Strategic human resource management is not a simple process as it keeps on evolving over time. The concept does not have an absolute definition since opinions about it vary between various scholars and analysts. However, one thing that remains clear is that the concept is essential for improved business performance.
It can be regarded as a strategic approach to human resource management which links human resource to the future plans and directions of an organization. Basically this implies that the strategic HRM seeks to ensure that resources are matched with organizational future needs by concerning itself with long term issues relating to employees, organizational culture, values, and commitments.
Harter et al. (2006) says that strategic human resource management focuses on increasing productivity and effectiveness by motivating employees to give their best and work towards achievement of organizational strategic goals. The approach revolves around policies that motivate employees and cause them to be committed towards their work.
It entails practices such as employee comprehensive training, employee development activities, developmental appraisal, and staff selection among many others. In the recent years, the notion of high commitment human resource management has been of much interest in many organizations and research studies.
Elwood et al. (1996) agrees with the fact that strategic human resource management focuses on shaping organizational culture. HR practices within organization directly affect their culture which eventually is reflected in the company’s overall success. Employee attitudes are affected and shaped by systems of human resource management. Strategic human resource management therefore is linked to increase in organizational effectiveness.
It helps create a working condition where employees become highly motivated and focused on the goals of the organization. Employees tend to assume that high commitment practices of human resource are a direct show of commitment by the organization to them. They therefore tend to reciprocate the same gesture by being committed to the organization.
Relationship between SHRM and Outsourcing HR
The concept of outsourcing human resource can be regarded as part of strategic human resource management. It involves the use of a third party provider to administer the human resource functions in an organization. The popularity of HR outsourcing has increased as most companies seek the expertise of HR outsourcing firms to effectively manage their internal human resource activities.
The main reason why companies opt for the option of outsourcing key HR functions is because it is less costly and more efficient than employing HR personnel to execute these functions.
According to Galanki and Papalexandris (2005), the HR vendors are able to provide the services at a lower cost because they benefit from economy of scale. The companies then transfer these benefits to their clients. As a result, Galanki and Papalexandris (2005) argue that small and medium sized companies are the ones who benefit the most from the HR vendors.
Delmotte and Sels (2008) say that companies may also decide to outsource their HR functions because of the need for knowhow. According to the authors, such companies may lack the necessary knowledge about strategic human resource management or they may simply have outdated information.
This therefore requires them to make significant investment into their human resource functionalities. The idea that Delmotte and Sels (2008) are contending is that outsourcing human resource functions offer knowledge and competence which in most cases are usually absent from within companies.
Case study: discussion of the key HR functions in the organization
In this section, the case study of a nonprofit organization based in California shall be analyzed to develop a discussion of key HR functions for organizations. Strategic human resource management is an important aspect for nonprofit organizations. The company had to ensure that its HR functionalities are aligned to its strategic goals in order to experience effective functioning.
The organization was found over 25 year ago with the intention of helping individuals struggling with domestic violence, trauma, mental illness, and substance abuse. The main goal was to help children, women, and communities rebuild their lives. The needs within the community increased forcing the company to also expand its operations to meet the increase. However, in the process of this expansion, the company encountered business challenges in its human resource management.
The department was not fully equipped to handle the requirements that accompany large organizations. The company faced a situation where its employees were overloaded with work. There were numerous challenges relating to the employment and staffing. These challenges also began affecting the finances of the organization. Even with the HR manager and a few other HR personnel in place, the department was overwhelmed with the new emerging HR needs.
Key HR functions in the organization include: global mobility, benefit pans, health and welfare, recruiting, payroll, staff performance, and staff development. Cook (1999) suggests that three additional functions can also be effectively outsourced. The three include organizational culture, human resource planning, and performance appraisal system.
Critical analysis of the HR functions that can be outsourced
Outsourcing key human resource functionality is designed to help companies integrate their human resource into their needs and goals. With regards to pay and benefits, the payroll clerk job measurements are usually done narrowly since it is considered to one of the back office jobs.
This is mostly done by considering the output in terms of paying the employees on time and accurately. Also measures can be done by the finance people to determine the how cost effective and proficient is the job. Outsourcing this function can prove cost effective for the organization since the job of a payroll clerk may not be necessary.
Another area that needs outsourcing in the organization is staffing and recruitment. This area falls under organizational man power planning. It seeks to improve and maintain the ability of an organization to attain its entire strategic objective through development of manpower contribution. When an organization develops a wrong man power planning, there can be a lot of disruption which will affect the organization adversely.
The process of staffing in companies includes recruitment of human resource, selection, training, and promotion. Other processes such as retirement, transfer and demotion also make part of the staffing process. Therefore, recruitment is an initial step of staffing. The entire process of staffing continues with the experience of employees within an organization. Outsourcing firms have the resources and capabilities that ensure staffing and recruitment is done effectively.
External sources of recruitment would even be more appropriate in reducing all the chances of biasness. However, despite the recruitment team appointed for conducting the process, that is whether internal or external recruiters, it is appropriate that they be well trained. They have to be aware of the skills and parameters that the company needs from the candidates. All the evaluation processes have to be planned in advance and these include both the technical and human resource interviews and the tests.
The systems of performance appraisals focus mainly on the employees who have contributed to the achievement of organizational goals and are also still in a position to assist the organization continue attaining its goals. Promotion is a human resource management best practice that helps to retain employees for long as well as motivating them to perform.
Promotion can be monetary or non monetary. Nonetheless, it has to be an opportunity for the individual employees to grow personally. Performance appraisals are not only aimed at identifying best performing and highly productive employees, but are also aimed at identifying poor performing employees. This is important for an organization because poor performing employees negatively affect performance of an organization.
The human resource personnel manager is responsible for coordinating the process of staffing and recruitment. This is a very conscious process that does not require mistakes to be made. Mistakes can lead to major consequences that would pose a serious threat to an organization.
The mistakes can affect the brand value of an organization as well as disrupt operations. The manager in charge of recruitment has to define primary and essential skills that are required for each role within an organization. In addition, the education qualification and experience are also to be defined.
The entire experience and stages of an employee in an organization constitute the existence of the process of staffing. Once an employee has been recruited for a position, the human resource team needs to identify the individual skills of the employee’s individual skills and integrate them to the skills required for the job. This is achieved through proper training. There is usually a difference in the required skills for the job and the employee’s individual skills.
Depending on the size of the gap or difference, the human resource team should be able to come up with proper training for bridging the gap. Training therefore serves an important role of making the employees competent by giving them the confidence to face the task before them.
Each employees within an organization needs to be developing and growing in their career. Therefore staffing process takes care of transfers and promotions of employees.
Employees need to be aware of the opportunities for growth within the company. This should be clearly communicated to them and the procedure blueprinted. For instance, in most organization, the path up the career ladder is usually certified through performance appraisals. The employees that qualify for promotions must have performed extremely well to deserve the promotions.
Such organizations also require work place diversity. Internal human resource personnel may be challenged to ensure the internal working environment is as diverse as a possible. However, outsourcing firms have the skills and expertise in recruitment and staffing needed to ensure diversity within the workplace. Workforce diversity is one of the main dominant staffing issues experienced by organizations.
With increase in globalization, many organizations find themselves having a multicultural workforce. Women, minority community, immigrants and the elderly are making job applications. Labor laws in almost any country require that companies have a balance workforce in terms of gender, and ethnic communities within its location.
The challenge is in staffing professionals and specialties. The organizations also have to recognize the cultural needs of their employees and address them appropriately. Adapting to the diversity provides the organizations with the opportunity to retain staff for longer periods. At the same time, such an organization is able to get the best out of each of their employees.
Another area that can be considered challenging for the in-house human resource management of the organization is training and development. The demands in employee training and recruitment can be overwhelming for the nonprofit organizations. The workforce definitely matures over time and this requires that the organization creates opportunities for their growth. Training and education of various fields in the market is advancing with time as current technology is integrated in almost every aspect of life.
Organizations find it challenging to retain the old employees who do not the current skills and knowledge required for a company to remain competitive in the market. This therefore forces companies to make new recruitments who are enthusiastic and motivated with the latest education and training.
Conclusion
Outsourcing provides the company with the necessary human resource expertise which may sometimes be difficult to have from within. An HR outsourcing firm would work close with the company to plan, develop, and implement necessary HR capabilities. Outsourcing critical functionality of human resource management works best in a small and medium sized company. This is primarily because employing HR personnel in such a situation can prove more costly for the company than when the functions are outsourced.
The outsourcing firms offer end to end services which sometimes the internal human resource personnel may not be able to fully provide. For large companies, the idea of outsourcing HR functionalities may make sense because HR administration can be time consuming. Outsourcing therefore can free up time and employees who can be made to support in other important company activities.
In most cases, companies do assume that HR functions can be handled in a short time. However, human resource requires a full time input for it to be effectively handled. Companies may also try to handle the HR functions with a single human resource personnel or a team of unqualified employees. Such an approach can never be effective and does not offer sound solution to the HR issues faced within the companies.
Outsourcing the functions of HR ensures that they are handled by experts with the necessary resourcing to for a fulltime input. Management of human resource has a lot of legalities involved and sometimes companies may lack the necessary resources and expertise to handle these legal implications.
However, the outsourcing firms are equipped with professional expertise and resources to handle the legal implications of human resource management. As a result, employees within the company will end up being more productive, healthy, and happy in line with the company’s strategic goals.
References
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