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Modern business environment dictates that organizations need to employ effective strategies in their operations for assurance of success, survival, and growth. There are many changes taking place in the environment in which organizations operate. Therefore, organizations need to take adapt to those changes and equip themselves well with adequate ‘tools’ to help such organizations win and realize growth.
Strategic human resource management (SHRM) is a concept that has evolved to define modern organizations within perspectives of strategic planning. This research paper constitutes the goal of defining the concept, exploring it with regard to key stakeholders, and subsequently, assessing how SHRM goals can be evaluated effectively. Such information will be important especially to organizations in the process of working out their SHRM policies.
There are increasing levels of uncertainty coupled with intensification of competition that have combined to force organizations to put more emphasis on developing key core competencies (Yuksel, 2011). The development of these key competencies is seen to aim at increasing the competitive advantage of organizations in the dynamic environments.
Prahalad and Hamel (1994) observed that those organizations that possess unique and non-substitutable resources and competencies competitor organizations do not have, exhibit high chances of realizing sustainable advantage (cited in Yuksel, 2011). An organization’s competitive core competences and capabilities can be obtained from numerous sources.
Such sources include possessing effective technology, enhancing organizational learning, and encouraging strategic flexibility and innovative capacity found among the human resources (Yuksel, 2011). As a result, it can be deduced that effective creation, organization, and leverage of knowledge throughout the organizations are becoming increasingly the main sources of competitive advantage in fast changing, information-driven economy.
Boxall and Purcell (2003) contend that almost all organizations have strategies since it is the duty of organizations’ managers and employees to design and implement strategic choices for their organization to function on in achieving goals (Ojo, 2011). Known as strategic choices, organizations are forced to create and implement sustaining strategic choices that become vital in dealing with strategic problems and challenges within the organization.
In this way, a strategy may be developed and implemented by a particular company either to maintain viability of the organization or to produce sustained advantaged within the organization in dealing with the external environment (Ojo, 2011). In creating these strategies, the aspect of human resource has become important and research indicates that human resource practices play and influence the direction and shape of any particular strategy of an organization (Ojo, 2011).
Strategies represent an organization’s capacity to compete with other organizations successfully in the dynamic environment of business world. The aim of such strategy is to see an organization succeed and realize its goals while at the same time being able to survive and realize meaningful growth (Mathis and Jackson, 2010). Realizing and accepting this to be important and vital to the organization, modern-day organizations are characterized by formation of strategic plans.
In simple view, strategic plans are designed on the aim of utilizing the organization’s available resources in such a way that the organization is able to outperform its main competitors in the industry (Mathis and Jackson, 2010). Wheelen and Hunger (1995) provides a definition of strategic planning/management as “that set of managerial decisions and actions that determines the long-run performance of a corporation” (Bratton and Gold, 2001, p.39).
Given that in strategic planning there is long-term consideration, the concept can be taken to constitute all activities that have ‘vision of the future’ and at same time are updated constantly on both internal and the external environment (Bratton and Gold, 2001).
As a long as the operations and activities of an organization have to continue with an indefinite time, strategic management should constitute a continuous activity that an organization’s management team undertake. Moreover, as the process takes place, the management should encourage some forms of adjustments but all ingrained within the aspects of: management, environment, and the available resources (Bratton and Gold, 2001).
Strategic planning depends and gets enormous input from possessing the right human resource in the organization. The right human resource to be utilized in the strategic planning process may be present or the organization may need to outsource them from outside.
This entire process has resulted to what is known as strategic human resource (SHRM) in many organizations. SHRM has being described as the process that “entails providing input into organizational strategic planning and developing specific human resource initiatives to help achieve the organizational goals” (Mathis and Jackson, 2010, p.38).
Michael Armstrong, writing in a book titled ‘Strategic Human Resource Management: Guide to Action’ defines SHRM in the perspectives of organization’s strategic planning (Armstrong, 2008). According to the author, SHRM entails “an approach to the development and implementation of human resource strategies that are integrated with business strategies and enable the organization to achieve its goals” (Armstrong, 2008, p.1).
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According to this definition, SHRM is a long-term process that largely succeeds on evaluating organization’s strategies and human resource strategies and how well the two categories of strategies can be merged to achieve organization goals.
SHRM as a concept cannot be divorced from the overall strategy that an organization envisions to undertake. In this way, SHRM is seen to be intertwined to the strategic objectives of an organization. Due to this, strategic human resource management has to emphasize the need for human resource plans and strategies to be formulated within the context of overall organizational strategies and objectives that are further, responsive to the changing nature of the organization’s external environment (Ojo, 2011).
This line of understanding leads to Wright and McMahan (1992) define SHRM as “the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals” (Ojo, 2011).
As such, the role of SHRM is seen to constitute all aspects that contribute to organizational performance in achieving organizational goals and objectives. The themes of SHRM have been categorized into three: process of integration all human resource key practices into a comprehensive and functional unit; an aspect of incorporating and utilizing broad organizational goals; and lastly, responding to the external environment in the most strategic and effective way (Ojo, 2011).
In this way, SHRM can be described as a comprehensive framework of human resource that constitute process of evaluating the impacts of external and internal environments and instituting the appropriate human resource measures in terms of strategy to enable sustainable adaptation of the organization.
Stakeholders in SHRM
Organization functions and carries out its activities dependent on goodwill of its stakeholders. Multiple stakeholders of an organization exist and their role in the organization defines the success, growth, and sustainability of the organization. Some of notable organizational stakeholders include the investors, organization itself, in terms of management team, employees, customers and suppliers (Schuler and Jackson, 2007).
Each of these stakeholders affects and influences an organization in one way or the other. Human resource practices have been identified to affect all these stakeholders either directly or indirectly (Schuler and Jackson, 2007). As a result, strategic planning in the organization has the ability to impact the stakeholders differently. In turn, the stakeholder may undertake initiatives of evaluating the different human resource practices in accordance to their outcome.
SHRM builds on the need to create human resource strategies that exhibit capacity to satisfy multiple stakeholders of the organization. In this way, there is always need to create SHRM practices and strategies that address the concerns of key stakeholders in the organization (Schuler and Jackson, 2007).
Investors constitute the first category of organizational stakeholders. Investors constitute all groups of people who have channeled their resources into the organization with intend of realizing positive returns on those resources. Positive returns generally come in form of profits and dividends that investors enjoy.
As a result, introduction of SHRM practices in an organization usually has the blessing of investors since it is viewed to change the current operations in the organization and improve financial performance of the organization. Organization’s employees constitute another category of stakeholders of an organization (Deckop and Deckop, 2006).
Numerous researches have been carried out on the implication of various human resource practices on employees in different organizations (Deckop and Deckop, 2006). Human resource practices that may impact employees include recruitment and selection, training and development and performance management (Deckop and Deckop, 2006).
The aim of the research on these practices has been to evaluate the impact of the practices on individual outcomes. At the same time, more research has been done on the impact of practices on employee outcome such as on job satisfaction, motivation, socialization and career success (Deckop and Deckop, 2006).
Therefore, introduction of strategies of human resource management in most cases impact employees to great length. The third type of organizational stakeholder is the consumer, usually known as product-market stakeholder (Deckop and Deckop, 2006). Activities of any organization always aim at achieving customer satisfaction with regard to organization’s products or services (Deckop and Deckop, 2006).
As a result, customer satisfaction is seen as a mediating variable between human resource practices and business performance. In introducing SHRM practices an organization aims at changing the dimension of work climate that in turn lead to customer satisfaction through customer orientation, quality emphasis, teamwork, cooperation, and involvement of customers in product designs (Deckop and Deckop, 2006).
How Stakeholders Evaluate Effectiveness of SHRM Practice
Evaluation of SHRM practices in an organization has to consider the impact of the SHRM system on all of the organization’s multiple stakeholders (Schuler and Jackson, 2007). Creating SHRM practices aims at introducing changes in the manner activities are performed in the organization. As a result effectiveness of such practices and systems are measured on objectives such as improvement in productivity, improvement in profitability, and the ability of the organization to sustain in the future (Schuler and Jackson, 2007).
On the part of employees, effectiveness of SHRM practices normally depends on total quality of the practices on the work within the organization, the innovativeness of the practices in contributing to realization of goals in the organization, ability of the practices to contribute to job satisfaction, enhancement, and enrichment (Schuler and Jackson, 2007). At the same time, employees have been regard as key resources of an organization in ensuring the success of any SHRM system.
In this way, the effectiveness of SHRM can be evaluated on the level of commitment and engagement by employees and overall satisfaction of employees (Schuler and Jackson, 2007). On the part of customers, evaluation of SHRM system put into consideration aspects such as quality and variety of products introduced in the market, the prices at which the products are being sold and overall services that accompany the products (Schuler and Jackson, 2007).
Human resource being one of the core components of an organization has to be re-organized and re-aligned to the new developments taking place. Re-organization and re-alignment in the modern world cannot take place within traditional and usual frameworks of human resource management.
Today there is need for strategic planning solutions that can guarantee organizations success. As a result, strategic human resource management (SHRM) is a concept that defines modern organizations that aim to realize organizational goals and objectives through strategic planning of its human resource. Introduction of SHRM systems in an organization is a path that sees ability of an organization to effectively compete in the dynamic environment and sustainability while remaining focused to the goals and objectives of stakeholders.
Armstrong, M. (2008). Strategic Human Resource Management: A Guide to Action. PA: Kogan Page Publishers. Web.
Bratton, J. and Gold, J. (2001). Human resource management: theory and practice. NY: Routledge. Web.
Deckop, J. R. and Deckop, J. R. (2006). Human resource management ethics. NY: Information Age Publishing. Web.
Mathis, R. L. and Jackson, J. H. (2010). Human Resource Management. OH: Cengage Learning. Web.
Ojo, O. (2011). “Impact of strategic human resource practice on corporate performance in selected Nigerian banks.” Journal of Ege Akademik Bakis, Vol. 11, No. 3, p.339. Web.
Schuler, R. S. and Jackson, S. E. (2007). Strategic human resource management. MA: Wiley-Blackwell. Web.
Yuksel, M. (2011). “Core competencies of managers in an emerging market”. Journal of American Academy of Business, Vol. 17, No. 1, p.104. Web.