History And Background Of Strategic Human Resource Management

Published Date: 02 Nov 2017

Business competitive advantage does not consist in the simple adaptation to its environment. Instead, it is essentially determined by business strategic resource. SHRM differs most from conventional HRM in which it combines HRM with business strategies, and modifies the conventional mode of HRM on the basis of the formation of competitive advantage. The conceptual mode of SHRM constructed in this article emphasizes that the key to winning competitive advantage is the coordination of strategic supportive system, ability development system and the main activities of HRM.

Introduction

Human resource management is the management of an organization’s employees. On managing people within the employer-employee relationship. (Armstrong, Michael 2006). HRM involves the productive use of people in achieving the organization strategic objective and the satisfaction of individual employee needs. (Stone, R.J.2011) The human resource (HR) development function will and should play a more strategic role in any industry. For example, in marketing, finance, operations or technology these kind of industries. Human resources strategy may decide to market share, sales, profits will increase or not. Effective human resources strategy as the company's marketing strategy to become equally decisive.

Traditional human resource management focuses on the administrative tasks of human resource management. For example, refers to the completion of the organization's mission, specifically management of the organizations involved in the relationship between people and things, people and things to achieve a good match.

Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. (Boxall, P 1992) With strategic human resource management, the company focuses on strategy and operational matters instead of simply engaging in the administrative tasks that are required for every business. This adds more responsibility to the human resources department.

The aim of this report is to study and analysis the difference between Strategic HRM and conventional HRM in different points in business field.

History and background of strategic human resource management

With the development of information technology-oriented high-tech, Internet and e-commerce applications, the human and the New Economy (knowledge-based economy), knowledge of the decisive role in creating organizational competitive advantage is increasingly obvious. The advent of the era of global competition, the competition into a new frontier. HR strategies are essentially plans and programmes that address and solve fundamental strategic issues related to the management of human resources in an organisation (Schuler, 1992). They focus on alignment of the organisation’s HR practices, policies and programmes with corporate and strategic business unit plans (Greer, 1995). Strategic HRM thus links corporate strategy and HRM, and emphasises the integration of HR with the business and its environment.

2.1 Consideration of conventional HRM

With the fast changing environment of the business, economic globalization and the competition among businesses increase fierce led to the business rethink how to organize and management the human resource. Since the traditional HRM aim to daily administration management cause the HRM is shortage of strategic and guiding the management system thus cannot response to the complex, changeable, expanse environment which brought us an increasing number demanding of flexible and innovation the changes in strategy. Reduced productivity of workers and industrial innovation deteriorate, the traditional HRM facing the big challenge. All these changes forced the professionals and managers thinking deeply of the source of advantage of the competitive. Most of them started to find out from inner business, then the based on resources, ability and knowledge the competitive statement developed. The roots of HRM go back as far as the 1950s, when writers like Drucker and McGregor stressed the need for visionary goal-directed leadership and management of business integration (Armstrong, 1987).

2.2 Explore the SHRM

In the nearly 20 years, SHRM in research content and scope got lots of progress. The main shortcoming: Steering based on the strategic management of the resource base from environment-based strategic management.

Business strategy

Typologies for characterizing the business strategies used by firms abound, but the two most frequently cited in discussions of HRM were proposed by Miles&Snow (1978) and Porter (1980, 1985). Miles& Snow classified organizations as prospectors, analysers, or defenders. Prospectors actively seek new products and markets and, therefore, seek to grow; analysers also seek to grow, but in a more stable and predictable way through the internal development of new products rather than creation of new markets; Porter’s (1985) competitive strategies distinguish among firms that compete on the basis of cost leadership, product differentiation, and market focus. According to the above analysis, strategic HR offers three critical outcomes: increased performance enhanced customer and employee satisfaction and increased shareholder value. These outcomes are accomplished through effective management of staffing, retention and turnover processes, selection of employees that fit with both the organizational strategy and culture, cost effective utilization of employee through investment in identified human capital with the potential for higher return ; integrated HR programs and policies that clearly follow from corporate strategy facilitation of change and adaptation through a flexible more dynamic organization ;and tighter focus on customer needs, emerging markets and quality.( Charles J. Fombrun and Noel M.Tichy and Mary Anne Devanna; 1984)

Difference between Strategic HRM and conventional HRM

Focus

Strategic HR shifts attention as against the traditional HR’s focus on employee relations to partnership with internal and external groups. Strategic HRM based on important of human beings as core, people as ‘capital’, emphasizing a dynamic, psychological adjustment and development, is a "service centre", the management point of departure is a "focus on the people" to achieve the system of people and things optimization enable enterprises to achieve the purpose of the best economic and social benefits. Traditional HRM based on "things" as centre, people will be regarded as a cost, and treat them as a "tool". Stressing the static control and management of a single aspect of the "things" is a "centre of power" the style of management and the purpose is control people.

SHRM as core sector is an important part of the business strategy, the main contribution to the business strategy to achieve long-term sustainable development through the promotion of enterprise; including all aspects of the organizational, cultural, and system building corporate of strategy, organization and systems to ensure the implementation and realization of the corporate strategy to promote long-term stable growth. Traditional HRM are auxiliary departments, no direct contribution to business performance, the main work is responsible for staff attendance, files, and contract management and transactional work.

Roles

Strategic HRM requirements HR managers in the height of the corporate strategy, initiative analysis and diagnosis the current human resource situation, providing the accurate and variety of valuable to the decision-makers to help them developing specific human resource action plans to support the implementation and realization of the corporate strategic objectives. Traditional HRM can only stand on a sectorial perspective, normative consider personnel matters and other related work, and at best can only convey the strategic goals set by the decision-makers and information. Conventional HR management can play a role in environmental scanning for example, identifying and analysing external opportunities and threats that may be crucial to the company’s success. Specific, in the following main roles: According to the requirements determined for the staff conditions by the enterprise objectives, through the planning, recruitment, exam, evaluation, selection, to obtain the proper candidates; Corporate culture, communication, interpersonal harmony, to resolve conflicts effectively integrate the individual within the enterprise, goals, behaviour and attitude of the masses tend to the requirements of enterprises and ideas, and make it a high degree of cooperation and coordination, their collective advantage, improve business productivity and efficiency; Remuneration, assessment, promotion and a series of management activities to maintain the employee's enthusiasm, initiative and creativity, safeguard the lawful rights and interests, and to ensure that employees in the workplace safe, healthy and comfortable working environment to increase employee satisfaction, peace of mind satisfied with the work; Labour attitudes, skills levels and other aspects of a comprehensive assessment, identification and evaluation of the results of the work of employees, and to provide a basis for the corresponding rewards and punishments, lifting of future decision-making; Staff training, job enrichment, career planning and development, promotion of employees' knowledge, skills and other aspects to improve the quality, enhanced their ability to work and play, to maximize their personal values ​​and the contribution to the enterprise, to employees individuals and businesses seeking common development.

Employee development

SHRM based on corporate strategic development needs, combined with employees’ personal development plans to provide a systematic and comprehensive human resource training and development system to ensure the steady stream of transport required for various types of talent for the enterprise at the same time, achieving development of enterprise and employees career development of a win-win situation. Traditional HRM is responsible only for new employees to accept organizational discipline into the enterprise, labour safety, quality management training, rarely will organize the training of other aspects of the employees. Cause management of the limitations, it is impossible to establish a comprehensive human resources training and development system.

Employee development is often missing in traditional human resources policies. Strategic HR management includes creating plans to develop your most promising employees on a professional and personal level. Employees’ potential is less than the development because of management model is single, the staff simply the implementation of the orders of superiors, the lack of a sense of corporate identity, enterprises lack the vitality and development of the power, such enterprises in the fierce competition in the market only slowly be eliminated. Strategic human resource management in enterprise development, the current status of the assessment of the organization's human resources, the analysis of the relevant information and data on the basis of a large number of scientific and rational human resources planning and development. The traditional human resource management is managed in accordance with the instruction of human resources managers; it does not consider the work of the human resources planning. (David Ingram; No Date)

Recruiting& Firing

Strategic recruiters interview candidates all year long and build a large pool of potential interviewees from which to draw in short-notice hiring situations. Except pay attenuation in candidates and job matching , SHRM more particularly concerned about the values of the candidates who meet the company’s core value, the development expectations of the candidates who can provide other factors to ensure that the recruitment of candidates can long-term services for enterprise. Traditional human resources departments engage in recruiting activities on a case-by-case basis, either to fill new positions or find replacements for employees who have moved on in their careers. This kind of reactive hiring can put pressure on recruiters to choose from a relatively limited pool of applicants. Traditional HRM can only be concerned about whether the condition of the candidate’s positions relative match or only play of communication between the department heads of the employer and candidates.

In firing, no manager enjoys firing employees, but this important decision-making can contribute to the strategic effectiveness of a business in a certain situations. Traditional HR departments can be hesitant to fire existing employees, regardless of how many issues may arise or how badly the employee's productivity and efficiency may drop over the years. (David Ingram; No Date)

In SHRM, except focus on whether the candidates suitable for the particular position with job matching, they also pay special attention to the values ​​of the candidate meets the company's core values​​, whether the company can provide other factors for the candidate development expectations of future to ensure that the recruitment of candidates’ long-term services for enterprises. Knowing who to let go can be just as important as knowing who to promote when building a happy, productive workforce. (David Ingram; No Date)

Performance appraisal

According to the needs of corporate strategic, SHRM based on combining with the staff capacity to develop a comprehensive performance management system, concerned about the enterprise wide performance management, including performance planning, performance assessment, performance evaluation, performance feedback and performance incentives, the whole process; Paying more attenuation to performance feedback corporate performance and incentives, to ensure that employees continuously improve performance while enabling spiralling. Traditional HRM is only concerned with the performance evaluation and punishment, most of them play the role of the corporate police are only responsible for the fault finding, find loopholes, it is impossible to form a scientific performance management system. ( Charles J. Fombrun and Noel M.Tichy and Mary Anne Devanna; 1984)

Reward system

The SHRM role of reward systems is to consider what behavioural impact they can have in organizations. The research so far on reward systems suggests that potentially they can influence the following factors which, in turn, influence organizational effectiveness.

Attraction and retention

Motivation

Culture

Reinforce and define structure

Cost

The design of an effective reward system demands not only a close articulation between the business strategy of an organization and the reward system, but also a clear fit between the reward system and the other design features of the organization. The implication of these for-reward systems, it is also impossible to design an effective reward system in the absence of knowing how other design features of the organization are arrayed. So the key strategic decisions about the reward system need to be made in an interactive fashion in which tentative reward system design decisions are drive by the business strategy and then are tested against how other features of the organization are being designed.

Appropriate reward system practise:

Conventional

With strategy

Promotion

Top management have power to make decisions

Open posting for all jobs; Decision-making process through all the groups

Status symbols

A great many, carefully allocated on the basis of job position

Few present, low emphasis on organization level

Base rate

Based on job performed; high enough to attract job applicants

Based on skills; high enough to provide security and attract applicants

Incentive plan

Piece rate

Group and organization wide bonus, lump sum increase

Communication policy

Very restricted distribution of information

Individual rates, salary survey data, all other information made public

Decision-making locus

Top management

Close to location of person whose pay is being set

Training

SHRM based on the need of enterprise development, offering the full systematic completely training program for individual development. Ensure a steady stream of transport required for various types of talent for the enterprise to achieve the rapid development of enterprise and staff career development of win-win. Conventional HRM is responsible only for new employees into the enterprise organization and discipline, labour safety, quality management and other aspects of training, and rarely will organize the training of employees; limited to departments limitations reasons, it is not possible to establish a comprehensive human resource training and development system.

Performance Management

Strategic human resource management based on the needs of corporate strategy, combined with the ability of employees to develop a comprehensive performance management system, pay attention to the enterprise-wide performance management, including the whole process of performance planning, performance assessment, performance evaluation, performance feedback and performance incentives; Pay more attention on performance feedback and incentives to ensure continuously improve employee performance, in order to achieve enterprise performance spiral. Conventional HRM is only concerned with performance evaluation and punishment, most of them play a corporate role of the police is only responsible for the fault-finding, looking for vulnerabilities, it is impossible to form a scientific performance management system.

The value of strategic HRM

Achieving the value of strategic human resource management is improving the staff capacity and organizational performance, and enhance staff capacity in conjunction with corporate strategy and SHRM and organizational performance; therefore need to focus on thinking about how to refine and create excellent corporate culture, the development of personalized of employee’ career planning, and pay special attention to the in-depth development of the corporate human resources. The value of the traditional human resource in the normative and rigor, that is, whether the affairs are well-kept, whether to see maintained and under control employees, however most of the work just stop at the surface. SHRM emphasizes an important position in the overall business, focused on change management and people management are warning management model that take a forward-looking attitude and take preventive measures. Imagine if without the aid of modern means to learn how can timely scattered throughout the country, even at home and abroad a variety of human resources-related data and information? How human resource can do the work of a forward-looking? With state-of-the art, modern scientific management tools to build a systematic and comprehensive human resource management system has become a trend and inevitable. Traditional personnel management focused on standardized management and transaction management is a post-administration. Almost all of the work done by hand, even if the adoption of modern management tools can only be used alone only for personnel departments simple personnel management system, impossible to build up the system, a comprehensive human resource management system.

Summary

However, the traditional HRM focuses mainly on employee relations; SHRM focuses on partnerships with internal and external customers. The traditional HRM has only short-term goals, however SHRM has long-term goals. HRM has staff specialists, SHTM has line managers. Comparing the two models: Conventional HR management lacks focus on the overall strategic initiatives of the company, but it works in strategic human resources management. For the SHRM , it has very clear route: Brands Tactic→Human Resource Management Department→establish the relevant HRM strategies→To develop an appropriate human resource policies→Understand employee’s demand—→Increase employees’ satisfaction→Productivity / service improvement→Customer satisfaction and loyalty→Sustainable development of enterprises