According to Sims (2002), Human resources management is the term increasingly used to refer to the philosophy, policies, procedures, and practices related to the management of an organization’s employees. Human resources management is particularly concerned with all the activities that contribute to successfully attracting, developing, motivating, and maintaining a high-performing workforce that results in organizational success (pp. 2-3). Human resources management (HRM) involves the establishment and execution of policies, programs, and procedures that influence the performance, capabilities, and loyalty of the employees of an organization. Through these policies and procedures, individuals are attracted, retained, motivated, and developed to perform the work of the organization. It is through these policies and procedures that the organization seeks to mold and shape the actions of its employees to operate successfully, comply with various public policies, provide satisfactory quality of employment, and improve its position in the marketplace through strengthened ability to compete and serve (Clardy 1996, p.1). HRM practices influence employee skills through the acquisition and development of human capital. Effective recruitment and selection practices can provide the firm with highly qualified applicants. Training and development opportunities contribute to increasing human capital. HRM practices can also influence levels of motivation by performance appraisals, pay-for-performance incentives, and internal promotions systems based on merit (Brown et al., 2003). In the process of HRM, there is an increasing emphasis on the personal needs of the organization and its members. How effectively employees contribute to organization goals depends to a larger extent upon the ability of its HRM staff. The challenge is to create an organizational environment in which each employee can grow and develop to his or her fullest extent. Such an environment increases the likelihood of a successful organization, and this is what HRM is all about, making organizations successful. Human resources management efforts are planned, systematic approaches to increasing organizational success. They involve HRM programs aimed at developing HRM strategies for the total organization with an eye toward clarifying an organization’s current and potential problems and developing solutions for them. They are oriented toward action, the individual, the global marketplace, and the future. Today it would be difficult to envision any organization achieving success without efficient HRM programs and activities (Sims 2002, p.3).
Organizational Strategy and Human Resources Management
According to Sims (2002), HRM does not occur in a vacuum but instead occurs in a complex and dynamic milieu of forces within the organizational context. The view that HRM personnel are simply “paper pushers” continues to disappear, to be replaced by the notion that they play a key role in helping to achieve organizational success and determining the organization’s competitive advantage (p.23). HRM managers and staff are adopting a strategic perspective of their job and they are recognizing the critical linkages between organizational strategy and the HRM strategy. The HRM personnel are viewed as strategic partners that work toward the organization’s strategic goals.
Strategy and HRM
Effective HRM practices can enhance an organization’s competitive advantage by creating both cost leadership and differentiation. In today’s competitive global environment, maintaining a competitive advantage puts a premium on having a committed and competent workforce. Low-cost, high-quality products and services are a result of committed employees all working hard to produce the best products and provide the best services that they can at the lowest possible cost.
The HRM function focuses its activities on ways to help the organization achieve corporate goals like growing operations through recruiting and hiring employees, orienting and training them, and making their initial and future job assignments. When organizations view the HRM area as a true strategic partner, they also use input from HRM managers in their initial formulation of corporate strategy.
HRM contributions to a cost leadership strategy focus on recruiting and retaining employees who can work as efficiently and productively as possible. On the other hand, more experienced employees may demand higher wages, so it might also be possible to reengineer jobs to require minimal skills and then to select employees who can perform the jobs but who may not remain long with the organization. A number of organizations (i.e., fast-food restaurants) often control labor costs with this type of an approach. Training may emphasize efficient production methods, and reward systems may be based more on quantity than on quality of output. One popular approach to reducing costs today is to move production to countries where labor costs are lower than in the home country.
HRM managers contribute to the successful use of a differentiation strategy by recruiting and retaining employees who can perform high-quality work and/or who can provide exemplary customer service. Likewise, employee training will likely focus on quality improvement, and reward systems may be based on factors such as quality of work and customer satisfaction. As noted earlier, functional strategies address how the organization will manage its basic functional activities, such as marketing, finance, operations, research and development, and human resources management. Thus, it is at this level that HRM strategy formulation or planning formally be gins to take shape. It is clearly important that an HRM functional strategy be closely integrated and coordinated with the corporate, business, and other functional strategies. Indeed, without such integration and coordination, organizational competitiveness will clearly suffer. As effective partners in helping organizations successfully achieve their goals, HRM managers need to have a clear understanding of exactly what are the organization’s strategies, and then they must ensure that their own efforts are consistent with and provide support for those strategies. To the extent that the HRM function is seen as a strategic partner and/or a center of expertise, of course, its managers should also be actively involved in the formulation of corporate and business strategies as well as other functional strategies.
STRATEGIC HUMAN RESOURCES MANAGEMENT (SHRM)
One prominent figure in the development of the SHRM perspective argues that changes like those discussed at the end of Chapter 1 present a number of competitive challenges that are quite different from those faced by organizations in past years (Ulrich, 1997). All of the challenges continue to place additional pressure on organizations to be innovative and create new ways of doing business with new technologies, new products, and new services to meet an increasingly diverse and demanding group of customers.
The enhanced value of innovation in determining competitive advantage requires organizations to attract, train and develop, and retain employees of the highest quality. Over time and throughout rapidly changing circumstances, organizations must be able to sustain the competitive advantage that the knowledge and skills of these employees provide. In the past, competitive advantage could be gained through finding better, cheaper access to financial capital, or marketing a new product, or inventing some new technological gizmos. While cheap and ready access to capital, high-quality products, and new technology remain important components of any organization’s competitive advantage, today’s business environment requires a greater focus on the human resources element in business. Out of this realization has come SHRM.
Before one can understand what SHRM is, it is essential to have a clear picture of the “traditional” view of human resources management. Traditional personnel management is still the prevalent form of HRM activity in many organizations. From the traditional perspective, personnel managers handle administrative tasks. The traditional role of the personnel department revolves around the following tasks: human resources planning; recruiting staff; job analysis; establishing performance review systems; wage, salary, and benefits administration; employee training; personnel record keeping; legislative compliance (affirmative action, EEO, etc.); and labor relations.
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