January 10th, 2018
Strategic human resource management and a Firm’s Value Addition
The contribution of SHRM to a firm’s value is evident from its role as a change agent and a business partner as discussed in subsequent section.
Change Agent Role: SHRM Enhances an Entity’s Ability to Adapt to Change
Drastic changes in the business environment may necessitate a change in corporate culture for an entity to compete effectively. The HR function, by being a change agent, would create opportunities that enable the creation of a memory for change (Court 2011). Such opportunities involve engaging employees in identifying how the organization dealt with historical events that necessitated change. By identifying the approach taken in such times and the success or failure of such approaches, the HR department is able to develop principles on aspects that enhance change and those that impede change. Through such a memory, the entity is able to build on its capacity to change by tapping into the organizational memory whenever situations necessitate a change in business strategy.
HR department also acts as a change agent by assisting in delineating the behaviors that facilitate change. In this approach, the HR department for instance engages the employees to create principles that guide behavior of employees e.g. those expressed in the entity’s ethical code (Court 2011). Such guidelines help employees make appropriate decisions when they encounter situations that make them vulnerable to unethical practices. HRM in this respect helps the organization to entrench important values in its workforce thus avoid costs associated with unethical business practices.
The role of HR professionals as change agents extends to developing interventions that support employees during the change period (Court 2011). The interventions may for instance involve training of employees on the new expectations following change. For instance, during Jack Welch’s leadership of General electric, training was a foundation that ensured culture transformation to meet the vision charted by the CEO (Bartlett & Wozny 2005). During that period, General Electric, for instance, changed from a hierarchical to a more flat organizational chart. Employees, assumed a higher responsibility and accountability instead of passing such to the multiple reporting structure that existed (Bartlett & Wozny 2005). Employee and team training sessions were resourceful in managing such transformation of the entity (Bartlett & Wozny 2005). HR professional thus could enhance the organization’s ability to change by interventions that, for instance, alleviate the liability of employees failing to share the vision of a new leader.
Being a change agent for the organization also includes tracking improvements in employee performance. HR professionals in this respect formulate individualized performance appraisals that embody multiple measures of performance (Court 2011). For instance, performance measures may be designed to measure innovation and rewards provided to encourage such innovation. By formulating appropriate performance measures, the HR department would thus encourage employee input thus enhancing such aspects as productivity. By being a change agent, the HR department thus adds value to the business in that it prepares it to adapt to changing situations in the external environment.
Business Partner Role: SHRM institutes practices that help an organizations to achieve its goals
Linking HR and business strategies enhances the capacity of the HR department to develop policies and institute HR practices aimed at meeting the goals of a firm. Since business strategy arises from the assessment of the external and internal environment, the congruency between the two strategies avoids a situation where the HR strategy is in conflict with a firm’s external environment. For instance, evaluating HR strategies in various U.S. corporations in 1988, Dyler and Holder noted that such corporations had discovered their “… paternalistic HR strategies to be unsustainable in the face of continuing competitive pressures and depressed earnings” (Cited in Kane & Palmer 1995, p. 9). Accordingly, by being a business partner, HR department can avoid such inconsistency thus allowing the entity to compete effectively.
To match the HR and business strategies, it is important to integrate HR professionals a firm’s decision-making process. Such integration helps the HR professionals to influence the planning process to enhance HR outcomes (Cadwell 2011). Through such influence, the fit between the two strategies is enhanced. Such a fit, in addition to helping the HR policies reflect the external pressures affecting the organization (Kane & Palmer 1995), directly enhances performance outcomes such labor productivity and HRM effectiveness (Wang & Shyu 2008). As a business partner, the HR department thus helps the organization to remain competitive by orienting the internal resources to address pressures presented by the external environment.
Challenges that impede HR from Playing a Strategic Function in the Entity
Administrative roles that remain a function of the HR department present a primary barrier to its role as a strategic business function. If HR department abandons administrative roles, it could distance itself from the employees thus lowering its efficacy as the advocate for employees (Lawler 1995). Conversely, administrative roles consume a lot of time thus lowering the time available for the department to engage in strategic roles (Haines & Lafleur 2008). Therefore, HR practitioners need to balance between strategic and administrative roles to achieve enhanced outcomes in their practice. A strategy that could assist in achieving such a balance is adopting technological approaches that support routine administrative functions thus reducing the amount of time spent on such routine functions (Haines & Lafleur 2008). Other approaches could involve outsourcing stages of the hiring process to reduce involvement of the HR department on such a process. These strategies save time that the HR department can apply in its strategic roles.
Limited specialist management knowledge among HR professionals also challenges the achievement of SHRM objectives. For HR managers to influence decision-making processes, even when integrated into decision-making avenues, they need to command a knowhow of skills such as financial-management principles (Kelly & Gennard 1996). Such knowledge would help the HR professionals to advance the case for linking HR practices to business strategy; for instance, the knowledge would help them to quantify the value that investment in appropriate HR strategy adds to the firm. Go to concluding part here.