Approaches to Strategic Human Resources Management - Strategic HRM adopts an overall resource-based philosophy, as described below. Within this framework there are three possible approaches, namely, high-performance management (high-performance working), high-commitment management and high-involvement management.
Resource-based strategic HRM
A resource-based approach to strategic HRM focuses on satisfying the human capital requirements of the organization. The notion of resource-based strategic HRM is based on the ideas of Penrose (1959), who wrote that the firm is ’an administrative organization and a collection of productive resources’. It was developed by Hamel and Prahalad (1989), who declared that competitive advantage is obtained if a firm can obtain and develop human resources that enable it to learn faster and apply its learning more effectively than its rivals. Barney (1991) states that sustained competitive advantage stems from the acquisition and effective use of bundles of distinctive resources that competitors cannot imitate. As Purcell et al (2003) suggest, the values and HR policies of an organization constitute an important non-imitable resource.
This is achieved by ensuring that:
- the firm has higher quality people than its competitors;
- the unique intellectual capital possessed by the business is developed and nurtured;
- organizational learning is encouraged;
- organization-specific values and a culture exist which ’bind the organization together (and) gives it focus’.
The high-performance management approach
High-performance working involves the development of a number of interrelated processes which together make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits, and ultimately, the delivery of increased shareholder value. This is achieved by ’enhancing the skills and engaging the enthusiasm of employees’ (Stevens, 1998).
According to Stevens, the starting point is leadership, vision and benchmarking to create a sense of momentum and direction. Progress must be measured constantly. He suggests that the main drivers, support systems and culture are:
- decentralized, devolved decision-making made by those closest to the customer – so as constantly to renew and improve the offer to customers;
- development of people capacities through learning at all levels, with particular emphasis on self-management and team capabilities – to enable and support performance improvement and organizational potential;
- performance, operational and people management processes aligned to organizational objectives – to build trust, enthusiasm and commitment to the direction taken by the organization;
- fair treatment for those who leave the organization as it changes, and engagement with the needs of the community outside the organization – this is an important component of trust and commitment-based relationships both within and outside the organization.
The fundamental business need the strategy should meet is to develop and maintain a high performance culture. The characteristics of such a culture are:
- a clear line of sight exists between the strategic aims of the authority and those of its departments and its staff at all levels;
- management defines what it requires in the shape of performance improvements, sets goals for success and monitors performance to ensure that the goals are achieved;
- leadership from the top, which engenders a shared belief in the importance of continuing improvement;
- focus on promoting positive attitudes that result in a committed and motivated workforce;
- performance management processes aligned to the authority’s objectives to ensure that people are engaged in achieving agreed goals and standards;
- capacities of people developed through learning at all levels to support performance improvement;
- people provided with opportunities to make full use of their skills and abilities;
- people valued and rewarded according to their contribution.
One of the underpinning characteristics of HRM is its emphasis on the importance of enhancing mutual commitment (Walton, 1985b). High-commitment management has been described by Wood (1996) as:
A form of management which is aimed at eliciting a commitment so that behavior is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust. The approaches to creating a high-commitment organization as defined by Beer et al (1984) and Walton (1985b) are:
- the development of career ladders and emphasis on train ability and commitment as highly valued characteristics of employees at all levels in the organization;
- a high level of functional flexibility with the abandonment of potentially rigid job descriptions;
- a heavy reliance on team structure for disseminating information (team briefing), structuring work (team working) and problem solving (quality circles).
- the reduction of hierarchies and the ending of status differentials;
- job design as something management consciously does in order to provide jobs that have a considerable level of intrinsic satisfaction;
- new forms of assessment and payment systems and, more specifically, merit pay and profit sharing;
- a policy of no compulsory lay-offs or redundancies and permanent employment guarantees, with the possible use of temporary workers to cushion fluctuations in the demand for labor;
- a high involvement of employees in the management of quality.
This third approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which a continuing dialogue between managers and the members of their teams take place to define expectations and share information on the organization’s mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved.
The following high-involvement work practices have been identified by Pil and McDuffie (1999):
- ‘on-line’ work teams;
- ‘off-line’ employee involvement activities and problem-solving groups;
- job rotation;
- decentralization of quality efforts.
- suggestion programs;
The implementation of strategic human resources management is carried out within the framework of the three approaches described above. The overarching imperative will be to achieve human resource advantage. A high-performance approach will emphasize the importance of creating and maintaining a performance culture, and both high-commitment and high-involvement management will contribute to the development of a committed and engaged workforce. Strategic HRM involves the formulation and implementation of specific strategies in each area of human resources management.