Strategic Human Resource Management

Keywords: SHRM strategy content, SHRM and competitive advantage, SHRM and business strategy, Approaches to aligning HR strategy, Approaches to HR strategy, HR strategy Process, Three dimension of people strategy model, HR balanced Scorecard, HRM Assignment writing services

Introduction

According to Armstrong & Taylor (2014), the objective of human resource management (HRM) is to propose techniques and strategy which are useful to enhance the productivity, motivation and performance of the employee in an organisation. HRM focus on the people as a key resource and i.e. effective management and development of the employees is critical to achieving the objectives of the organisation.

Aswathappa (2013) added that the dynamic business environment because of globalisation, technological changes, profitability and growth has resulted in undergoing organisation change and consequently has increased the importance of the human resource. Human resource is a unique asset which is a vital source of competitive advantages and lack of strategic integration of HR with the strategy of an organisation fails to provide the competitive advantage as well as lose its relevance for the organisation.

Case organisation — YORLAB

YORLAB is science Glassware Company which is based in the New York and is a family owned business. The company has grown over the years and quality customer service is the top priority. The company has knowledgeable and friendly staff; flat organisation structure, as well as customer satisfaction, is the philosophy of the business. The company is planning to expand its business into new markets but the recent HR reviews have highlighted that company current HR practices are informal and will not able to support the business expansion for the company.

YORLAB management believes that effective HR strategy will increase the productivity and performance of the company. Therefore, the purpose of this report is to propose new HR strategy for the company which achieve the growth objective of the company and become a unique asset to sustain the competitive advantage.

HR strategy content

SHRM and competitive advantage

Campbell et al (2012) discussed the performance of the organisation depends upon the business strategy and how it supported by the distinct capabilities of the organisation. The organisational capabilities are based on the abilities, knowledge as well as behaviour which are managed by the employees. Therefore, the competencies and skills of the employees are key factor for efficient and effective operations and HR as a strategic asset is an important to source of the competitive advantage.

App et al (2014) stated that the knowledge and behaviour of the employee as well as interaction among the employees is important in order to formulate and implement the strategy. The competence of the employees helps to create financial and technological value for an organisation which helps to create and sustain competitive advantage. Therefore, YORLAB should integrate its HR strategy with business expansion in order to retain its reputation for high-quality customer service and sustain its competitive advantage.

SHRM and business strategy

Campbell et al (2012) The HR strategy is useful to support the competitive strategy of the organisation and role of the HR to reinforce and stimulate the employee behaviour and motivation. The important factor is that competitive strategy chosen by the organisation is based on the on the human factors. The consideration behind the management of the human resources is that companies require particular strategy to manage its workforce and HR capabilities, business strategy and HRM strategy needs to create effective linkage.

The strategic option chosen by the YORLAB is market development and i.e. it should align existing and new employees with business expansion in order to achieve objectives of the company (Bagga & Srivastava, 2014).

Approaches to aligning HR strategy

Aswathappa (2013) suggested that the purpose of the HR strategy is to develop the capabilities which are useful to create and maintain the competitive advantage. The contingency approach or matching involves finding the fit between the competitive strategy and HR strategy of the company. The matching model suggests that HRM strategy should focus on the vertical integration between business strategy and HR.

The content-focused approach to HRM strategy focused that HRM element match with the strategy of the organisation and whereas implementation approach focuses on the formulation of the business strategies which achieve the vision of the company.

The alignment of the business strategy and HRM systems through one-way vertical fits consider the role of the HR as a partner and it is high integrated with processes of the business. The high quality customer service and the repeat customers are critical for the YORLAB and it is important to view the employees as strategic asset the company to sustain competitive advantage (Bamberger, Biron, & Meshoulam, 2014).

Moreover, Lengnick-Hall et al (2011) highlighted that horizontal fits involve the alignment of the various functions and create a connection between and among the people. The horizontal alignment involves the alignment of the processes and system which reference to the desire performance and achieve desired behaviour. Contingency theory highlighting on the economic attractiveness is to fit between the competitive strategy and HR strategy. Nevertheless, the change management theories suggest that HR strategy should fit with the degree of change rather business strategy.

Approaches to HR strategy

According to Chadwick et al (2015), the employees in an organisation have different roles and i.e. require a different type of HR strategy. In other words, to manage the employee relationship it is important that organisation establish different HR strategies. The particular useful model to manage the configuration of the human resource management in an organisation is ‘Lepak and Snell’. The model examines the four different approaches to managing the different employees in an organisation based on their strategic need.

Examining the Human Resource Architecture
HR configuration (commitment-based, productivity-based, compliance-based, and collaborative)

Commitment HR strategy

Tiwari & Saxena (2015) argued that the employees’ relationship is focused on the long-term and employees have both uniqueness as well as high strategic importance. The internal knowledge and skills development is important to develop the individual distinct knowledge which values to the organisation and empower the employees which provide motivation and encouragement to participate in the important decision of the company to maximise productivity and performance.

The important consideration under commitment based strategy is that it includes family style relationship between employee and organisation, job enrichment and mentoring programme, investment in training and development as well as the implementation of the skills-based pay and performance system (Aswathappa, 2014).

Productivity HR strategy

This HR strategy focus on the acquisition human capital and generic employees are used for the deploying the skills for immediate use. The strategic value of the employees is high but they have a low degree of the specificity. Under this strategy organisation have utilitarian style relationship with employees for mutual benefit, standardise the job requirement, hiring of the employee with relevant skills and performance system is based on the short-term productivity target (Monks et al., 2016).

Compliance based HR strategy

Bratton & Gold (2012) argued that employees are considered as generic ancillary who have a low degree of uniqueness and value for the company. The employees are viewed as expenses and organisation contract externally to reduce the administrative expense. The employees are acquired through temporal and outsourcing. This strategy is managed through retaining transactional employment relationship, strict adherence and compliance with rules, training for company policies and systems and performance appraisal system which focus on the short-term contribution (Bamberger, Biron, & Meshoulam, 2014).

Collaborative HR strategy

This HR approach view employee as ‘idiosyncratic’ who processes a high degree of specificity but low degree of the strategic value for the organisation.  The problem for the organisation is to how to develop these employees in order to increase uniqueness for the organisation. This approach is usually managed through building talent alliances in which collaborative efforts are made to shared outcomes. This strategy is managed through partner style relationship, team building, job rotation, group-based rewards and fostering a system which helps to create an alliance for information sharing (Chun & Evans, 2013).

HR strategy Process

Commitment HR Strategy — YORLAB

YORLAB is planning to expand its business through it should consider the alignment of the business strategy and HRM systems through one-way vertical fits consider the role of the HR as a partner and it is high integrated with processes of the business. The expansion in the new market requires the company to acquire and develop new resources which support the processes and function of the company. The company is focused on the providing high-quality customer services and i.e. it is important it has employees which help to deliver effective service (Meyer, Stanley, & Vandenberg, 2013).

SHRM: alignment of HR function with business strategy

Therefore, the company should take a long approach to managing its employees. YORLAB employees’ relationship must be based on the long-term perspective because employees have both uniqueness as well as high strategic importance. The internal knowledge and skills development is important to develop the individual distinct knowledge about the YORLAB product and processes (Buller & McEvoy, 2014).

The employee empowerment would allow offering customer care with greater flexibility as well as providing motivation and encouragement to participate in the important decision of the company to maximise productivity and performance. The important factor implication for the YORLAB is that it should adopt family style relationship between employee and organisation offers job enrichment and mentoring programme (Meyer, Stanley, & Vandenberg, 2015).

Hendry (2014) stated the training and development is vertical for the effectively delivery of the customer service because it would allow the employees to learn how to deal with customer as well as increase the understanding of the company product and objectives. The performance of the employees should be based on the long-term perspectives such as how many repeat customer each employee has achieved.

According to the Goetsch & Davis (2014) HR strategies of the firm should be based around one of the category to effective achieve the objectives of the business.

The diagram below highlights that how SHRM is managed and implemented in an organisation.

The Strategic Human Resource Management Model

Environment factors which affect the HRM strategy

According to Marler (2012), the process of the HR strategy development is influenced because of the range of the internal and external factors. These factors include economic, socio-cultural, technology and political environment which affect strategy formulation. The changes in these factors such as demographic of the workforce, economic condition and political factors affect the direction of the organisation. There in order to effective manage the impact of these environmental variables, it is important to align the HR strategy and business strategy with the external environment.

Mariappanadar (2013) argued that HRM strategy is usually influenced by the labour market, economic conditions as well as the availability of the skills and knowledge. The external factors which affect the HRM strategy of the organisation provide the opportunities and constraints to the processes and function of the HRM in an organisation.

On the other hand, internal environment factors such as organisational culture, employee skills and knowledge as well as key personnel’s effect the HRM strategy of an organisation. To summarise, the external environment factors which affect the HRM strategy are technology, economic conditions and the internal factors which affect are structure, culture, employee skills and politics in an organisation (Mitchell, Obeidat, & Bray, 2013).

YORLAB is needed to analyse and understand its structure and culture because it is small family business and grows business would change the hierarchy and power structure in the company.

Strategic choice and SHRM strategy implementation

Business driven HR strategy

YORLAB is following the competitive strategy of differentiation which involves providing high quality customer service. The company should develop business driven HR strategy which support the company strategy of expansion as well as ensure that company can effectively implement the differentiation strategy (Purce, 2014).

DescriptionCost Leadershipdifferentiation
Employee knowledge and behaviourRepetitive and predictableInnovative and problem-solving
Skill needs and developmentLow to ModerateBroad and comprehensive

(Training and development)

Employee flexibility and adaptionLow to moderateHigh adaptability and flexibility needed
Training and developmentLowhigher
Employee Focus and Performance appraisalNo empowerment requirement and target based incentivesAutonomy and employee involvement and skill related pay

Human Resource Planning

Delahaye (2015) highlighted that the human resource planning would allow the YORLAB to identify the demand and supply of the company HR requirement. The commitment HR approach will be support based on the strategic value required in the each job role. The human resource planning will support the HR needs of the company through employment and training.

For example, the business expansion plan of the company requires more employees and in order to support new operation and processes and HR planning would allow streamlining the availability of the employee (Niven, 2014).

Attracting Human Resource

The recruitment and selection of the employees are important aspects of fulfilling the manpower requirement of the company. Recruitment would allow finding and attracting capable applicants from the high-quality employees. To provide the high-quality customer service, it is important that YORLAB hiring people with right skills and long-term perspective. Therefore, selection would allow matching the right candidate with job requirement (Snell, Morris, & Bohlander, 2015).

Developing, placing and performance appraisal

Monks et al (2013) stated that the HR would allow the new candidates to understand the policies and procedures in their new job. The existing employee would receive training and understand the job responsibilities through systematic planning. The performance appraisal system would ensure employees feedback on their performance would which would allow developing the training policies for the company.

Motivation and maintaining performance

The compensation and benefit policy is critical to ensure employee performs efficiently and stay motivated.  The range of factors which influence the motivation of the employees in an organisation include work schedule, procedures and work environment. The HR would ensure that employee’s remains productive and strategic manpower need of the company is fulfilled. The diverse nature of the workforce increases the importance of the disciplinary procedures and monitoring to ensure the safety and productivity of the employee (Snell, Morris, & Bohlander, 2015).

HR strategy implementation

Three dimension people strategy model

Seal & Ye (2014) discussed that the effectiveness of the strategy is determined and achieved once it is implemented. The strategy implementation is major issue and it is important that the gap the intended and actual strategy should be smallest in order to achieve benefits from the strategy. The ‘three dimensional people strategy model’ is effective to implement the strategy through brining people, process and implementation together.

The model includes linkage between the HR strategy and business strategy through vertical dimension as well as horizontal dimension between the individual HR policy and action. The action involves two dimensions which are HR practices and behaviour of the managers to implement the policies (Truss, Mankin, & Kelliher, 2012).

Gratton and Truss, The three-dimensional people strategy

Strategy driven

There is strong vertical alignment and action but there is weak horizontal dimension. HR strategy implementation is viewed as the responsibility of the line manager and there is strong linkage with overall direction of the organisation (Leopold & Harris, 2013).

Tactical driven

This includes weak horizontal and vertical integration but based on the strong actions. This approach considers the HR function as administrative function and therefore, focuses on the implementation of the policies which are not integrated with objectives of the company (Albrecht, Bakker, Gruman, Macey, & Saks, 2015).

Process driven

This approach has weak vertical alignment but rely on the strong horizontal alignment and actions. This approach occurs when there is lack of the strategic focus for the HRM but HR team is strong (Aswathappa, 2013).

Strategy and Process driven

This perspective involves all three dimensions which are vertical and horizontal alignment and focus on the linkage of the HR strategy and business through strong actions (Truss, Mankin, & Kelliher, 2014).

YORLAB and HR strategy implementation

Brattoh, Forshaw, Callinan, Sawchuk, & Corbett (2010) discussed that the best approach for the company to effectively implement the strategy includes ‘strategy and process approach. This will ensure that that there is will strong linage between the HR strategy and competitive strategy as well as strong action to implement the put the HR strategies into action by the managers. The range of effective actions which company could implement the HR strategy in efficient manner.

There should complete understanding of HR policies based on the feedback from the staff, reinforce strong action to change the behaviours, acquire and develop the best personnel’s, understanding and alignment of the HR action and competitive strategy and HR strategy as well as focus on the key projects which drive the business rather initiatives which does not align with the HR needs of the company (Truss, Mankin, & Kelliher, 2012).

HR balanced Scorecard

The balanced scorecard is useful tool to link the strategic objectives of the company with the desire performance outcome. The balanced scorecard is useful to measure the effectiveness of the HR initiatives across all domains which are critical for the current and future of the company. The four perspective of the HR balanced scorecard are strategic Perspective, Operational perspective, customer perspective and financial perspective (Seal & Ye, 2014).

The HR Scorecard

The HR balance scorecard will ensure that business goals are aligned with the HR objectives. For example, the human capital of the company is managed through improve corporate culture and employee retentions.  The measure could include the customer satisfaction, profitability achieved per customer as well as register new patents. The employee perspective could include the training, reward system and length of service (Niven, 2014).

The operational element includes the staffing as well as HR process and traction. The range of measure could include the training days and availability of the employees for the internal jobs. The customer perspective includes the customer satisfaction and employee engagement with the customers.

For example, YORLAB highly valued the customer service and dependent upon repeat customer and there measure of the employee skills and capability will enhance the performance of the employees. The financial measure would allow to measure cost of the HR and per hire, value added by each employee and Return on investment from training (Tiwari & Saxena, 2015).

Conclusion and Recommendations

YORLAB is planning business expansion and in order to effectively support the new processes and function, company need to have effective HR strategy. The HR strategy will useful in order how to manage the people need of the company through aligning the human resources with business strategy. Company should develop effective HR strategy to ensure its manpower need is managed and employees contributed to the objectives.

The HR strategy would allow addressing the demand and supply of the manpower need as well as acquiring and developing employees which support the business objectives.

  • There should be vertical alignment between HR strategy and business strategy to ensure HR integrated into business strategy.
  • The focus should be on business driven HR function is aligned with strategic need of Business and HR integrated into business strategy
  • The company should adopt the Commitment HR Strategy which ensures that strategic value of the employee is understood and focus on developing long-term relation with employees.
  • To implement the HR strategy company should adopt eh ‘strategy and process approach’ to ensure will ensure that that there is will strong linage between the HR strategy and competitive strategy as well as strong action to implement the put the HR strategies into action by the managers
  • The result of the HR practices should be analysed and measured using the balance scorecard which ensure HR strategically contribute toward the objectives of the company.

 

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