Karen Legge argues that evidence shows “that the integration of strategy and HRM is at best a lengthy, complex and iterative process and, at worst, that there is little evidence to suggest that widespread integration is achieved” (1995) Critically Evaluate this Argument and suggest why this should be the case.
Human Resource Management
Human resource management (HRM) comprise the entire gamut of knowledge and practices that describes the nature of work and regulates employment relations (2000). HRM is also an approach geared towards the achievement of organisational goals by directing the organisation systems so that human resources and talents are utilised efficiently and effectively ( 2006). HRM is most considered as a generic term that covers the entirety of a work-based organization, working terms and conditions, and representational systems ( 2003). HRM covers the five functional activity areas, which are: 1) staffing—getting people with the appropriate knowledge, skills and experience to work in vacant positions in the organisation with the entire processes broken down into HR planning, job analysis, recruitment, selection; 2) rewards—development and implementation of reward systems covering work evaluation, performance appraisal, benefits; 3) employee development—analysis of training requirements by identifying the skills and capabilities of employees; 4) employee maintenance— administering and monitoring of work standards and organisational policies to develop a competent workforce; and 5) change and relationship management—monitoring employment relationship issues and adjusting to changes. (2000) Human resource management covers the knowledge and experience, approach and process involved in the establishing, developing and maintaining the relationship between the company and its human resources based on the premise that the members of the businesses organization are valuable contributors to the achievement of the goals of the company.
Human resource management has always been important to all organizations because of the shift in the characteristics of personnel needs of organizations. Employment requirements are now shifting towards knowledge-based work requiring highly qualified and skilled people. Due to this reason, management of valuable human resources becomes the driving force for most industries. Based on labour economics, this trend implies that the limited number of highly qualified and skilled people empowers them to choose the organization where they want to be employed. This further implies that organizations have to develop and implement human resource management strategies that are not only appropriate to the organization but also competitive relative to other organizations requiring the same level of skills and experience.
Strategy
Strategy refers to the “deliberate search for a plan of action that will develop a business’s competitive advantage and compound it” ( 1991). As such the search involves a repetitive or cyclical process that starts with recognizing the current status of the company in terms of its financial viability and competitive goals together with the resources that the company currently holds. Assessing the status of the company in terms of competitive goals means that it should be able to recognize other businesses closely similar to the business so that the determination of the differences between the business and its closest competitors comprises what competitive advantage the business holds.
Strategies also refer to the “unique and sustainable ways by which organizations create value” (2001). This is in recognition of the trend in organizations of operating through decentralized departments or business units that closely work with customers. Modern organizations recognize that a company’s competitive advantage emanates from the intangible knowledge, capabilities and relationships created by employees relative to the market rather than from investments in material assets or access to capital. Strategy implementation then requires for all business units, support divisions, and employees to be linked and aligned to the strategy. In the context of rapid technological changes, aggressive competition and strong regulation the formulation and implementation of strategies should become a process of continuous participation. In line with this business context, organizations need a language or channel for communicating strategy together with processes and systems helpful in the implementation of the strategy that also enables the business to gain feedback regarding the strategy. Thus, the success of a strategy comes from having strategy become everyone’s every day job. In relation with human resource management, strategy integrates all human resource functions into a cohesive endeavour directed towards the achievement not only of human resource functions but also the overall financial and competitive goals of the business.
Strategic Management
Strategic management is the process involving three key elements: 1) mission and strategy—due to the recognition that an organization need to determine and establish a reason for its existence while at the same time develop ways of conveying information and materials for people to effectively carry out the company’s purposes; 2) formal structure—involving the organization of people and tasks in the implementation of the strategies of the organization covering the formal structures of information dissemination and financial accounting; and 3) human resource system—since human resource recruitment and development are directed towards the accomplishment of jobs as determined by formal structure of the organization, performance need to be monitored and rewards allocated to develop and maintain productivity. ( 1984) In relation to the link between strategy and human resource management, this indicates the basic elements that the organization should consider in achieving the goals of strategic human resource management.
Strategic Human Resource Management
Strategic human resource management is a concept that has been in existence for several decades but there is yet no established theoretical or working definition for this business concept. This means that the relationship of strategic human resource management with other business concepts depends upon the perspectives of the parties considering this idea so that its application also becomes subjective. However, the concept has persisted for several decades indicating that despite the lack of clarity in its definition and applicability, it still comprises an important issue in business management necessitating the aggressive determination of these issues in order for more business firms to experience the benefits of the concept.
A definition of strategic human resource management regards the concept as the general approach in strategically managing human resources in line with the organization’s intentions for this resource relative to its future business direction (1999). As such, this approach is largely concerned with long-term people issues together with macro-level concerns regarding the organizational structure; quality of human resource environment, relations and output; organizational culture and values; and the level of commitment of its resources towards the achievement of the immediate and long-term objectives of the firm.
Another definition for strategic human resource management considers the concept as the aggregate of the activities that affects the behaviour of individual members of the organizations in their exertion of efforts in formulating the implementing strategic business needs (1992). This definition focuses on the human side of the concept giving stress to the role of human resources in contributing towards the achievement of the goals of the company.
Still another definition considers strategic human resource management as the pattern encompassing the planned human resource assignments, deployments and organization together with planned human resource activities intended to empower business units to achieve specific and overall goals (1992). Similar to the previous definition, this also centres on the manner of accomplishing human resources tasks in a manner directed towards the predetermined goals of the company.
Lastly, another definition looks at strategic human resource management covers the explanation of the manner that human resource management influences the performance of the organization so that strategy becomes differentiated from strategic plan. While strategic plan refers to the formal process selectively engaged in by organizations in defining the manner of accomplishing tasks, strategy is innate to every organization defining the behavior of the firm and the ways it can cope with existing and expected business environment. (Boxall & Purcell 2003) This means that strategic human resource management comprises the principles incorporating strategy. This further implies that if human resource management already comprises a coherent approach to managing human resources, strategic human resource management encourages human resource management to be accomplished in a planned way that involves the integration of organizational goals with business policies and human resource action sequences.
A common theme in these definitions is the link between human resource management and strategic action. This implies that strategic human resource management is generally perceived as an approach, process or guide that facilitates action towards the achievement of organizational goals. This means that while human resource management covers human resource needs, deployment, organization and maintenance, strategy directs these efforts towards goal-driven action. Without strategy, human resource management may not necessarily be aligned with the achievement of the financial and business goals of the company in a manner that solicits actual realization.
Another theme derivable from these definitions is the recognition of the expanded scope of strategic human resource management because this involves not only human resource functions but also the accomplishment of human resource tasks aligned and integrated with the overall goals of the company. This implies a level of cohesion between human resource management and strategy determined by the level of nature and extent of integration of human resource functions with business goals.
Linking Strategy & Human Resource Management
According to (1995), integrating strategy and human resource management requires a lot of time, involves complex processes, and constitutes repetitive or cyclical activities. These seemingly negative and irrational descriptions of the integration already constitute the best that can be derived from the integration. On the worst side, integration lacks sufficient and reliable evidence of the achievement of integration.
The author provides a negative description of the viability of the integration of strategy and human resource management into the concept of strategic human resource management. This is not entirely without basis. As mentioned earlier, despite the existence of the concept for several decades now there is yet no standard theoretical or practical definition for this idea. This means that the understanding of the concept is largely subjective limited only to particular business context without actually deriving a generalized understanding and conception of this idea. Lack of a standard definition defining the elements of strategic human resource management as well as a generalized understanding of the applicability of this idea may indicate problems over the viability of the initial integration of strategy and human resource management. On the extreme integration may be impossible but on the other side of the spectrum integration may be viable.
However, the persistence of strategic human resource management over the past years as applied by different organizations indicate that integration is possible and it is only the nature and extent of the integration that draws question. Moreover, strategy and human resource management are not incompatible or opposing defeating the idea of integration at the least and effective integration at the most. Succeeding discussions consider the possible integral links between strategy and human resource management based on the previous discussions.
Links between Strategy & Human Resource Management
The links determined from the definitions and conceptualizations of strategy and human resource management were derived based on the manner that strategy and human resource management relate in the context of the quest towards the achievement of the business goals of business firms.
The first link involves the necessity of matching business activities to the resources of the business firm in order to determine the capability of the company to support its planned business activities increasing the likelihood of actualizing the business activities ( 2000).
Determining the capabilities of the company includes the consideration of the human resource capabilities of the business firm. Learning this information involves the intervention of the human resource management, which encompasses the knowledge over the number of people involved in the organization, the concentration of deployment of people to the different working units, and the collective capabilities of the group. After learning information over these factors, decision-makers can then determine whether the planned business activity stands to receive sufficient support from the members and different units of the organization. It is only when it has been determined that the business activity is fully covered by the aggregate capabilities of existing human resources that the company is ensured of the viability of its endeavours. However, if the capability of the organization cannot sufficiently support the viability of the business activity, then the company has to decide whether to reconsider or abandon the project or enhance the capabilities of its human resource. The process of planning, evaluating and reconsidering of the consistency between the human resource capabilities of the company and the project goals is strategy. This means that strategy and human resource management meets at the point that the business firm is matching its human resource capabilities with its business objectives.
The process of matching human resource capabilities with business objectives creates a complementary relationship between strategy and human resource management. On one hand, strategy provides the plan, guidance and the steps through which the company is bale to direct the activities of its human resource towards the achievement of financial and competitive goals. It is strategy that links human resource management with the overall objectives of the company. On the other hand, human resource management assures the business of accomplishing its planned activities through the management of human resources inevitable to the survival of the organization. Human resource management ensures that the members of the organization are duly informed of their role in the organization and motivated to develop commitment to the accomplishment of their roles. This means that the link between strategy and human resource management lies in the areas and the ways that both are able to complement the other towards the financial viability and/or the establishment of a competitive advantage by the firm in the industry where it belongs.
The second link is the contribution of strategy towards the organizational consciousness of performance centred towards the sources of profitability ( 2002). Human resource management on its own is indirectly linked to the quest for profitability. This is because human resource management focuses on ensuring the efficient organization and utilization of human resources with the result comprised of the achievement of the desired level of output from the members of the organization. The desired output only pertains to the existing profitability targets of the company without identifying other areas of profitability. Moreover, human resource management involves the balancing of the interests of the employer with that of the employees in order to facilitate a good working relationship between the parties in order for the employer to meet its business goals and the employees to obtain their work-related and personal goals expected from their contributions to the company. The process of balancing interests and facilitating good employment relations supports the current level of profitability but it does not necessarily open new sources of profitability or ways of enhancing the current level of profitability of the company. Strategy contributes to the redirection of human resource management to give greater consideration for sources of profitability.
Strategy is geared towards improvements in the operations of the company and the determination of future sources of profitability. This involves the development of a plan of action directed towards the financial and competitive goals of the company followed the assessment of the viability of the plan based on the capabilities of human and other resources, with the result determining the implementation of the plan. Strategy compared the company’s current status with its greater potential for future realization. As such, strategy is able to fill-in the limitations of human resource management in considering future financial and competitive goals of the company.
This means that the link between human resource management and strategy is determined by the contribution of strategy towards directing human resource management towards the enhancement of existing sources of profitability and discovering new sources of profitability particularly from the actual and potential capabilities of the human resources of the company. This further implies that strategic human resource management involves directing current human resource capabilities towards the achievement of present financial and competitive goals and the realization of planned sources of profitability.
The third link is the recognition that strategy cannot be separated from implementation (1999). In modern business organizations, the importance of human resource is enhanced by the recognized shift from industrial to the information age. This means that although the scale of operation of most industries would decrease this is replaced by greater reliance upon human resource competitiveness. The change in organizational direction means that the success of plans for improving the organization depends upon its implementation by the members of the organization. Despite the rationality and viability attached to a plan but without the cooperation of the members of the organization, the project would not succeed. The link between strategy and human resource management lies in the ability of strategy to direct the efforts of human resources towards the desired change with human resource management ensuring the motivation of the people to cooperate for the success of the company.
Conclusion
Strategic human resource management remains to be unclear and subjective resulting to questions regarding the possibility and viability of the integration of strategy and human resource management. With regard to possibility, the persistence of this concept or approach and the attempts at its application by many companies over the years indicates that the integration of strategy and human resource management is feasible. In terms of viability, a consideration of the definitions and conceptions of strategy and human resource management indicates three general links between the two. However, the lack of best practices on strategic human resource management supports Legge’s view that there seems to be little empirical support for the integration. This means that greater effort by the academic and business sector to clarify the integration issue in order to actualize the benefits offered by strategic human resource management.
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