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Australian Energy Company Strategic Human Resource Management Case Study

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Introduction

A combination of varying factors is usually required to ensure the success of workplace. Case studies are often used to analyze and confirm various assumptions and theories.

A case study was conducted on an Australian Government firm to give first hand information on how the implementation of an integrated model of strategic Human resource management impacts the work place. This paper seeks use the case study and identify whether Compton’s argument really support the two key aspects of a successful workplace namely: human capital; and fiscal profit.

Integrative SHRM

The integrative model of SHRM that was applied in the firms SHRM was designed to incorporate the two main models of the HR strategy (Rosilah 2004). One of the strategies defines the core logic that informs managerial control, the second strategy that primarily focuses on the compensation-effort swap.

This kind of model is chiefly characterized by activities such as acquiring and developing human capital from within as opposed to recruiting them from external environment.

The other important aspect of the integrated model is the focus on employ assessment in order to ensure that the employees comply with the process-based standards rather the development of a psychological atmosphere that enables them to get used to the social relationships, encouraging mutual trust and respect, and hence controlling the focus on the outcomes (Rosilah 2004).

Case Summary

In the current case, a Government owned Australian Energy Company was gearing up for privatization, and thus the management decided to put in place a new HRM strategy. The strategy was intended to double up as a precursor for the workers to adapt to the conditions of a privatized industry and also to develop a highly competent leadership team that can turn around the firm’s fortunes (Mackeena 2008).

The integrated SHRM approach was used to engage different managerial levels to ensure that a new set of leaders with the desired competencies were developed take the organization to the next level.

Case Analysis

In this section, an analysis is to done to identify whether the argument advanced by Compton relates to human capital and fiscal profit as two most important aspects of a successful workplace.

This is a question that can be answered following a logical analysis of the cascade of activities that may follow the integrated SHRM that has been implemented at the Australian Energy firm. If this is correctly benchmarked to theory while reflecting on the organization goals then an important conclusion can be made as to whether the strategy will have an impact on the organizations profitability (Legge 2004).

Here is an organization that has lost a considerable chunk of its best workers; had a current crop of managers that have no other experience outside the organization; and had a paternalistic culture that relates to the past management style.

The organization thus attempts to developed competencies from within rather than from outside. To facilitate this, the management employees the commitment strategy as its not aware of how their currents work force will perform in a private setting.

Human Capital

The development of a proper human capital requires the selection of a good HR strategy that is consistent with the organizations situation, goals and nature of business. The integrative strategy employed by the Australian Energy Company seeks to define the core logic that informs managerial control and then primarily focus on reward-effort exchange to develop its human capital at the managerial level (Wilson 2009)

In so far as the strategy will be effective in developing the human capital required at the managerial level, it’s vague on how the same will be done at the low level work force.

First and foremost, the commitment aspect of the integrated SHRM strategy employed by the company can, and is often applied in certain situations. One, when the leadership does not have full information regarding the basic aspects of the labour process and/or the ability to clearly monitor and evaluate the efficacy of worker behaviours that are required to carry out some specific tasks (Price 2007).

In such cases, managers require employees to come up with ways through which the challenges in the labour process can be addressed. The strategy is utilized when the development of a highly committed and flexible workforce is required (Delery 2002).

Cooperation and fostering of common interests is usually developed through an effort-reward exchange that relies a lot on learning investment within the organization (Paauwe 2009).

These strategies often work well in the development of the necessary human capital, especially for managerial positions. However, there are a number of limitations have been identified through current research in Strategic Human Resource Management.

First, the current conceptualizations of the strategic HRM are projected basing upon to the conventional “perspective to managerial decision making –definable acts of linear planning, choice and action” (Ludger 2008, p. 45).

Key organizational theorists always point out that these assumptions do not apply to all situations. They claim that rational calculation does not inform all decisions that may be considered strategic for different organizations (Seymour 2003).

It’s true that business level strategies have no logical or linear relationship whatsoever (Storey 2007). Many firms formulate their strategies in informal ways that may be politically influenced and be subjected to a lot more contingency issues.

What makes the Case study even more interesting is the background of the Company. The firm was initially male dominated, inwardly focused, government owned monopoly with no completion mindset (Armstrong 2006). This kind of organizational culture can hardly mutate to fit into a private competitive industry if the same work force is to be maintained as a whole package (Rosilah 2004).

The activities of the workers’ union may also put the company in an unfamiliar situation. This may result due to the fact that the junior workers within the company who are actively involved in the union activities may fail to adapt to the new culture and avoid reprisal by hiding under the union. The likely scenario is that the competencies developed at the managerial level may fail to be completely imparted on the junior workers.

Therefore if art of the existing human capital fails to adapt to changing circumstances then the company not be able to survive as a private firm in a competitive industry. If this is the likely scenario then the company may not fit into the definition of a successful workplace even after implementing an integrated SHRM.

Fiscal profit Aspect

Organization development is an important aspect through which firms seek to increase profitability (Wilson 2009). The organizational development that pertains to human resource management can be defined as a process through an organization builds its internal capacity so as its able to provide its mission work in the most effective and efficient way that is vital for its sustenance (Price 2007).

This often involves complex strategies that may be aimed at changing the beliefs, attitudes, values and the general structure of organizations so that they can better adapt to a new market place (Mackeena 2008).

The strategy approached in the case study involved “recruitment and selection, education and development, performance management, succession planning, remuneration and finally, retention of key players”(Legge 2004, p. 3).

To understand whether the strategy can lead to profitability or not depends on how the competencies will be communicated throughout the organization. How wills this impact on satisfaction of workers at all levels and possibly influence the company turnover (Delery 2002).

It’s generally understood that human resource management impacts on profitability when communication is improved form top to bottom; when a good plan is drawn for the development of managers; when the leadership’s emotional intelligence is improved; when coaching opportunities are provide; when the required training is brought on board in away that it includes all important aspects such as communication, leadership and time management (Claydon 2010).

Based on the above argument it becomes a proper to believe that the integrated HRM strategy being implemented at the Australian firm will actually impart on profitability and thus being consistent with the fiscal profit aspect of successful workplace (Pfeffer 1994).

This is due to the fact that when an organization selects a managerial team that is competent then their good performance is likely to be replicated at all levels of the organization. However, this will depend on other factors in play (Budhwar & Aryee 2008).

Certain other important aspects that may seek to validate or challenge Compton’s argument are addressed in the sections below.

As far as the case study goes, it’s not clear whether the leadership competencies that are being implemented by the company will impact the basic functional operations within it.

It’s of interest to know whether the integrated SHRM will have an effect on research and development, marketing, manufacturing, finance and human resource (Armstrong 2006). What are the policies that the company will employ to ensure that a proper business strategy is formulated and implemented?

Conclusion

This paper sought to determine whether Compton’s argument really supports the two aspects of a successful workplace, namely human capital and fiscal profit. The firm in the case study analyzed used an integrated model SHRM to focus its efforts on the development of managerial competencies through managerial control and reward-effort exchange.

It has been noted that the efforts that are carried out during the implementation of SHRM often results into positive changes that impact positively on the quality of human capital and profitability. However, this is not always guaranteed as it’s difficult to draw a linear relationship between them due to several interfering factors such as politics.

In addition, a positive impact on profitability requires effective communication between those in managerial positions and the workers who carry out the actual work in the firm. Thus it will depend on a combination of several factors for SHRM to have an effective impact on profitability and HR.

References

Armstrong, M., 2006. A Handbook of Human Resource Management Practice. London: Kogan Page.

Banfield, P., & Rebecca, K., 2008. Introduction to Human Resource Management.Oxford. Oxford University Press

Budhwar,P., & Aryee, S., 2008. Strategic Human Resource Management: Building Research through practice. London. CIPD

Claydon, T., 2010. Human Resource Management A Contemporary Approach, FT Prentice Hall

Delery, J., & Doty, H., 2002. Modes of theorizing in SHRM’ Academy of Management Journal, 39(4): 802–835

Legge, K., 2004. Human Resource Management: Rhetorics and Realities. Basingstoke: Palgrave Macmillan.

Ludger, W., 2008. The role of cognitive skills in economic development, Journal of Economic Literature, 46, pp. 607-668.

Mckeena, E., and Beech, N., 2008. Human Resource Management:A Concise Analysis. England: FT Prentice Hall.

Paauwe, J., 2009. HRM and Performance: Achievement, Methodological Issues and Prospects. Journal of Management studies. pp.46 (1)

Pfeffer, J., 1994. Competitive advantage through people. Harvard: Harvard Business School Press

Price, A., 2007. Human Resource Management: in business context. London; Cengage Learning

Seymour, W., 2003. Intellectual Capital in Twenty-First-Century Politics. London; Wiley

Storey, J., 2007. What is strategic HRM? Human Resource Management: A Critical Text, Thompson

Rossilah, J., 2004. Human Capital: A Critque. Journal Kemanusiaan. Pp. 1675- 1930.

Wilson, J.P., 2009. Human Resource Development: Learning and Training for individuals and organizations. United Kingdom; Kogan

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IvyPanda. 2019. "Australian Energy Company Strategic Human Resource Management." August 20, 2019. https://ivypanda.com/essays/strategic-human-resource-management-case-study/.

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IvyPanda. (2019) 'Australian Energy Company Strategic Human Resource Management'. 20 August.

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