competitive advantage through the strategic HRM function. This implies that the HRM function has to monitor and direct organizational behaviors, provide a blue print for the organizational code of conduct and subsequently monitor adherence to the same. Strategic HRM therefore becomes the central point in the link between organizational performance and the functions of other aspects of the business. In terms of the market shares and the financial accounting outcomes, the strategic HRM function manages to realize connections between performance and the work force through satisfaction of employee needs as well as through proper alignment of the employee goals and objectives to the organizational goals and objectives.
The challenges faced by strategic HRM in the accomplishment of its roles are many. However, the literature shows that the key objective of the function is to bring together the competence and opportunities in the work place, and the organizational goals and objectives. It is recommended that integration at various levels of the organization be pursued to ensure that strategic HRM achieves its objective. According to Wei (2006) achieving integration can be considered a starting point for the effectiveness of the strategic HRM function. Coherence in operations across departments can be beneficial to the organization as well as to the customers. Such congruence can be either vertical or horizontal. The vertical congruence is considered to be the link between the HR measures of practice and the organizational strategies. On the other hand, the horizontal fit is that across different strategic HRM functions. If both types of congruence are achieved, the organization can be able to accomplish the objectives of the strategic HRM function. Wei (2006) purports that some of the factors that contribute to such integration in roles include: individual factors, functional factors and organizational factors. The individual factors mentioned by Wei are aspects such as the knowledge and skills of the employees, the ability of the top managers to support the employee functions, and the capability of the HR function. This implies that these three factors have to work successfully to ensure that the desirable type of fit is achieved. Failure of any of these components impacts negatively in role performance at various stages of the organization.
In functionality, phenomena such as the operational policies, the availability of options and the budget for operations all impact on the level of congruence between strategic HRM and the other business functions. Failure on any of these functions results in negative performance in the overall HRM function as well as in the entire organization. At the organizational level, the strategies and culture put in place are essential in ensuring that the organizational performance is effective. The strategy applied in pursuing organizational goals is also important in the efforts to achieve greater organizational performance. The implication of this is that without a clear and effective strategy, it may be difficult for an organization to accomplish its goals. This explains why organizations have clearly developed strategic plans which they train all employees to work towards. In some companies, the clarity of productivity expectations creates the link between organizational goals and the performance initiatives held by different employees.
Technology and SHRM
To some extent, technology has reduced the implications of various challenges to the SHRM function. The use of technology in the organizational context and particularly in the HR function has widened the role of SHR in an organization. According to Jain (2014), IT has increased the ability of strategic HR professionals to integrate employee databases within the overall organizational databases and to provide information to employees regarding news, policies and new findings in the organization. Moreover, the use of SHR IT has enabled the function to be available to all organizational members online. This makes it easier for employees to edit and/ or update their information online, thus lifting the burden of information maintenance and storage off the shoulders of the HR personnel (Jain, 2014). It can thus be deduced that the use of technology in strategic HR eliminates routine work and also enhances communication in an organization.
Strategic HRM is an essential step towards achieving organizational goals. Based on the arguments presented by the literatures reviewed in the paper, the goals of strategic HRM are clear. The primary goal is to improve the productivity of the employees through the use of the available competencies and opportunities. The ability to understand organizational needs and goals goes hand in hand with strategic HRM practices such as recruitment and selection of employees, training and employee development, enhancing employee job satisfaction, providing a dynamic and motivational environment for employee growth. Through these practices, strategic HRM aims at providing a link between organizational performance and the employees of the organization. This is explained through the relationship between the HRM function and features such as organizational culture, organizational behaviors, employee attitudes and approaches to role performance. These factors have been established before to be determinants of organizational performance. It its functioning however, the strategic HRM function faces many challenges, mainly to do with the variable and immeasurable nature of human resources performance. It is thus important to provide supportive environments at individual, organizational and functional levels of the organization.
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Cania, L. (2014). The impacts of strategic human resource management on organizational performance. Economia Seria Management, 17(2): 373- 383. Retrieved from www.mer.ase.ro/files/2014-2/14.pdf
Bagga, T. and Sanjay, S. (2014). SHRM: alignment of HR function with business strategy. Strategic HR Review, vol. 13, no. 4/5, www.doi.org/10.1108/SHR-03-2014-0023
Jain, V.K. (2014). Impact of technology on HR practices. International Journal of Informative and Futuristic Research, 1(10): 25- 37. Retrieved from www.ijifr.com/pdfsave/13-06-2014621JUNE-V10-E15.pdf
Stankiewicz, K. (Ed.) (2015). Contemporary issues and challenges in human resource management. Gdansk. Retrieved from www.zie.pg.edu.pl/documents/10693/38995566/Contemporary%20Issues%20and%20Challenges.pdf
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