Critical Aspects of HRM in the Australian Context – Impact of Strategic Integration of HRM into Business Strategy

HRM has recently attracted attention as a strong strategic tool through which firms can develop and implement their organisation strategy to meet their objectives. According to Barney (1991), HR and its techniques present a vital tool that unearths and maintains an organisation’s specific competitive advantage (cited in Kim & Gray 2005, p. 809). Accordingly, a business strategy with a sound HRM strategy support may prove hard for competitors to imitate (Kim & Gray 2005; Luthans & Sommer 2005; Ismail, Omar & Bidmeshgipour 2010). Identifying how a HRM strategy may be integrated into the business strategy, Kane and Palmer (1995) provide a model widely regarded to explain the link between HR strategy and organisation strategy. According to the model, the organisation strategy – a product of analysis of the external and internal environments and the mission set by the corporate headquarters – can be linked to the HRM strategy to ensure that the entity establishes appropriate HR policies and practices to achieve its business strategy (Kane & Palmer 1995, p. 7). Such practices then set apart the organisation from its competitors thus not only helping it to attract the best fresh talent, but also encourage employee commitment to the organisation’s vision (Court 2011).

Outcomes of integration of HRM into the business strategy in Australia have been investigated with respect to a number of Industries. Zheng et al. (2007), for instance, present a framework that links Strategic HRM (SHRM) with an entity’s performance. Through their model, Zheng et al. (2007) identify positive outcomes such as enhancing employees’ innovation, improving commitment of the employees and cost efficiency that can arise from SHRM. By linking the HRM strategy to the organisation strategy, an entity can modify its HR policies such as job design, compensation and reward programs, occupational health approaches and personnel evaluation processes to achieve such positive outcomes (Zheng et al. 2007; Kane & Palmer 1995). Following this need to link HRM strategies with the business strategy, Gill and Meyer (2008) identify HRM strategies that are suited for various business strategies. According to their study, high performance work practices are linked with better outcomes in organisations whose business strategy emphasizes differentiation of products from the resulting innovation and quality development (Gill & Meyer 2008).

On the negative side, alignment of the HR department to the organisation by integration into higher levels of management may distance it from employees who could be incapable or lack the will to make such a transition (Fisher, Dowling & Garnham 1999). Lawler (1995) for instance argues that “moving to a strategic partner role does not mean that human resource managers…completely forget about [their administrative and support] activities” (p.13). When HR professionals forget these other aspects of their roles, even when such duties are outsourced, there could arise a huge gap between the employees and the management thus impacting on effective communication that is necessary for the organisation to succeed (Fisher, Dowling & Garnham 1999, Lawler 1995). Increased engagement in strategic business roles thus means that the HR professionals must be capable of playing a broad range of dual roles (Fisher, Dowling & Garnham 1999, Lawler 1995). For instance, such duality would require the HR professional to be “reactive as well as proactive, administrator as well as strategist, [and an] employees’ advocate as well as a manager” (Fisher, Dowling & Garnham 1999, p. 510).This task could become challenging where the administrative and support functions of the HR department are inefficient (Haines & Lafleur 2008). Go to part 5 here.

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