Match Hrm To Organisational Strategy Commerce Essay Example

time. Initially, it aimed to distinguish between "Personnel Management" and "HRM" (see e.g. Legge, 1989; Guest, 1991) and then shifted towards integrating Industrial Relations into HRM (Torrington et al.).

The text discusses the analysis of the relationship between HRM schemes, integration of HRM into business schemes, and devolution of HRM to line managers. These developments have occurred over the past few decades, causing changes in the nature of the HR function. It has transitioned from being reactive, normative, and administrative to being proactive, descriptive, and executive. The literature emphasizes the role of HRM in improving a company's performance and overall success.

In relation to the last argument, three positions emerge from the bing literature: universalistic, eventuality, and configurational (Katou and Budhwar, 2006; 2007). The 'universalistic' position posits the 'best' of HR patterns, connoting that concern schemes and HRM policies are reciprocally independent in finding concern public presentation. The 'contingency' position emphasises the tantrum between concern scheme and HRM policies and schemes, connoting that concern schemes are followed by HRM policies in finding concern public presentation. The 'configurational' position postulates a coincident internal and external tantrum between a house's external environment, concern scheme and HR scheme, connoting that concern schemes and HRM policies interact, harmonizing to organizational context in finding concern public presentation.

Activity

Briefly discuss with your co-workers: (1) the chief factors responsible for developments in the field of HRM/SHRM; and (2) the chief arguments in the field of HRM.

Emergence of Strategic Human Resource Direction (Shrm)

The above developments in the field of HRM highlight the part it can do towards concern success and an accent on HRM to go an built-in portion of concern scheme (Lengnick-Hall and Lengnick-Hall,

1988; Brewster and Larsen, 1992; Bamberger and Meshoulam, 2000; Schuler and Jackson, 2007).

The term 'strategic human resource direction' (SHRM) has emerged as a result of efforts to integrate HRM into the business strategy and adapt HRM at all levels of the organization (Guest, 1987; Schuler, 1992).

What is strategy?

The concept of strategy can be traced back to its military origins, derived from the Greek word 'strategos', referring to a general who organizes, leads, and directs their forces to the most advantageous position (Bracker, 1980; Legge, 1995; Lundy and Cowling, 1996). In the business world, strategy primarily refers to how top management leads the organization towards specific goals, objectives, vision, and overall purpose in society, within a given context/environment.

The main focus of strategy is to allow an organization to gain a competitive advantage through its unique capabilities by focusing on the present and future direction of the organization (also see Miller, 1991; Kay 1993). In the field of strategic management, a lot has been written over the past three decades about the nature, process, content, and formation of organizational strategy (see e.g. Mintzberg, 1987; 1994; Quinn et al., 1988; Ansoff, 1991; Whittington, 1993; 2001). A 'classical' strategic management process consists of a series of steps, starting from establishing a mission statement and key objectives for the organization; analyzing the external environment (to identify potential opportunities and threats); conducting an internal organizational analysis (to examine its strengths and weaknesses and the nature of current management systems, competencies, and capabilities); setting specific goals; analyzing potential strategic choices/options to achieve organizational objectives and goals; adoption/implementation of chosen options; and regular evaluation of all the above (see e.g. Mello, 2006).

The five

steps mentioned above are part of strategic planning, while the last two steps deal with the implementation of a strategic management process. These steps cover both the content (objectives and goals) and process (planning, structure, and control) of organizational strategy. However, it is important to note that in real life, top decision-makers often do not follow such a formal and rational approach when formulating their strategy due to various reasons and pressures (such as lack of time, resources, or excessive information). Instead, they adopt an informal and bounded rational approach based on their experiences, intuition, limited resources, and the need for flexibility. This informal incremental process of strategy formation is influenced by factors such as demand for flexibility (Quinn, 1978; Mintzberg, 1978).

According to Mintzberg (1987), a formal approach to strategy-making leads decision-makers to deliberate and think before taking action. In contrast, the incremental approach allows strategy to develop in response to changing circumstances. Lundy and Cowling (1996: 23), summarizing Mintzberg's idea, state that deliberate strategy prevents learning while emergent strategy encourages it but hinders control. Effective strategies combine deliberation and control with flexibility and organizational learning.

A number of scholars, including Ansoff (1991), have criticized Mintzberg's work for being too prescriptive.

Activity

The main issue at hand is to identify and analyze the core aspects (such as why, when, and how) of both 'rational' and 'bounded rational' approaches to strategy development. The debate surrounding the formation of organizational strategy is ongoing. Whittington (1993) proposes four generic approaches to strategy formation based on two dimensions: 'processes' and 'outcomes of strategy' (refer to Figure 1.1). The 'x' axis focuses on the degree to which strategy is formed in a rational,

formal, planned, and calculated manner, either through a bounded rational approach or emerges organically. The 'y' axis refers to a continuum of outcomes.

The organizational scheme's focus on profit-maximizing results varies. In the top left-hand quadrant, there is a combination of maximal profit-maximization and a formal planned and considerate approach to scheme formation, which Whittington refers to as 'classical'. On the other hand, the top right-hand quadrant combines profit-maximization with an emergent type of scheme formation known as the 'evolutionary' approach.

The alternative ways of approaching scheme formation and outcomes are referred to as 'processual' and 'systemic' attacks, respectively. These approaches are represented in Whittington's (1993) generic position on scheme shown in Figure 1.1. The classical attack, followed by administrations such as the ground forces, involves a clear, rational, planned, and calculated procedure to maximize profits. This approach is most likely to be successful when the administration's aims and goals are clear, the external environment is relatively stable, reliable information about both the external and internal environment is available, and decision-makers are able to thoroughly analyze it to make carefully calculated decisions for the best possible choice. In this approach, top directors are responsible for strategy preparation while operational managers from different departments handle its implementation.This example illustrates the distinction between "first-order" or initial decision-making and "second-order" decision-making. The former refers to the creation of a plan by top-level directors, while the latter involves its execution by lower-level directors (for more details, refer to Miller, 1993; Purcell, 1989; Legge, 1995). In addition, it reflects Chandler's (1962) top-down approach, where the organizational structure follows the strategy.

The evolutionary attack refers to the opposite side of the scheme formation

continuum. In situations where the dynamic business environment is unpredictable, a rational, planned, and calculated process is not possible. However, the main focus remains on maximizing profits. In competitive and uncertain conditions where managers do not feel in control, only those who are best suited can survive (survival of the fittest or being in the right place at the right time). Success largely depends on how well organizational strategy aligns with the business environment (also see Lundy and Cowling, 1996). On the other hand, the processual approach differs from seeking maximum profit. Managers are unsure about what level of output should be considered 'optimum'. There is a great deal of confusion and complexity within both organizations and markets. The strategy gradually emerges over time through practical processes such as learning, negotiating, and compromising instead of following clear steps.

The text discusses the challenges faced by senior directors in understanding large amounts of information and making optimized decisions. This can lead to 'satisficing' behaviors, acceptable to the dominant alliances in the world of strategy-making. The systemic approach recognizes the importance of larger societal systems, such as national culture, business systems, demographic composition, and dominant institutions. These factors strongly influence strategy formation and may cause strategists to deviate from rational planning and profit-maximization. It is not reasonable to suggest that organizations should adopt only one of Whittington's four approaches to strategy formation, but rather a combination along the dimensions of processes and profit-maximization.

Activity

Highlight the main contexts within which each of Whittington's four approaches to strategy formation could be pursued by directors.

What is Strategic HRM ( SHRM ) ?

The concept of Strategic HRM (SHRM)

is still evolving, and scholars have yet to agree on a clear definition. In essence, SHRM focuses on aligning people with the organization, specifically integrating HR strategies into corporate strategies. HR strategies are essentially plans and programs that address key strategic issues related to managing human resources within a company (Schuler, 1992). The goal is to align the organization's HR practices, policies, and programs with the overall corporate strategy and the strategic plans of business units (Greer, 1995). Therefore, Strategic HRM connects corporate strategy with HRM and emphasizes integrating HR with the business and its external environment. It is believed that this integration between HRM and business strategy contributes to effective human resource management, improves organizational performance, and ultimately leads to the success of a particular business (Holbeche, 1999; Schuler and Jackson, 1999).

Assisting organizations in achieving a competitive advantage can also involve the creation of exclusive HRM systems that cannot be replicated by others (Barney, 1991; Huselid et al., 1997). To enable this, HR departments need to have a forward-thinking approach and ensure that their HR strategies are consistently integrated into the overall business plan (Stroh and Caligiuri, 1998). This forward-oriented approach necessitates regular analysis by organizations to determine the future HR competencies required, activating core HR functions such as procurement, development, and compensation to meet these needs (Holbeche, 1999).

According to Lengnick-Hall and Lengnick-Hall (1999: 29-30), the subjects that strategic HRM authors have focused on in the past few decades can be summarized. These subjects include HR accounting, which aims to assign value to human resources to quantify organizational capacity; HR planning; how HRM responds to strategic changes in the business environment; aligning human resources

with strategic or organizational conditions; and a broader range of HR strategies. These authors view strategic HRM as a multidimensional process with multiple effects. Their writing also emphasizes the increasingly proactive nature of the HR function, its greater potential contribution to organizational success, and the interconnectedness between business strategy and HRM. Two core aspects of SHRM are: the importance placed on integrating HRM into the business and corporate strategy, and decentralizing HRM to line managers instead of HR specialists.

Brewster and Larsen (1992: 411-12) define integrating as 'the grade to which the HRM issues are considered as portion of the preparation of the concern scheme' and devolution as 'the grade to which HRM patterns involve and give duty to line directors instead than forces specializers'. Research in the field (see Lengnick-Hall and Lengnick-Hall, 1988; Purcell, 1989; Schuler, 1992; Storey, 1992; Budhwar and Sparrow, 1997; Truss et al., 1997; Budhwar, 2000a; 2000b) high spots a figure of benefits of integrating of HRM into the corporate scheme. These include: supplying a broader scope of solutions for work outing complex organizational jobs; guaranting the successful execution of corporate scheme; lending a critical ingredient in accomplishing and keeping effectual organizational public presentation; guaranting that all human, proficient and fiscal resources are given equal and due consideration in puting ends and measuring execution capablenesss; restricting the subordination and disregard of HR issues to strategic considerations; supplying long-run focal point to HRM; and assisting a house to accomplish competitory advantage.

In a similar vein, researchers (Budhwar and Sparrow 1997; 2002; Hope-Hailey et al., 1997; Truss et al., 1997; Sisson and Storey, 2000) have emphasized the advantages of devolving HRM to line managers. These

advantages include: focusing on issues that are too complex for top management to fully understand; cultivating motivated employees and effective control; enabling local managers to respond quickly to local problems and conditions; resolving most everyday problems at the grassroots level; giving more time for HR specialists to perform strategic functions; aiding in consistently directing and monitoring the actions of line managers; improving organizational efficiency; preparing future managers by allowing them to practice decision-making skills; and helping to reduce costs by redirecting traditionally central bureaucratic HR functions. Despite these highlighted benefits, the delegation of HRM to line management is not widely practiced in organizations. Building on previous studies in the UK and their own extensive investigations into the topic, McGovern et al.

(1997:14) suggests that the delegation of HRM duties to line managers is limited due to short-term pressures on businesses, such as cost-cutting, as well as the lack of education and technical skills among supervisors. A significant concern for top decision-makers is how to assess the extent to which strategic integration and devolution are implemented in their organizations. The level of HRM integration into the corporate strategy can be evaluated using various criteria. These include having specialized HR managers represented on the board, having a written people management strategy (in the form of mission statements, guidelines, or action plans that emphasize the importance of human resources in all parts of the business). Other criteria include consulting with HR specialists from the beginning stages of corporate strategy development, translating the people management strategy into clear work programs, fostering a proactive nature within HR departments through the creation of rolling strategic plans that highlight the importance of human

resources throughout the business. Other methods include using mission statements, aligning HR policies with business needs through business planning processes, employing participative management procedures and committee meetings, and conducting HR audits.The level of devolution of HRM to line directors in an organization can be assessed based on various factors. These include: the level of decision-making responsibility held by line directors in areas such as wages, benefits, recruitment and selection, training and development, industrial relations, health and safety, and workforce planning; changes in the HRM roles assigned to line directors; the proportion of line directors who have received training in people management; the feedback provided to managers/line directors on HR-related strategies through consultations and discussions; the extent to which line directors are involved in decision-making; the empowerment of line directors in terms of ownership of HRM functions; and ensuring their acknowledgement and acceptance through obtaining their recognition (for more details, refer to Budhwar and Sparrow, 1997; 2002; Budhwar, 2000a).

Activity: Summarize the significance, advantages, steps, and concerns associated with the practice of integrating HRM into the business strategy and devolving HRM to line directors.

Phases of the Development of Scheme and HRM Integration

The development of the integration between an organization's business strategy and its HRM function can be classified into four possible types of linkages, as discussed by Greer (1995). The first type, known as "Administrative linkage," occurs when there is no dedicated HR department and another executive, such as the Finance or Accounts executive, handles HR functions on a paper-processing basis. In this scenario, there is no real connection between business strategy and HRM. The second type is called the "one-way linkage,"

where HRM only comes into play during the implementation phase of the strategy. The third type, known as the "two-way linkage," involves HRM not only at the execution phase but also during the formation of the corporate strategy.

The 'integrative linkage' association in HRM involves equal engagement between HRM and other functional areas of the organization for business development, according to Purcell (1989). This integration occurs at two levels: upstream or first-order determinations, which focus on issues at the organizational mission level and vision statement; and downstream or second-order determinations, which deal with scenario planning at the strategic and divisional levels for the next 3-5 years. These determinations also involve HR policies related to each core HR function (such as recruitment, selection, development, and communication). Guest (1987) proposes three levels of integration: a 'fit' between HR policies and business strategy.

The text discusses various concepts related to the connection between HRM (human resource management) and organizational strategies. It begins by mentioning the concept of "complementary" or mutual employment patterns, which aim to generate employee commitment, flexibility, improved quality, and internal coherence between HR functions. It also mentions the idea of "internalization" of the integration of HRM and business strategies by line managers.

Linking Organizational Strategy and HRM Strategy: Theoretical Developments

The literature contains several theoretical models that highlight the nature of the linkage between HRM strategies and organizational strategies.

The Strategic Fit or the Challenging Discrepancy of HRM

Fombrun et al.'s (1984) "matching model" emphasizes the "resource" aspect of HRM and emphasizes the efficient use of human resources to meet organizational objectives.

This means that human resources must be acquired at a low cost, utilized sparingly, and maximized

to their fullest potential, similar to other administrative resources. The duplicated model is primarily derived from Chandler's (1962) argument that an organization's structure is the result of its strategy. Fombrun et al. (1984) further developed this assumption in their strategic HRM model, which emphasizes a strong alignment between organizational strategy, structure, and HRM system.

The main objective of the duplicate theoretical model is to create an appropriate 'human resource system' that will identify HRM strategies contributing to the most effective execution of business strategies. However, the duplicate model of HRM has faced criticism for being overly normative due to its strong unitarist assumptions. The model neglects employee interests and views HRM as a passive, reactive, and implementation-focused function. Nonetheless, research also highlights the opposite trend (Storey, 1992), suggesting the importance of considering employees in the alignment between organizational strategy and HR strategies.

According to Lengnick-Hall and Lengnick-Hall (1988), it is argued that this theoretical model does not understand the potential for a reciprocal relationship between HR strategy and organizational strategy. In fact, some believe that the idea of a 'tight fit' makes the organization inflexible and unable to adapt to necessary changes, thus making it unsuitable for today's dynamic business environment. Additionally, the matching model overlooks the 'human' aspect of human resources and has been referred to as a 'hard' model of HRM by Guest (1987), Storey (1992), and Legge (1995). The idea of seeing and using human resources like any other resource of an organization seems impractical in the present world. Despite the numerous criticisms, however, the matching model should be recognized for providing an initial framework for subsequent theory development in the field of strategic

HRM. Researchers must adopt a comprehensive methodology to study the dynamic nature of human resource strategy.

The text highlights the importance of analyzing the presence of core issues in a theoretical model in order to determine if elements of the model exist in different scenarios. The main propositions emerging from these models, which can be adopted by managers to assess strategic HRM in their organizations, are: ensuring a close alignment between HRM and organizational strategy, developing HRM systems for effective execution of the organization's strategies, viewing human resources as a cost versus investing in their training and development, and considering variations in HRM strategies across different employee levels.

Additionally, the "Harvard model" of strategic HRM is mentioned as another analytical framework that suggests that if general directors have a clear perspective on how they want employees to be involved and developed by the enterprise, it can help overcome criticisms of historical forces management. This model was initially proposed by Beer et al. (1984).

Compared to the fitting theoretical model, this model is referred to as 'soft' HRM (Storey, 1992; Legge, 1995; Truss et al., 1997). It emphasizes the 'human' aspect of HRM and is more concerned with the employer-employee relationship. The model highlights the interests of various stakeholders in the organization (such as shareholders, management, employee groups, government, community and unions) and how their interests are connected to management objectives. This aspect of the model acknowledges the European context and other business systems that prioritize 'co-determination'. It also recognizes the influence of situational factors (such as the labor market) on HRM policy decisions.

According to this model, the existing content of HRM can be described in relation to four

policy areas: human resource flows, reward systems, employee influence, and work systems. Each policy area requires managers to perform a set of tasks. The desired outcomes of these four HR policies are commitment, competency, congruity, and cost effectiveness.

The purpose of these results is to develop and maintain trust and improve individual and group performance at a low cost in order to achieve individual well-being, organizational effectiveness, and social well-being. This model allows for analyzing these results at both the organizational and social levels. As this model recognizes the role of social outcomes, it can serve as a useful basis for comparing HRM. However, this model has been criticized for not explaining the complex relationship between strategic management and HRM (Guest, 1991). The contingency model and the Harvard analytical model represent two different approaches, the former being more aligned with the strategic management literature and the latter with the human relations tradition.

Based on the analysis above, the key points from this theoretical account are as follows, regarding the relevance of SHRM and understanding its nature in different contexts:

• The impact of stakeholders, situational variables, and contingent variables on HRM policies.
• The use of communication with employees to maximize commitment.
• The emphasis on employee development through engagement, empowerment, and delegation.

The Contextual Emphasis

According to the Harvard theoretical model of human resource policy, researchers at the Centre for Corporate Strategy and Change at Warwick Business School have examined strategy-making in complex organizations and its connection to transforming HRM practices. They conducted empirical research (using in-depth

case studies on over 20 leading British organizations) to understand the relationship between strategic change, transformations, and how people are managed ( Hendry et al., 1988; Hendry and Pettigrew, 1992). Hendry and colleagues argue that HRM should not be categorized as a single form of activity. Organizations may adopt various approaches to achieve similar outcomes.

This text primarily focuses on the interconnections between the external environmental factors (such as socio-economic, technological, politico-legal, and competitive) and the internal organizational factors (such as culture, structure, leadership, task-technology, and business output) in relation to an organization's HRM. It emphasizes the importance of analyzing past information regarding the organization's development and management of change. The main questions that arise from this model pertain to the influence of economic, technological, and socio-political factors on HRM strategies, as well as the linkages between organizational circumstances and HRM strategies. Additionally, there is a discussion about the issue of strategic integration, wherein arguments in the early 1990s called for further exploration of the relationship between strategic management and HRM. There has been a growing trend in recent years for HRM to be seen as an integral part of business strategy.The emergence of SHRM is a direct outcome of these efforts.

As previously stated, the main focus of HRM is on "integration" and "adaptation". Its goal is to ensure that HRM is fully integrated.