STRATEGIC HRM

Strategic human resource management is relevant to all organisations- public or private, irrespective of form, hierarchic or networked fluid or command-control etc. SHRM has both policy and operative aspects. Understanding of SHRM ranges from a 'reactive' management field where human resource management is a tool with which to implement strategy, to a more proactive function in which HR activities can actually create and shape organisational strategy.

Human resource management being an architectonic activity may not be targeted or specific enough to achieve desired levels of accuracy and economy in policy making and implementation.

There is therefore need for strategic human resource management for cost effectiveness of HR programmes.

Hence, SHRM is predicated on two fundamental assertions.

First, an idea that an organisation’s human resources are of critical strategic importance; that the skills, behaviours and interactions of employees have the potential to provide both the foundation for strategy formulation and the means of strategy implementation.

Second, the belief that firms’ HRM practices are instrumental in developing the strategic capability of its pool of human resources. (Colbert, 2004)

. New perspectives continue to emerge on Strategic Human Resource Management (SHRM).

The SHRM debate has progressed from considering how personnel management differs from HRM to exploring how HR can lead to more sustainable competitive advantage. Strategic human resource management entails integrating HR practices with discrete specific strategy formulated or articulated towards identified ‘end’(intermediate-end or ‘mean’ or desired ‘value’) through “hierarchic purposive behaviour” directed towards pursuit of ‘final value’ or ‘organisational goal’ through intermediate ends as perceived by Simon.

 Such ‘end’ or intermediate ‘end’ (also mean) is articulated academically (since public administration is cooperative rational action) and implemented through strategic decision making regarding.

For instance, cost reduction or better public relations would form an identified ‘end.’ Human resource practice would need to be weaved into organisational strategy and implemented by means of specific strategies crafted towards identified ‘end’.

 Organisational functioning would thus proceed as a coherent linear with each sub-policy integrally linked with overall policy till the objective is reached.

SHRM is therefore contingent on

(a) identification of end,

 (b) articulation of strategy, and

(c) integration of sub strategies into the whole i.e. organisational policy.

The important issue is to find ways of integrating HR strategy with organisational strategy to achieve desired economy in operations.

Wide array of questions addressed in strategic human resource management are recounted as follows: (Colbert, 2004)

• “What is the effect of HR practices on the development of a firms’ human resources;

 • Which HR practices lead to greater organisational performance;

• To what degree does that depend on a firm’s strategy;

• How does it ensure that its individual HR practices ‘fit’ with one another or does ‘fit’ at all matter in HR practice?; and

 • Must the attributes of a firms’ base of human resources always align with a priori strategy, or can its stock of skills, knowledge and interactions drive strategic direction?”

Strategic HRM can include a number of individual HR strategies, for example:

• To deliver fair and equitable reward.
• To improve employee performance.
• To streamline organisational structure.

Evolution of Strategy

Strategy is basically a “military” term. However, it is not in this sense that it has implications for human resource management.

Chaffee (1985) considers that academically, strategy is viewed in three distinct but sometimes conflicting ways, as, linear strategy, adaptive strategy, and interpretative strategy.

(a) Linear Strategy: The linear model has been used by most researchers. It focuses on planning and forecasting of likely events. Sequence of events is traced through past and present activities to its logical culmination in the ‘value’ or ‘end’ to be achieved in the future.

(b) Adaptive Strategy: The second model is described as the adaptive strategy model and is most closely associated with the idea of ‘strategic management’. This model focuses on means and is largely concerned with achieving ‘fit’ of a strategy with respect to internal and external factors. P

(c) Interpretative Strategy: Interpretative model represents a minority view. It sees strategy as a metaphor and, therefore, not as something measured or measurable but rather, as something perceived in qualitative terms. Strategy is the visible tip of the iceberg, representing the underlying factors or the underpinning theme of organisational philosophy. This concept is more representative as there is a reflection of long- term objectives, which are glimpsed through the microcosm of specific strategies. It was Peter Drucker who pointed out the importance of strategic decisions in 1955 in his book, The Practice of Management, in which he defined strategic decision as “all decisions on business objectives and on the means to reach them”

STRATEGY & ITS SCHOOLS

Mintzberg (1998) has identified ten ‘schools’ of strategy research which have developed since strategic management emerged as a field of study during the 1960s:

1. The Design School; where strategy is perceived as a process of conception through a choice of alternatives. All contextual and contingent factors are taken into account in arriving at choice(s).

2. The Planning School; whereby strategy is construed a formal process and a deliberate planned construct. Strategy making is put in a temporal perspective in that it is seen as evolving gradually out of a series of steps.

3. The Positioning School; by which strategy is perceived as an analytical process; contingency of situations is taken into account in framing suitable strategies.

4. The Entrepreneurial School; which looks upon strategy as a visionary process. There is a perception of the future and actual strategising depends on assessment of vulnerability and feasible risk taking.

5. The Cognitive School; which opines that strategy is a mental process. It is conceived in the mind of the strategist and the degree of success attained in practice depends on the quality or level of cognition of the individual strategist. Stress is unmistakably on the quality of human capital employed at strategic positions by an organisation.

6. The Learning School; where strategy is conceived as an evolving concept; as constantly growing and developing through the impact and interplay of internal and external forces and factors. There is a suggestion of the ‘organic’ view in that organisational activity is seen as dynamic, as constantly evolving, growing and rediscovering new dimensions and through interactive strategy.

7. The Power School; views strategy as a process of negotiation resulting in an L.C.M (least common denominator) through interplay of relevant forces and factors where bargaining power of the interest or pressure groups is a factor of consequence. ‘Design’ sequence or stage of the decision making process (Simon, 1957) entails exploration of possibilities which are articulated as administrative norms and proffered as inputs by interested parties to policy design.

8. The Cultural School; whereby strategy is perceived as a reflection of organisational culture or mode of functioning (whether hierarchical or team, directive or participatory). Strategy is perceived as a dependent variable. The functioning of the enterprise determines what kind of strategy is adopted or considered desirable and feasible under a given set of circumstances.

 9. The Environmental School; which looks upon strategy as a ‘reactive product’ (responsive to stimuli from the environment). Environment is the independent variable here and strategy the dependent variable.

10. The Configuration School: whereby strategy is perceived as a process of transformation from the actual to the desired state of affairs. There is reference to organisational ‘architecture’ here as, organisational design (structural configuration) involving segmentation; division and coordination are altered in the desired way through the instrumentality of and for the purpose of strategy. Organisational functioning is thereby imparted required direction. Synthesis of strategy emerges which cannot be foreseen.

Formulating Strategy

Formulating strategy requires defining intentions (strategic intent) allocating and matching resources to opportunities (resource-based strategy), achieving thereby, ‘strategic fit’ or balance with respect to organizational strategy. The effective development and implementation of strategy depends on the strategic capability of the organisation, which includes not only determining strategic goals but also developing and implementing strategic plans employing strategic management.

The concept of  Barney proposes four criteria for deciding whether a resource can be regarded as a distinctive capability:

a. It must result in value creation for the customer;

 b. Its presence should be a distinguished rarity, compared to the competition;

c. It should be non-imitable and should have; and

 d. Non-substitutability. It is based on a deep understanding of the compet itive environment, the resource base and potential of the organisation and the values that engender commitment from Takeholders of the organisation.

Features of SHRM Features of strategic human resource management could be inferred as mentioned below:

• Organisational level - Because strategies involve decisions about key goals, major policies and the allocation of resources, they tend to be formulated at the top;

• Focus - Strategies are business-driven and focus on ‘organisational effectiveness’; people are seen primarily as resources to be managed towards the achievement of strategic business goals; and

• Framework - Strategies by their very nature provide a unifying framework that is broad, contingency-based and integrative. They incorporate a full complement of the HR goals and activities designed specifically to fit extant environments and be mutually reinforcing and synergistic

 The concern is with broader issues in organisational functioning. Strategic management is thus explained as:

• A set of decision and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of an organisation (Pearce and Robinson, 1988); and

• Concerned with policy decisions affecting the entire organisation, the overall objective being to position the organisation to deal effectively with its environment.

Implications of SHRM

SHRM has the following distinct implications:

1. The use of planning to maximise advantage from human resource management;

2. A coherent approach to the design and management of personnel systems based on employment policy and manpower strategy underpinned by ‘philosophy’; and

3. Human resource management activities and policies are aspects of explicitly formulated business strategy.

However, strategic HR objectives go beyond simplistic calculations and control of staff numbers and overall cost control. Strategic thinking incorporates ethical and legal considerations, which have complex implications for the achievement of a wide range of business objectives. A few are listed below. .

(a) Equity: Applicants and employees should be treated fairly to minimise complaints or negative publicity.

(b) Consideration: There should be consideration for individual circumstances and aspirations while taking strategic decisions which affect the security, prospects and self-respect of employees.

(c) Commitment: Commitment and motivation of employees should be secured as a priority issue. Staff tends not to be committed to organisations, which are not committed to them.

(d) Working Conditions: Safe, healthy and pleasant conditions enhance well[1]being, minimise stress and improve efficiency. Physical and social working conditions determine work efficiency significantly and need to be included in strategy.

APPROACHES OF SHRM

(a) Universalistic; where some HR practices are believed to be universally effective. This approach proffers common, standard, individual HR practices, and treats them as principles claiming verifiability and consistent applicability. Scholars contend that it errs in oversimplifying organisational reality since it does not explain complex system interactions and has a rather “isomorphic” than “differentiating” effect (Colbert, 2004).

(b) Contingency; where effectiveness of HR practices is taken as dependent on organisation's strategy, systems interaction and ‘achievement of ‘vertical fit’ regarding policies. It goes beyond simple linear causal relationships for prescription of HR practices and allows for interaction effects and varying inter[1]variable-relationships (system interaction effects) during strategy formulation. The stress is on achieving ‘vertical fit’ or integration of policy through hierarchic levels and its consistent alignment with strategy. The idea of ‘horizontal fit’ envisions HR practices as “hanging together as a coherent self[1]reinforcing system.”(Colbert, 2004)

(c) Configurational; where there is believed to be synergistic or mutually reinforcing relation between HR practices and strategy that are crucial for enhanced performance, whereby, researchers gather data regarding “multiple dimensions of organisations such as strategies, structures, cultures and processes into typologies of ideal types” and treat the types as independent variables. This approach therefore gives patterns of HR practices that together form an internally consistent whole. Ideal type model building is attempted, whereby few possible system configurations are developed. It then correlates patterns with performance. However, configurational approach confines real life possibility into two or three system types which might not in practice cover real life possibilities (Colbert, 2004)

The Best Practice Approach

(a) Employment Security: This implies employee security in the face of exigencies like economic downturns or the strategic errors of senior management on which they have little or no control. It is fundamental to the implementation of such high-performance management practices as selective hiring, extensive training, information sharing and delegation. Companies are unlikely to invest in the screening and training of employees who are not expected to stay long enough for the firm to recoup its investment. And if the policy is to avoid lay-offs, the company will hire sparingly.

(b) Selective Hiring: Selective recruitment is needed to minimise training costs. Organisations should look for people with the right attitude, values and cultural attributes that may be hard to inculcate by training. Management should also be able to predict the employee’s performance and the likelihood of the employee remaining with the company for a long time.

(c) Self-Managed Teams: These are a critical component of high[1]performance management systems. They:

(i) Substitute peer-based control for hierarchical control of work;

(ii) Lessen tiers in hierarchy; and

(iii) Permit employees to pool their ideas in order to produce better and more creative solutions to work problems.

(d) High Compensation Contingent on Performance: Compensation offered to employees is made contingent on organisational performance, for example, gain sharing or profit- sharing can be related to individual or team performance or even unique or particular individual skills.

 (e) Training: Virtually, all descriptions of high-performance work practices emphasise the role of training in providing needed skills and creating a motivated workforce that has the knowledge and the capability to perform required tasks.

(f) Reduction of Status Differentials: The fundamental premise of high[1]performance work systems is that organisations should be able to tap ideas, skills and efforts of its employees. For this to be possible, status differentials should not be emphasised to the detriment of team spirit in an organisation.

 (g) Sharing Information - This is an essential component of high[1]performance work systems for two chief reasons.

First, the sharing of information on the firm’s financial performance and business strategies sends a positive message across to employees that they are valued.

Second, even motivated and trained people cannot contribute to organisational performance if they do not have information on important aspects of performance and training in interpreting and using that information.

Best Fit

For the reasons given above, ‘best fit’ is considered more appropriate than best practice’. This is not to say that ‘good practice or ‘leading-edge practice’, (practice that does well in one successful environment) should be ignored. Benchmarking has its uses as a means of identifying areas for innovation or development practice applied to good effect elsewhere.

But having learnt what works and what does not work in similar situations, the organisation has to decide what general policy should be adopted and what lessons can be learnt to make the adopted idea fit its own particular strategic and operational requirements.

The requirement is an analysis of the business needs of the organisation within its own particular context, (culture, structure, technology and processes) indicating clearly what has to be done. Thereafter, it maybe useful to adopt a mix of various ‘best practice ingredients’, to develop an approach which applies practices that are appropriate in a way that is conducive to identified business needs.

Resource Based View

Strategic human resource management is an extension of the Resource Based View (RBV) of competitive advantage of a firm or an organisation. (Colbert, 2004) Proponents of RBV argue that sustained competitive advantage originates in an organisation’s resource base thereby drawing attention to the internal workings of an enterprise. Strategic human resource management, therefore, emphasises the role of the manager.

Optimising human and material resource comes under the functions of the executive. RBV has helped build a productive theoretical bridge between the fields of strategy and HRM. It has been an integrative framework for optimising use of human material resources for sustained competitive edge. (Barney, 1991)

MODELS OF SHRM

The High-Performance Working Model

The models of SHRM are either prescriptive or descriptive. As per Guest’s model of 1987, HRM can be derived empirically and conceptually from analyses of individual practices overtime leading to testable propositions and finally, prescription of policy.

There are four key elements or goals of strategic human resource management, as identified by Guest. These are:

 (1) integration;

 (2) commitment;

(3) flexibility, and

 (4) quality.

Guest’s model however takes little account of contextual circumstances such as impact of situational and environmental factors on organisational practice. The other major paradigm is functionalism, which draws upon functionalist sociology propounded by Comte.

The High-Performance Working Model

Guest suggests that the main drivers of support system or culture are:

 • Decentralised decision- making, especially at the cutting edge level so as to constantly renew and improve offers or services made to customers or people in general;

• Development of people -capacities through induced learning at all levels, with particular emphasis on self-management and team capability to enable and support ‘performance improvement’ and enhance ‘organisational potential’;

• Performance, operational and people management processes are aligned to organisational objectives to build trust, enthusiasm and commitment towards the direction or course of action adopted by the organisation.

• Fair treatment of those who leave the organisation mid-course, and engagement with the needs of the community outside the organisation. This is an important component of trust and commitment based relationships, both within and outside the organisation; and;

• High-performance management practices that include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, and incentive pay systems and performance management processes.

The High-Commitment Management Model

Ways to achieve high commitment are:

• Development of leadership through training, with premium on commitment as highly valued characteristic at all levels in the organisation;

• A high level of functional flexibility abandoning potentially rigid job descriptions;

• Reduction of hierarchies and de-emphasis of status differentials;

• A heavy reliance on team infrastructure for disseminating information (team briefing), designing and distributing work (team working) and problem solving (quality circles);

• Understanding job design as an area of management craft to provide intrinsic satisfaction to workers;

• A policy of no compulsory lay-offs and permanent employment guarantees with the possible use of temporary workers to withstand fluctuations in the demand of labour;

 • New forms of assessment and payment systems; more specifically, merit pay and profit sharing; and;

• High degree of involvement of employees in the management of quality.

The High-Involvement Management Model

While commitment might still suggest subjugation, this model is more democratic in approach, in that it involves treating employees as partners in the enterprise whose interests are respected and who have a voice in matters concerning or relating to them.

This establishes full mutual understanding of what is desired by both the management and workers and also establishes the means of managing and developing employee potential to ensure target accomplishment through better involvement across the region. Specifically, the following structural and functional attributes are desired.

• ‘On line’ work teams;

• ‘Off-line’ employee involvement activities and problem solving groups;

• Job rotation;

• Suggestion programmers; and

• Decentralisation of quality efforts.