Human Resource Management and its Environment

Introduction

This paper will critically evaluate the approaches involved in developing strategic human resource management as identified by David Guest. I will also identify the strategic human resource development approach that provides the most appropriate fix with the business strategy at the Pace company. The role of Human Resource Managers in organisations continues to evolve with changes in the complex and competitive market environment. It is a fact that Human Resource Management now plays a more strategic role for the success of their organisation.

David Guest stipulated that human resource management essentially consists of 4 main policy aims and approaches to strategic human resource management. These include:

Strategic integration of human resource management with business objectives

High employee commitment

Flexibility

Provision of high quality goods and services

The roles of human resource managers around the globe continue to change due to changes in the competitive market environment. Another factor affecting human resource management roles is the need for human resource management to be utilised more strategically in the success of an organisation. Any organisation that fails to focus on the attracting and retention of relevant skills and talent in its area of operation might well find itself at a severe disadvantage, as other competitors may be outdoing such an organisation in the strategic employment of their human resources. “For the last twenty years, empirical work has been mostly concerned with the link between Human Resource Management practice and organizational performance, which is evident in improved employee commitment, lower levels of absenteeism and turnover, higher levels of skills and therefore higher productivity, enhanced quality and efficiency” (Beardwell and Claydon 2007 p. 182).

The success or failure of any organisation depends on the ability of the organisations human resource managers to manage a diverse body of skills and talent which can bring new perspectives, innovative ideas and relevant views to the workplace. It is possible to turn workplace problems and challenges into a strategic organisational asset if an organisation succeeds in taking advantage of the diversity in its workplace.

In the current era of high business competitiveness in which we live, business organisations operate in an ever-changing dynamic environment, and so must be able to adapt to circumstances in order to stay ahead of the aggressive competition. In today’s business organisations, human resources are the major asset to gaining an edge over the competitors and the achievement of organisational efficiency and success. This paper will critically analyse human resource management functions like staffing, executive relations, performance, training and development. Human resource management has been described as “a strategic approach to the management of employee relations which emphasises that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programs and practices (Brewster, 2000 p. 130).

According to David Guest, there exist six dimensions of analysis. These are:

Human resource management strategy

Human resource management outcomes

Human resource management practices

Performance outcomes

Financial outcomes

Behavioural outcomes

David Guest’s model can be said to be prescriptive in nature, as his model is based on the assumption that human resource management differs distinctively from the usual or traditional forms of personnel management.

Strategic integration of human resource management with business objectives

The ability of an organisation to integrate human resource management issues with its business objectives and strategic plans helps to ensure that various human resource management aspects are cohesive, and makes provisions for the management to bring a human resource management perspective to the decision making process.

Strategic human resource management involves the strategic management of the human resources/capital in an organisation. In comparison to technical human resource management, the increasing importance of human resources to the success of any organisation is correlated to the rise of strategic human resource management as a global field of study. According to Walker (1992), strategic human resource management is “a means of aligning the strategic aspect of business with the management of human resources in an organisation” (Walker, 1992 p. 78). Strategic human resource management is concerned with ensuring that the management of resources in an organisation is fully integrated with the organisations strategic planning, and that human resource management policies are in line with hierarchies and policy areas.

Human resource management policies should also be acceptable and can be implemented by line managers as part of their regular schedule of work. Thus, strategic human resource management must provide a macro-organisational approach to the functions and roles of human resource management in an organisation, and this is what distinguishes strategic human resource management from traditional human resource management.

According to David Guest, “strategic human resource management is mostly about integration, which is one of the main policy goals of human resource management” (Guest, 1989 p. 54). Walker (1992) also pointed out that human resource strategies are functional strategies such as marketing, financial, Production and IT strategies.

High employee commitment

Nowadays, organisations have become more focused on the exploitation of competitive advantage “because of rapid technological, environmental and global economic changes. Other sources of competitive advantage have become less important, and so the level of commitment of employees in the organisation is a crucial differentiating factor” (Beardwell and Claydon 2007 p.318).

Often times, HR management issues like these are seen to be the sole responsibility of the personnel department. Recent research and studies however, suggest that functions of specialist personnel tend to detract from industrial and economic relations performance, rather than enhance such performance. One such study is a research carried out by Fernie, Metcalf and Woodland in the United Kingdom. The study was carried out in 1994, and employed data extracted from nationally representative workplace samples.

High employee commitment, which results in a behavioural commitment on the part of the employees to pursue set goals, is important in HR management. This can be in form of an attitudinal commitment that is reflected by a strong sense of identification for the organisation in question. “The current major view among strategic management researchers is the recognition that sustained advantage in competition arises as a result of a firm’s internal resource endowments and deployment of its resources, especially the human resources, which are imperfectly initiable, rather than from the organization’s product market position.” (Pfeffer, 1994 p.36).

Flexibility

In recent history, changes in the technological political and demographic aspects of organisations’ operating environments have led to strategic human resourcing responses being focused on flexibility in the workplace. Drivers for a more flexible approach to work structure have arisen from factors like new technological demands, uncertainty about demand, which leads to uncertainty about labour requirements, economic pressures from increasingly volatile and competitive markets, new work patterns and changing workforce. In a survey carried out in 1998 about workplace employee relations, it was found that about 90 per cent of employees said that there was increasing use of subcontractors in many organisations. According to Felstead (1993) “these types of sub-contractual relationship affect the organisations approach to employment practices.” It has also been suggested that “at one end of this spectrum emphasis is placed on competition between service providers (subcontractors) and a scrutiny of contractual terms that will usually lead to frail relationships and low trust; while at the other end there exist more engaged relationships in which more security is observed in the contract arrangement” (Felstead, 1993 p. 159). Such relationships may be characterised by some element of mutual dependency.

It is not unusual for human resource managers to be required to undergo cultural-based HR management training in order to enhance the ability of these managers to motivate qualified employees from diverse cultured backgrounds. It is also important for human resource managers to assure the local employees in an organisation that foreign workers do not pose a threat to their career advancement opportunities. It can therefore be seen that in many ways, the efficiency of managing workplace diversity depends on the flexibility and skilful balancing of the activities of the human resource manager.

One of the principal reasons for improper or ineffective management of diversity in the workplace is “the predisposition to pigeonhole employees, placing them in a different silo based on their diversity profile” (Ketchen, Thomas, and Snow, 1993 p71). The main challenge in any analysis of flexibility in the workplace is the identification of the exact meaning of flexibility in an organisational context. The model of a flexible organisation depicts 3 types of flexibility to satisfy changing demand levels. “These types of flexibility include functional flexibility, numerical; flexibility and financial flexibility. Functional flexibility involves the development and utilisation of the skills of the main workforce while numerical flexibility has to do with the adjustment of the numbers of direct employees. Financial flexibility, which is also called distancing, is based on the payment of fees instead of wages through arrangements like subcontracting and outsourcing of projects.” (Torrington, Hall, Taylor, and Atkinson, 2008 p. 142).

Flexibility can also come in form of temporal flexibility which involves executed work and evident in the growth of different time frames and shift patterns that are designed to accommodate high and low periods in demand.

Provision of high quality goods and services

David Guest noted that one major driving force behind HR management is “the pursuit of competitive advantage in the market-place through provision of high-quality goods and services, through competitive pricing linked to high productivity and through the capacity swiftly to innovate and manage change in response to changes in the market-place or to breakthroughs in research and development” (Armstrong, 2003 p.26). Recent developments in HR management have shown the importance of having a more business oriented approach to HR management issues.

The strategic human resource development approach that will provide the most appropriate fix with the business strategy at the Pace company is a strategic integration of HR management with the company’s business objectives. According to Bratton and Gold, strategic HR management can be seen as an outcome or as a process. From the perspective of being an outcome, “strategic HR management includes organisation systems designed to achieve sustainable competitive advantage through people” (Bratton and Gold, 2007 p.253). From the perspective of being a process, “strategic HR management is a process by which an organisation seeks to link its human, social and intellectual capital to the strategic needs of the firm” (Bratton and Gold, 2007 p. 213).

A properly functioning HR management system is an invisible asset that creates value and involves the acquisition, development and motivation of the organisation’s human resources. This includes activities like job analysis, Human resource planning, employee recruitment, employee selection, performance appraisal and Human resource development, among others. HR management consists of 4 important functions including staffing, selection placement, and compensation and performance management. Human resource managers have to be sensitive to changes in people, competition and market since they have become more business oriented and strategically focused; they also have to be aware of the need for an adaptive and flexible organisation.

It has been said that change is the only thing that is constant in life. It is thus very important for organisations to prepare for events which may have a significant effect on various aspects of their operations. HR management is no different. A lot of events contribute to the shaping of our field of work. Some such events are globalisation, corporate downsizing, varying skill requirements, work force diversity, employee involvement, quality management and reengineering of work processes.

Any business organisation that fails to focus on attracting and retention of talented employees may find themselves facing difficult consequences, as the competition will probably outplay such an organisation in strategically employing their human resources.

Any organisation that wishes to be successful must become more flexible, more resilient, and adaptable because of local and international increase in competition. Within this kind of environmental change Human Resource professionals must evolve to become a strategic partners and advocates to other employees. Human Resource professionals can also play the role of a change mentor within their organisation. In order to achieve the desired success at the pace company, Human Resources management must be viewed as a business driven function and there must be thorough understanding of the company’s ultimate goals. The human resource managers in the organisation must also be able to influence the company’s major policies and decisions.

There are many discussions about effectiveness of HR management in an organisation, and not all of them agreed with each other, although their main point is same. Due to the increasing complexity of HR management, most of larger size organisations today have established a Human Resources Department, but not all of these organisations perform all of the Human resource functions and activities. The organisational context in which HR management is presently seen involves considerable uncertainty and rapid change. This is explained with various internal and external barriers such as, lack of HR management’s status within an organisation, top management’s attitude to HR management, lack of knowledge and skills of Human resource staff, competitors, government legislations, economical influence, etc.

To overcome those above mentioned barriers and limitations, and to increase the effectiveness of HR management in their organisations performance Human resource specialists have to increase their skills and knowledge which are necessary to undertake all tasks and prove the necessity of HR management in order to be effective in today’s competitive market.

The human management field has emerged as a major aspect that is necessary for organisational success, as HR management is now strategically focused and business oriented. Thus, managers and other top personnel in an organisation should work together to successfully tackle market changes and any changes in the competition. Managers must also be sensitive to the need for flexibility and adaptability in an organisation.

There must be continued appropriate staff training as this enables the staff to get to know how HR management can boost business and how employee performance can be improved. As Buller (1988) noted, the degree of integration between organisational and human resource strategy is influenced by an organisation’s philosophy towards people.

It is important to manage people as they want to be managed, not how you think they should be managed. (Buller 1988) Relevant human resource theories and models should be integrated into the workplace, as the soft approach to HR management produces more positive results than the heard approach, due to the fact that a soft approach to HR management involves the employees, thereby resulting in more motivation and commitment. More attention should also be given to theories of individual motivation and the organisation should develop a more psychological approach to organisational strategies.

Good managers commit to memory that focusing on the simple things will often yield the major benefits. In general, managers are selected based upon their functional proficiency. However, being a good manager is about getting results through people. In other words, a manger must stand back and progressively assign responsibility to the resources – people – around him/her, because the superior objectives cannot be attained alone. Accomplishing through other people is one of the leading challenges in management.

Managers are accountable for managing the assignment and complying with the vision and strategy of the organisation; they must understand that the biggest portion of their time will be spent managing people. A manager needs to plan what he/she is trying to do and be creative with the resources he/she has, to organise his/her people, train them and set individual targets. The manager can assign tasks and if required employ more people, and stimulate his/her team so that they enjoy their work and the environment, and make them feel looked after and esteemed. A manager must also persistently check that things are moving according to plan. Managers must not lose touch with the need to accomplish results, but should treat their team with a human touch.