Strategic HRM: The Blueprint for Modern Organizational Success

 

Strategic HRM: The Blueprint for Modern Organizational Success

~Let’s talk about Concepts of SHRM~👇

Strategic Human Resource Management (HRM) is the visionary approach of aligning HR practices with an association's overall strategic objectives. It involves anticipating unborn requirements, using mortal capital effectively, and fostering a culture of innovation and adaptability. By integrating HR strategies with business goals, Strategic HRM aims to enhance organizational performance, drive competitiveness, and insure long-term sustainability.

” The concept of HRM is often defined as a strategic approach to the management of an organization’s most valued assets- the people working there who individually and collectively contribute to the achievement of its objectives for sustainable competitive advantage”.

(Armstrong M, 1994)

SHRM involves a set of hones and forms that are designed to guarantee that an organization's human resources are adjusted with its vital destinations. This involves developing a comprehensive HR methodology that is cordinates with the organization's overall business strategy.

According to Hendy and Pettigrew (1986), there are four meanings of SHRM:

•  The use of planning
•  A coherent approach to the design and management of personnel systems based on an employment policy.
•  Match HRM activities and policies to the business strategy
•  Seeing the people of the organization as a strategic resource for the achievement of competitive advantage.

Ø  What are the aims of strategic SHRM ?

The aim of SHRM enable strategic opinions to be made that have a major and long-term impact on the growth and success of the organization by ensuring that the association has the skilled, committed, and well-motivated employees it needs to achieve sustained competitive advantage. The HR strategies should consider the interests of all stakeholders in the organization, employees in general as well as possess and management.

Ø  Do you know about “Strategic fit”?

Strategic fit for organizations, explaining that it can help to improve performance, increase competitiveness, and ensure that resources are used effectively. Provide examples of companies that have successfully achieved strategic fit. Strategic fit, explaining that it refers to the extent to which an organization's strategy is aligned with its internal and external environment. Discuss how this alignment helps organizations to achieve their goals and objectives.

·       External Fit (vertical) alignment between an organization's strategy and the external environment in which it operates. This includes factors such as industry trends, competitive dynamics, and customer needs. An organization that achieves external fit has developed a strategy that is well-suited to its external environment and that takes advantage of opportunities while minimizing risks and threats.

·       Internal Fit (horizontal integration) alignment between an organization's strategy and its internal resources and capabilities. This includes factors such as the organization's culture, structure, and processes, as well as its human capital and other resources. An organization that achieves internal fit has developed a strategy that leverages its strengths and capabilities while addressing its weaknesses and limitations.

Don’t you think both external and internal fit are important
for achieving strategic fit???

Strategic Human Resource Management (HRM) involves aligning HR practices with an organization's overall strategy to achieve its goals effectively. This means tailoring HR strategies to fit both the external environment and internal resources and capabilities of the organization. By doing so, organizations can enhance their chances of success and better adapt to changes in the business landscape.

Let’s take an example;

Imagine a company competing in a tough market. To stay ahead, it might focus on cutting costs and being more efficient. At the same time, it would also want to use its strengths, like being innovative and providing great service, to stand out from the competition. This balancing act is what strategic HRM is all about—finding the best ways to use the company's strengths to succeed in a tough market.

Take a break and watch this; 

Ø  What are the other important concepts?

·       Strategic Flexibility

In today's fast-paced business world, being flexible is crucial. Do you agree?

Companies that stick to rigid plans can struggle to keep up. Instead, they need to be able to shift gears quickly when markets change, customer demands evolve, or new technologies emerge. This flexibility, known as strategic flexibility, is vital for staying competitive over the long haul. It helps organizations stay agile and resilient, giving them the edge they need to succeed in an ever-changing landscape.

·       Strategic capabilities

Strategic capability is crucial for organizations because it allows them to build sustainable competitive advantages that competitors find hard to match. By utilizing their distinct strengths and resources, companies can set themselves apart, foster customer loyalty, and enhance their financial performance. This strategic edge is what helps businesses thrive in a competitive market, ensuring long-term success and growth.

·       The Resource Based view of SHRM.

The Resource-Based View (RBV) of Strategic Human Resource Management (SHRM) is a perspective that prioritizes internal resources and capabilities within an organization to generate competitive advantages. It underscores the notion that a company's resources, including its workforce, are central to its achievements. This approach emphasizes leveraging these internal strengths effectively, including human capital, to outperform competitors and attain sustainable success.

“The resource-based view of the firm (RBV) represents a paradigm shift in SHRM thinking by focusing on the internal resources of the organization, rather than analyzing performance in terms of the external context. Advocates of the resource-based view of SHRM help us to understand the conditions under which human resources become a scarce, valuable, organization-specific, difficult-to-imitate resource, in other words key ‘strategic assets’.”

(Barney and Wright, 1998; Mueller, 1998; Amit and Shoemaker, 1993; Winter, 1987)

In the RBV-SHRM perspective, an organization's human resources are seen as strategic assets capable of yielding sustainable competitive advantages. This viewpoint highlights that an organization's success hinges not only on external factors but also on its internal strengths and capabilities, including its workforce. 

I believe you will agree if I say, that by effectively leveraging these internal resources, organizations can gain a significant edge in the competitive landscape, fostering long-term success and resilience. 

What do you think?

Ø  Perspectives on strategic HRM.

·       The universalistic perspective- some HR practices are better than others and all organizations should adopt these best practices.

·       The contingency perspective – an organization’s HR policies must be consistent with other aspects of the organization (strategy). This is described as the vertical fit.

·       The configurational perspective – An organization must develop an HR system that achieves both horizontal & vertical fit.

Ø  The Best Practice Approach

The view is that there are “Best practices” that any organization can easily adopt.

Pfeffer (1994) introduced several best practices in his work. These practices included;

•        Employment Security
•        Selective hiring
•        Self-managed teams
•        High compensation contingent on performance
•        Training to provide a skilled and motivated workforce.
•        Reduction of status differential
•        Information sharing

Ø  Critique of Best practice approach

·       Too much diversity in the list of best practices and does not specify the pathway or intervening variables through which they are supposed to improve business performance.

·       Major object to the idea of a universally valid set of HR practices is a socio-cultural one as there is a problem with trying to specify a set of cross-culturally best practices as there are significant differences across counties in cultural values.

Ø  Best fit approach

Absolutely, HR strategies should indeed be contingent upon the specific context and circumstances of the organization, including its type, industry, and strategic objectives. The concept of "best fit" in HR management emphasizes the importance of aligning HR practices with the broader business strategy of the organization.

In essence, the Best Fit approach involves analyzing the organization's business strategy to determine the critical competencies and skills necessary for its success. HR practices are then tailored to support and reinforce these competencies and skills, thereby enhancing the organization's ability to achieve its strategic goals.

This approach recognizes that different organizations operate in unique competitive environments and have distinct strategic objectives. As such, HR practices cannot be one-size-fits-all; they must be customized to fit the specific needs and circumstances of each organization.

By adopting a Best Fit approach, organizations can ensure that their HR strategies are aligned with their business goals, leading to improved performance, employee satisfaction, and overall organizational success.

Certainly. Different organizations have different priorities based on their competitive strategies. For instance, those focused on innovation may prioritize investing in training and development to foster creativity, while those emphasizing cost may prioritize efficiency and productivity. The Best Fit approach acknowledges that there's no one-size-fits-all HR strategy and emphasizes tailoring HR practices to suit each organization's specific needs and goals.

Do you agree?
By adopting SHRM, companies can achieve sustainable competitive advantages and long-term success.

My Conclusion :

Strategic Human Resource Management (SHRM) is essential for adjusting HR methodologies with organizational objectives. SHRM guarantees that companies have skilled and motivated employees to gain a competitive edge. It emphasizes strategic fit, leveraging resources like human capital for success. Strategic flexibility and capabilities are key, to permitting organizations to adjust and thrive.

Reference

· Paauwe, J. and Boon, C., 2018. Strategic HRM: A critical review. Human resource management, pp.49-73.

· (Armstrong M, 1994) HRM represents a strategic approach in management, www.ukessays.com. (n.d.) [online] Available at: https://www.ukessays.com/essays/business/hrm-represents-a-strategic-approach-in-management-business-essay.php [Accessed 5 Apr. 2023]

· Becker, B.E. and Huselid, M.A., 1999. Overview: Strategic human resource management in five leading firms. Human resource management, 38(4), pp.287-301.

· Hsieh, Y.H. and Chen, H.M., 2011. Strategic fit among Business Competitive Strategy, Human Resource Strategy, and Reward System. Academy of Strategic Management Journal, 10(2).

· CEOpedia | Management online. (n.d.). Strategic fit. [online] Available at: https://ceopedia.org/index.php/Strategic_fit#:~:text=Strategic%20fit%20relates%20to%20the%20situation%20in%20which [Accessed 5 Apr. 2023].

· Hartman, D. (2019). What Is Strategic Capability? [online] Chron.com. Available at: https://smallbusiness.chron.com/strategic-capability-15828.html.

· Jobs, W. (2009). The resource-based view of SHRM HR Management. [online] Wisdom Jobs. Available at: https://www.wisdomjobs.com/e-university/hr-management-tutorial-69/the-resource-based-view-of-shrm-8741.html.

· CIPD and Gifford, J. (2021). Strategic Human Resource Management | Factsheets | CIPD. [online] CIPD. Available at: https://www.cipd.co.uk/knowledge/strategy/hr/strategic-hrm-factsheet.

· Francis, A. (2012). Best Fit and Best Practice Approaches in Strategic HRM. [online] MBA Knowledge Base. Available at: https://www.mbaknol.com/human-resource-management/best-fit-and-best-practice-approaches-in-strategic-hrm/.