Strategic Human Resource Management is powerful and influential
Strategic Human Resource Management is one of the most powerful and influential ideas to have emerged in the field of management. Schuler (1992) defines SHRM as “all those activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of the business”. Moreover Guest (1989) suggested that SHRM is concerned with ensuring that “HRM policies cohere both across policy areas and across hierarchies and that HRM practices are accepted and used by line managers as part of their everyday work”. Accordingly, Othman (1996, p41) argue that strategic HRM emphasises the way an organization manages its human resource should be in accordance with the strategy it follows. In other words, Strategic HRM is an organizational approach in viewing the roles and functions of HRM (Butler et al., 1991).
SHRM takes human resource management a step further by emphasizing on the linkages between an organization’s HR practices and goals and internal and external factors that influence and shape HR choices (Martin-Alcazar, Romero-Fernandez, & Sanchez-Gardey, 2005; Wright & McMahan, 1992). SHRM literature has focused on “linking HRM practice with firm strategy and mobilizing people’s ability and actions toward organizational goals” in order to improve organizational performance (Wei & Leu, 2005, p. 1902).
On the other hand, Cascio and Aguinis (2005) point out that that Strategic Human Resources Management (SHRM) is a practical step towards more comprehensive personnel planning and development to achieve objectives and set outputs of the organisation. Delahaye (2005) also comments that SHRM compels managers and supervisors to adopt a strategic mind set or a way of looking at and thinking about the management of personnel. Hence, SHRM entails the synchronising and integrating the organisation’s strategic business needs and plans with all those aspects stemming from and relating to managing its personnel (HÃ¤rtel, Fujimoto, Strybosch & Fitzpatrick 2007; Kearns 2003).
Boswell (2006) found that organizations that implemented SHRM practices had a strong correlation to employees who understood organizational goals, objectives, and strategy-and understood how to contribute to them. SHRM provides an incentive on how an organization performs. It improves the understanding of the relationship between how organisations manage their human resources and their success in implementing business strategies (Sell et al., 1996). It also affects how employees are treated, their security, and their nature of employment and creates a sense of direction in a turbulent environment. Moreover the influence of SHRM even reached into the deepest ties of individuals’ relationships and like the other studies mentioned, employees had a greater individual sense of belonging, attitude, job stress, and retention within the organization.
2.2 Two types of fit
As a fundamental characteristic of SHRM, fit represents the deployment of human resources to help with the achievement of organisational goals. Just as Wright and McMahan (1992, p298) underlines, fit usually signifies “the pattern of planned human resource deployments and activities” which are essential for a firm to achieve its goal.” Scholars put emphasis on two kinds of fit: the horizontal and vertical fit. Horizontal fit refers to the congruence among the various HRM practices (Baird & Meshoulam 1988), and vertical fit denotes the alignment of HRM practice with the strategic management process in an organisation (Schuler & Jackson 1987). Beer et al. (1984, p29) stated that: “An organization’s HRM policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces” and this is emphasized by Devanna et al. (1984) matching model where the HRM strategy and structure which follow one another and are influenced by environmental forces as shown in figure 1 below:
Figure 1: Devanna et al.’s (1984) Matching Model of Strategic HRM
The model denotes three core elements necessary for successful implementation of SHRM: mission and strategy; organisation structure and Human resource management. Moreover Devanna et al. (1984) agree that HR systems and organisation structure should be congruent with the org strategy and as Miller (1987) emphasizes HRM cannot be conceptualised as a stand-alone corporate issue. Strategically speaking it must flow from and be dependent upon the organisation’s corporate strategy (cited in Boxall, 1992, p.66).
2.3 Strategic Integration
Strategic integration, one of the key features of Guest (1989) model of HRM, is necessary for the alignment of HRM practices with strategy in order to achieve individual and organisational performance. Guest (1989) further stated that an integrated set of HRM practices with strategy is applied in a coherent way with a view to achieving the normative goals of high commitment and high quality, and then superior performance will eventually result. Beer et al. (1984) also stressed on strategic importance and stated that the main objective is to arrange for strategic fit and uniformity between HRM policy goals and the business. Moreover, Gratton (1999) suggests that there are two types of integration: Horizontal and vertical integration such as HR units assess the knowledge, skills and abilities required by the organisation to operate successfully, and institute staffing, performance management, reward, training and development policies to meet those needs (Holbeche, 2001, p.13).
However, according to Guest (1987, p.512), the implementations of strategic business plans become more problematic if the human resources component is not an essential part of the strategic planning process “because that are the most variable, and the least easy to understand and control of all management resources, effective utilization of human resources is likely to give organisation a significant competitive advantage. The human resource dimension must therefore be fully integrated into the strategic planning process” (Guest, 1987, p.512)
2.4 SHRM and the Civil Service
Government organizations, particularly state and local governments, ‘are becoming increasingly accountable for resultsÃ¢â‚¬Â¦programs and services’ (TechRepublic, 2007) and It is in this context that strategic human resource management has become just as important in the public service. Storey (2001) believes that a changing environment and changing expectations of public servants will enhance HRM as a central issue and will be the main challenge in effectively manage its human resources. Moreover Jules and Holzer (2001) underline that strategic HRM enhance employee productivity and the ability for government agencies to achieve their mission and that SHRM should be implemented in the civil service to promote a high performance workplace.
Though little information has been reported on the implementation of SHRM in the public sector organisation compared to private sector, certain research found that SHRM alignment with overall government objectives; learning, development and employee participation are the most important strategic HRM practices that impact on public service effectiveness. Accordingly, Ayanda and Sani (2010), while conducting research in the Niger state, indicate that some strategic HRM practices such as SHRM alignment, training and development and employee participation play a big role in the country public sector effectiveness. They also state that through the integration of HR function, SHRM add value to Nigeria public sector’s strategies and operations. Furthermore Budhwar and Boyne (2004) suggest that contrary to established notion, the gap between the private and public sector HRM practices (structure of HR department, role of HR in corporate change, recruitment and selection, pay and benefits, training and development, employee relations and key HRM strategies) is not very significant in India.
Thus, as O’Riordan (2004) concluded in her report on the implementation of SHRM in the civil service in Ireland, developing a strategic approach is an option that governmental departments should fully embraced as it will bring about significant benefits and enhance the civil service effectiveness.
2.5 The behavioural Model of SHRM
The behavioural model of strategic HRM is one of the most common theoretical models used in the SHRM literature (Jackson, Schuler, & Rivero, 1989; Schuler, 1991; Schuler & Jackson, 1987). The model is derived from the contingency theory (Fisher, 1989); it denoted that employee behaviour acts as a mediator between strategy and organisation performance and assumed that HRM practices elicit and control employee attitudes and behaviours. The specific attitudes and behaviours will differ depending upon organisations characteristics including its strategy. Moreover Little (2003) defined SHRM as the process of achieving the best possible alignment of personnel behaviour with the organisation’s strategy. The personnel behaviour-strategy relationship is dynamic because it changes as the environment changes and as the precise goal and performance requirements of the strategy emerge.
2.6 Resource-based model and SHRM
The resource-based model has influenced Strategic HRM by focusing on the value of employee in an organisation. It stresses on the strategic value of human capital and continuous workplace learning. Contrary to the matching SHRM model which lay emphasis on external ‘opportunities’ and ‘threats’, the resource-based SHRM model focuses more on the strategic importance of internal ‘strengths’. Moreover, the Resource-Based model was claimed to be at the foundation of modern HRM (Prahalad, C. and Hamel, G. 1990) as it focuses on the internal resources and how they contribute to the effectiveness in the public sector.
Accordingly, Barney (1991) underlined that the resource-based perspective emphasizes the strategic importance of exploiting internal ‘strengths’ and neutralizing internal ‘weaknesses’. The resource-based model has influenced SHRM by showing the importance of the effective utilisation of human resources in order to generate superior performance from employees, hopefully leading to successful delivery of the civil service strategies. By human resources themselves, it was understood the knowledge, skills and abilities of the employees combined with (or in statistical language “mediated” by) their motivation to put these individual characteristics to use for the benefit of the organisation.
As Bach (2004) underlined, resource-based model helped demonstrate the importance of a strategic HR approach in the civil service as it viewed as a strategic resource which enhance performance and ensure public service effectiveness.
2.7 Strategic HRM Practices
With human resource considered the primary strength of organisation effectiveness, HR management are being faced with new challenges when it comes the sourcing of new employees. Armstrong (2006) addressed this issue by underlying that the HR management have to formulate strategies that will add value to an organisation in the pursuit of identifying, recruiting, developing and retaining highly talented employees.
2.7.1 Talent Management
Talent management is an essential element of any strategic human resource management program that simply cannot be overlooked. Buckingham and Vosburgh (2001, p17) argued that the main objective of the HRM function is to maximise the talent of all employees. It is difficult to clearly define talent management as it is complex and generally operates with the strategy human resourcing task however, according to PSDMA (2008), Talent management “is about developing pools of talent skills, giving employees the opportunity to widen the scope of their expertise and experience at the same time “and Lewis and Heckman (2006, p140) stated that talent management is comprised of “a collection of typical human resource department practicesÃ¢â‚¬Â¦such as recruitment, selection, development and career and succession management”.
Interest in talent management has sharpened into a strategic imperative as many public sector organisations have begun to experience the so-called ‘war for talent’ with the private organisations. An organisation’s strategic perspective shapes the way in which a talent management system is owned, viewed and implemented. Lewis and Hackman (2006) advocate a strategic orientation in the adoption of Talent management and underline that it is synonymous with the various components of HRM. Accordingly Collings and Mellahi (2009) underlined that as a SHRM practice, talent management involve the activities and processes that identify key positions and the development of high potential and high performing employees. However they argue that the strategic use in talent management focuses on those employees who are included in the organisation’s pivotal talent pool and who occupy pivotal talent positions.
2.7.2 Recruitment and Retention
The strategic use of talent management has a great impact on the improvement of employee recruitment and retention. Deloitte (2005) found that the ability to attract and retain talent was perceived as being the two most critical HR management issues. Beardwell & Holden (1997) state that employee recruitment is important as it helps ensure that employees with right skills are recruited. Erasmus et al (1998) argued that it is important that a strategic approach to recruitment is maintained, which implies that job descriptions and job specifications, must be in line with the general direction of the civil service. It was underlined that the implementation of a strategic recruitment system in the civil service helps potential employees identify what best fit their own career plans but also allows the civil service to find the most suitable talents for its staffing needs (United Nations, 2005). However even though it is understood that poor recruitment decisions affect organisational performance and limit goal achievement, it is taking a long time for public service agencies to identify and implement new, effective hiring strategies.
However the main problem in the in the public service is not the strategic recruitment of talents but how to retain them. Retention is a voluntary move by an organisation to create an environment which engages employees for long term (Chaminade, 2007). Retaining the staff, in whom the civil service has invested in and trained, is very problematic. Authors argue that employees are not leaving the public sector because of the incentives they were offered, or because they are not satisfied with their jobs, but because of the private sector are offering them more interesting offers that they cannot refuse. As even though the acquisition of talent in the civil service will enhance performance; researchers argue that program and polices are more predominant that the effective recruitment, retention and management of talent.
2.8 SHRM and employee performance
An effective employee performance management system is a key component in creating a performance culture where staff adopt the values and behaviours that enables an organisation to achieve its goals. Armstrong (2000) argues that a Strategic HRM approach is one that makes decisions on the plans of an organisation concerning performance management of its employees. Moreover Dyer and Reeves (1995) underlined that employee performance is a combination of both ability and motivation and they also identified that in the various HRM models which emphasised strategic integration, HR practices, found to enhance employee performance are involvement, extensive training and contingent compensation. Additionally In his best practice approach, Pfeffer (1994) list seven HR practices that enhance employee performance as employment security, high compensation contingent of performance, selective hiring, training, reduction of status differentials, self-managed teams and sharing information. Recruitment is also one of the HRM practices that impact most on a organisation performance. Strategic HR concept underlines that recruitment strategies must be linked with the business strategies using the right mix of incentives to motivate employees to constantly improve their performance.
2.8.1 HR Scorecard – Approach to measure employee performance.
HR scorecards inspired by Kaplan and Norton (1996), who proposed adding measures of ‘customer’, ‘internal processes’ and ‘learning and growth ‘ to traditional financial measures. It is a mechanism for describing and measuring how people and management systems create value in organisations, as well as communicating key organisational objectives to the workforce. HR scorecard measures the contributions of HR to the overall strategic goal of the organisation and provides measurement in linking HR results to strategy and value addition. Additionally it enables an organisation to manage HR by measuring the high performance work system that plays a role in Building HR as a strategic asset.
Becker et al. (2001) proposed a seven-step process in transforming the HR architecture into strategic assets:
Clarify and articulate the business strategy
Develop the business case for HR as a strategic asset
Create a strategy map for the firm:
Ã¢â‚¬Â¢ Business indicators – leading and lagging
Ã¢â‚¬Â¢ Results – tangible and intangible
Identify HR deliverables within the strategy map
Align the HR architecture with HR deliverables:
Ã¢â‚¬Â¢ HR function
Ã¢â‚¬Â¢ HR system
Ã¢â‚¬Â¢ Strategic employee behaviours
Design the strategic measurement system:
Ã¢â‚¬Â¢ The HR scorecard
Ã¢â‚¬Â¢ Results measurements – tangible and intangible
Execute management by measurement
Walker & MacDonald (2001) stressed that the HR scorecard takes into consideration the strategic perspective that is; it measures the organisation success in achieving talent leadership, organisation integration and Human Resource Capability
Becker et al. (2001) underlines that the main benefits of HR Scorecard are that it enables cost control and value creation; it assesses HR’s contribution to strategy implementation; it lets HR professionals effectively manage their strategic responsibilities and it encourages flexibility and change. Pattanayak (2006) added that HR scorecard add value to the organisation by linking its human resource with strategy and performance.
On the other hand though, several authors stressed that An HR scorecard is time intensive to maintain and that the measurement of employees’ skills and task competencies is very complex. Moreover it is imperative that the scorecard is designed and implemented around the organisation strategy. However if the strategy is lacking or is unclear, it challenges the scorecards’ ability to add value to the organization and to efficiently measure employee performance.
2.9 Critics on SHRM
The literature has revealed that authors argue with respect to how strategy is formulated in an organisation. Due to the changing environment the Strategic HRM has certain difficulty in finding the accurate match between the current situation and the environment which complicates the strategic integration. Much criticism was based on the fact that the practice of human resource management (HRM) lacks a clear theoretical framework on the strategic approach of HRM. Much of the authors’ criticism in the field of SHRM has been concerned with either practical advice or presentation of empirical data. The lack of a good theory underlining the practice of Strategic HRM could be characterized as an excess of statements that fail to explain why empirical relationships or prescriptions for practice exist and why. If this criticism is true, it will be difficult for both practitioners and researchers to successfully make use of human resources in order to support the organisation strategy. Thus as was originally pointed out by Fombrun et al (1984), organisations will face drastic problems if they attempt to implement new strategies with the wrong HRM systems.
2.10 Limitations of SHRM in the Civil service
HRM is particularly problematic in the public service organisations – from technical, social-political and organisation culture perspectives. HR is invariably the most expensive investment and recurrent expenditure in the public service. O’Riordan (2004) stressed that the implementation of SHRM is limited in the Irish Civil service as the alignment of HR and strategy is much more challenging in practice than in theory.
Additionally, previous research in the United States shows that there is minimal attention to Strategic HRM in the civil service and there exist numerous factors that present its implementation such as the generally excessive staffing at the unskilled and semi-skilled job categories; Shortage of skilled staff and finally that the compensation levels are too low to attract, retain and motivate skilled and managerial cadres. Moreover while the literature claims that both HRM and SHRM are linked to performance, there is little empirical evidence of this and such as in North Carolina County, where Perry and Mesh (2006) conducted research, it was found that Strategic HRM does not have such a big impact on the public service performance either. Thus as described by Guest (1997), there is an inadequacy on the theoretical foundations upon which these statements are made.
Moreover Strategy development is technically a more complex undertaking than most leaders and managers acknowledge. R.S. Kaplan & D.P. Norton (2001) emphasises that human resources systems, designed to provide clear objectives for employees, do not typically align to strategy and only 51% of senior managers in the US and 31% in the UK civil service link their goals to strategy. Bana and McCourt (2007) also demonstrated that strategic HRM was not properly implemented in Tanzania and Uganda public service. Research indicates that while these two countries had a vision and a strategy, there was no integration of HRM practices with the civil service policies. Thus the vertical and horizontal integration described in Guest model was acutely missing. Civil Service Culture also limits the implementation of SHRM in the African civil service with the over-centralised management of HR; bureaucracies ‘antipathy to new ideas and addressing issues in a truly strategic approach and the rigidity in the rules and practices of recruitment, utilisation, deployment and lay-off of public service employees.
Despite the prevalence on the strategic importance of HR, the paradigm shift has yet taken place in the public bureaucracies of the developing countries. Evidence shows that changes brought to the civil service are rather marginal and that the HR function is not fully implemented.
While Strategic HRM plays a big role in systematically linking people in the organisation, its relevance in the public service is far from clear. Civil service agencies rarely operates in a competitive market and thus do not develop business strategies in the same way that private organisation do. While there is still little evidence that SHRM has a direct causal relationship to improve performance in the civil service, the fact that they function within a larger systems of authority and do not enjoy the same degree of autonomy may impaired the implementation of a strategic HRM management framework.