Introduction
Globalisation and IT integration have reshaped the business world with free flow of human resources crossing the limit of national boundaries and mass media has deliberated to the quick-changing competitive business environment where the theoretical framework of strategic human resources management (SHRM) is gaining central attention to respond to the business performance.
The essential arguments rose from the conceptual perspectives how the organisation’s resource-based presumptions of competitive advantage would contribute to the implications of SHRM linking with theories and models of HRM practice.
This paper has designed with conceptual framework of SHRM, its model and relationship with competitive advantage, linking corporate strategy with HR strategy, and organisational performance under SHRM practice. To come into conclusion, this paper also integrated the raising challenges to HRM that has driven the organisations towards the practice of SHRM.
Raising Challenge to HRM
Ansari and Babu (2010) pointed out that the poses of globalisation and IT integration in the business arena has raised tremendous challenges to the traditional HRM practice particularly who are working outside of the national boundaries, such as MNCs while the different international alliances and unions have confirmed free flow of HR and financial resources within their territories.
Ulrich, et al. (2008) added that, such advancement has deliberated new market characteristics that put emphasis on the requirements to deal with HR successfully to achieve competitive advantage in the comprehensive marketplace. To meet these demands, it is essential for the organisations to identify and understand the factors those can resolve the needs of effectual HR practices.
Different counties have diverse dimensions those persuade the charisma of attracting FDI (Foreign Direct Investment) and such factors determine the economic feasibility to establishing a foreign operation for an organisation and it will bring predominantly strapping impact on the existing HRM of that country.
There are various factors those have an effect on HRM practice in the global arena such as social and organisational culture, economic system, existing legislation of the country and human capital and all these factors possibly have measurable challenges to the traditional HRM where SHRM facilitate the organisations to gaining competitive advantage.
Conceptual Framework of SHRM
Datta (2007) pointed out that SHRM is an approach of decision making relating to the organisational objectives connecting people rather than employees who are essential to implementing the business strategy of the organisation. At the same time, SHRM sets up a rapport connecting HRM with Strategic management while SHRM aimed to clarify the whole course of action that the organisation would like to accomplish its objectives by the concerned people.
Wright (1998) added that as a component of the strategic management, SHRM would consider to handling with all people linked with the business for long-term and integrate inclusive issues of the organisational structure, its culture, managerial effectiveness, performance, resources, as well as changes of management that deals with HR actions applied to support the competitive strategy of the organisation.
Jakson and Schuler (1995) indicated SHRM as a means and approach of supporting the management of HR connecting with the strategic context of the business while it aimed to endow with an intellect to directing any disorderly environment of the organisation towards an ordered and coherent way adopting effectual actions and policies.
Becker and Huselid (2006) explained that the SHRM takes into account those verdicts and course actions to managing the employees of all stages in the way that rooted to the direction of generating sustaining competitive advantage for the organisation.
Sheehan (2005) explored that SHRM should make available of guidelines to selecting triumphant action to gaining eventual trial of the authenticity of strategic HRM where HR is considered a strategic issue for overall corporate function and evidence. To implementing SHRM, it is essential to enlarge the existing strategy of the organisation with clear reflection on the HR dimensions and comprehensible guidance for the HR management regarding their responsibility and accountability.
Datta (2007) also mentioned that a great deal of the literature endows with the facts of strategic amalgamation, but it is necessary to address the reasons why strategic incorporation would be advantageous to organizations. The wider viewpoint of modern business advocates to amplify the input of HR reflections within the strategic planning with an outlook to caring employees as an asset of the organisation ensuring their further participation and apprehension through effectual communications, result oriented procedural practices, well aliened training, reward and career expansion opportunities concerned with performance.
Schuler and Jakson (1987) explained the necessity of SHRM arguing that it will provide well-built visionary and captivate leadership at the top of the organisation that dedicated to the exposed missions and values with clear understanding to the business strategies, eager to implementing them effectually, positive focus to the critical success factors, and friendly to working consistent management team.
Model for SHRM
Delery and Doty (1996) introduced the two stages model of SHRM while Truss and Gratton (1994) presented the three stages model to deliver the process of SHRM. Krishnan and Singh (2006) integrated both the two stages and three stages strategy into a single platform and presented a modified version that has demonstrated in diagram – 1 with explanation of the three stages. Wright (1998) pointed out that the first stage is to put together with the business strategy and decode this connecting with the strategic objectives of HRM while the HR strategy generates from the strategic objectives of HRM.
The next level is to put into practice of HRM systems supporting the HR strategy while the concluding level is to weigh up and reviewing the efficiency as well as strategic incorporation of the HRM systems within the organisation. The course of action of SHRM is enough dynamic with the three levelled strongly inter-linked procedure including diverse enablers and deterrents for every level, which are the organisational factors to assist the course of action of SHRM practice.
The above model is a modified version of both two and three stage method of SHRM practice where the horizontal configuration presents assorted HR practices as well as the connections of then with strategic objectives including the entire five major features of SHRM.
The First Steep of SHRM Model
Krishnan and Singh (2006) described that the elementary stage of the model endow with the basic opinion for commencing efficient SHRM and the organisation considers its HR department just like a business collaborator and facilitate it with the opportunities to be a convenient partner. At this level, the strategy team would put together the business strategy where the integration of the HR departmental head as top of the team would generate the organisational strategy that aimed to build up a positive strategic association with the HRM systems of the organisation.
Delery and Doty (1996) mentioned that, both the external and internal environment of the organisation would seriously influence the strategy formulation where the external factors identified as environment of the product market and level of competition, labour market condition including demography, politics, legislation, and economic circumstances together with external stakeholders of the organisation.
Trussa & Grattona (1994) added that the organisational factors have been identified as the organisational state of affairs that stand for different departments as well as functions, which contribute to put together the business strategy integrating with people’s management factors and all other internal factors.
One of the key factors for successful execution of SHRM is the requirement of competencies at HR while the other necessary factors are the organisational capacities, training the HR to improve and meet up the existing gaps, identifying critical factors for HR strategy and competencies to executing business strategy including HRM components.
The Second Steep of SHRM Model
Wright (1998) pointed out that the second step of SHRM is to putting into operation of a range of HRM systems supporting the HR strategy connecting through vertically, horizontally, and temporally. Truss and Gratton (1994) identified that the vertical linkage involved with HR selection, recruitment, performance measure, reward, training and career development while the horizontal linkage integrated with HRM related policies and practices and the temporal linkages concerned with organisational development and sudden changes through automation or for any merger.
Integration of Information System within HRM practice and outsourcing also contribute the HR department to implementing SHRM while the first step and second step of the model has interlined as a strategic partner (Krishnan and Singh, 2006).
The Third Steep of SHRM Model
Krishnan and Singh (2006) mentioned that the third steep of SHRM the model concentrated to assessing and reviewing the efficiency of HRM systems including their strategic amalgamation to gaining strategic objectives as an essential component of SHRM. At this stage, the total HRM systems supporting business strategy would be evaluated with aim to determining the effectiveness of the HR practices and presentation through scrutinising the association between the three steps.
It is essential for the HR department what are the standard and measures to assessing the progress as the model involved with different survey and reviewing process while some of the theoretician suggest to measuring the productivity of employees in terms of financial returns, others argued for turnover as well as advanced performance shaping the intensity of strategic integration.
SHRM & Competitive Advantage
Elliott (2006) identified three major standpoints that have come into sight to delivering competitive advantages from SHRM practice and the first one is Universalistic viewpoint that engage with a HRM practice to ensure prolonging competitive advantage, but a number of researchers disagreed with this view.
Guest (1997) put down to a contingency viewpoint as well as argue that one organisation to another the HR strategy and practices would be dissimilar for which the HR practices are not quite synergistic and dependable with organisational strategies and may equally unfavourable for both individual and organisational performance.
Delery, et al. (1996) and Bobko, et al. (2008) explained the configurational viewpoint of SHRM that support the HR practices to contribute the organisational performance and to attain business objectives fitting with configurational perspectives that put forward the organisation to establish the HR system complying with both horizontal and vertical fits.
SHRM to linking Competitive Advantage & HR Strategy
Elliott (2006) and Inyang (2010) established the linkage of competitive advantage and HR practices based on SHRM with the resource-based framework for which it is essential to highlight on the following points-
- Human capital resources as valuable: organisations must provide highest value and care to the HR treating it as tremendous source to provide competitive advantage where the demand and supply of workforce are heterogeneous to the organisation (Miles & Snow, 1984);
- Human capital resources as rare: Under this approach of SHRM, the rarity of human capital has derived of HR expertise and capabilities altitude as well as predestined on the proposition HR skills and competencies as a rare feature;
- Human resources as inimitable: The SHRM scholars delivered this approach arguing that HR is inimitable to generate sustained competitive advantage for the organisation based on complex social networks (Elliott, 2006 & Wright, 1998).
This SHRM loom applying the HR practices is further fitting from resource-based observation to deliver competitive advantage for the organisation to systemically to control and administer the HR pool through implementation HR behaviour that has demonstrated in the following diagram – 2:
Linking corporate strategy with HR strategy
Porter (2009) clarified the corporate strategy as an overall road map for the diversified organisations though there is long gap among the top management to understanding the core context of corporate strategy and the root to implication. A diversified organisation belong to double ranked strategy that formed with business unit strategy and corporate strategy with reference to two queries – first one is for which business the different units would go for and the second query is how the corporate office would administer the assortment of business units.
The corporate strategy drives the diversified organisations add and sum up the activities of the business units including portfolio management, reengineering, transmitting skills, and shared vision and activities where the HR is the vital strength for implication. Deloitte (2009) added that the key success factors for the modern diversified organisations have to taking into account their people first as the ultramodern HR executives have to face the challenge to enlarge the well-organised, effectual, and influential, but easygoing solutions for the people related to the business.
It is enough complicated to settle on the exact input of HR function to gaining such objectives, but integrating SHRM framework it will exclusively contribute the organisations to reinforce the strategic responsibility of HR function supporting the business strategy. Ulrich, et al. (2009) added that recognising the human capital value, this approach uphold the corporate strategy through transforming business strategy into actionable HR strategy, then transforming HR strategy into people’s initiatives and programs of the organisation identifying the best fit to motivate and retain existing employees and pull attention of the new workforce.
Consequently, the entire process would contribute the organisation to survive and grow up by accelerating the greater shareholder value (Delery, et al., 1996). Boxall and Purcell (2000) investigated and identified a number of logical linkages among the HR strategies and corporate strategies where the major acquaintance set up through the portfolio theory that correspond to the market growth rate considering as a function market share and the adoption of HR strategies would generate a changing organisational circumstances.
Graetz, et al, (2010) recognised other linkages such as value chain that endorse with service quality, continuous innovation, sensitivity where the HR treated as a critical success factor complying with complexity, emergence, and organisational structure.
SHRM and Organisational Performance
Ansari and Babu (2010) emphasised on the elevated utilisation of SHRM and put forward arguing that the practices of SHRM would constantly carry on superior organisational performance ensuring long-term inducement policies for the HR executives to enhancing ROI (return on investment).
Graetz, et al. (2010) identified that the well extent of managerial reimbursement has direct influence on the future financial well-being of the organisation while Delery and Doty (1996) argued that the pay-mix have straight interconnection with the financial performance of the organisation as well as to appointing most excellent staffing would bring successful outcomes in practice.
Robson (2008) presented the example of Brunt Hotels, PLC, a British company with sixty hotels in the UK and it has recently purchased an undersized hotel chain in France while the strategic objective of the company is growing gradually with sure shot new ventures within budget.
The company decided to utilise the generic framework of SHRM approach integrating enhanced training, excellent pay-mix, and vertical and horizontal fits for the HR while the company sends few of the UK-based managers to train the new HR in France.
Consequently, the company jumped into a remarkable position acquiring more 152 hotels within the next few years that proved enough evidence of success SHRM and organisational performance.
Conclusion
This study has investigated and identified the intentions and core competences of the SHRM approaching modern HR practices including their involvement and contribution to substantial competitive advantage for the organisation.
The linkage among the HR strategy and practices of the organisational performances that have treated from the resource-based views and considered HR as a potential provider that would generate sustainable competitive advantage for the organisation. The theoretical factors and HR models illustrated the argument that the relationship among corporate strategy and HR strategies and its role to potentiality deliver successful organisational outcomes.
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