Human resource management can be defined as “the effective use of human resources in an organization through the management of people-related activities. ” (Harvard Extension School, 2013) According to Boxall (2007), “HRM is the management of work and people towards desired ends. ” Human Resource Management (HRM) is the core function of all organizations. It ensures that’s companies have the necessary talent required to operate effectively. Strategic HRM according to Ulrich(1997), p. 89, states “SHRM is a process of linking HR practices to business strategies. So from the above definitions it can be seen that SHRM contains HRM but SHRM is at a higher level. Also it must be noted if there is HR in an organization; it doesn’t mean there is strategic human resource management. According to Mayo(1997) “ SHRM is the alignment of the human resources function to the overall core business objectives. ” This advanced level to the traditional HR; can be a more effective tool in showing and guiding its employees the strategic objectives and aims of the organization in which they are employed.
Business partnering according to (Cipd. com 2013) “is a process whereby HR professionals work closely with business leaders and or line managers to achieve shared organisational objectives, in particular designing and implementing HR systems and processes that support strategic business aims. ” Meaning it is where attention is refocused on how HR is to achieve it aims in supporting line managers, aligning HR activities with the business and delivering efficient services.
In the past HR resided in the tactical level and was called personnel management which is today known as hard HRM. HR is a field that is constantly evolving and if HR is to be effective at the strategic level there needs to be adequate vertical integration as stated by Torrington and Hall Model. This model deals with vertical integration which is “HR driven”. It is where the strategy of the organization is conducted by the HR strategy. This concept of vertical integration goes hand in hand with the best fit approach to strategic HRM.
The Best Fit promotes the best approach that is suited to the organization in terms of its resources, people, strategies and environment. The best fit approach can be one of three strategies which are, innovation, quality and cost reduction, all which emphasizes the relationship between HR policies and the way to reach the company’s goals. There must also be horizontal integration where each department is driven to ensure that HR has a strategic element. If HR is to be a true business partner at the strategic level, the Ulrich Model(1997) must be incorporated in the firm.
As a business partner of the firm the human resource professional as a strategic partner must work with other managers in the organization which would result in value adding activities, which Ulrich states. Also stated to be a successful business partner and deliver organizational success, four ways were suggested for the individual to be competent in, these are as follows: * Strategic partner * Change agent * Employee champion * Administrative expert Figure 1 below shows the Ulrich Model (1997). Figure 1 above shows the Ulrich Model.
Source: (e-hrminc. blogspot. com/. (2011). The Multiple-Role Model of HRM. Available: http://e-hrminc. blogspot. com/2011/04/multiple-role-model-of-hrm. html. ) The main function of the HR professional as a business partner is aligning HR and the business organization strategy, vice versa. Therefore it is essential for the HR professional to understand the businesses strategy. Caldwell (2004) added to Ulrich’s model by introducing his view of the importance of the operational levels to be as equally important as the administrative and strategic level.
Caldwell was very optimistic about human resource policy playing a strategic role in the organization. He believed that the HR role should be decentralized so that the influence in the firm would be felt more. The Michigan Model according to (http://paulooliveiramartins. com) states “it is described as ‘hard’ HRM because it emphasises treating employees as a means to achieving the organisation’s strategy, as a resource that is used in a calculative and purely rational manner.
Hard HRM focuses more than soft HRM does on using people as resources and as a means towards the competitive success of the organisation. The Michigan model observes the different business strategies and related organisation structures can lead to contrasting styles of HRM in activities such as selection, appraisal, rewards, and development. “It is based on strategic control and identifies the need for human assets to be managed to achieve the organization strategic goals. Figure 2 below shows the Michigan Model. Figure 2 above shows the Michigan Model.
Source: (paulooliveiramartins. (2012). MichiganModel. Available:http://paulooliveiramartins1967. blogspot. com/2012/11/unit-1-michigan-model. html. ) The Harvard Model according to (http://paulooliveiramartins. com) states “it is ‘soft’ HRM because it concentrates attention on outcomes for people, especially their wellbeing and organisational commitment. It does not rank business performance or one of the stakeholder interests for example, shareholders as being inherently superior to other legitimate interests, such as the community or unions.
Organisational effectiveness is represented in the Harvard model as a critical long term consequence of HR outcomes, but alongside the equally important consequences of individual and societal wellbeing. An organisation putting this model into practice would therefore aim to ensure that its employees were involved in their work and were able to participate in decision making. HRM policies would be developed and implemented to meet employees’ needs for influence, but within the limitation of having to be consistent with the overall business strategy and management philosophy. Figure 3 below shows the Harvard Model. Figure 3 above shows the Harvard Model Source:(paulooliveiramartins. (2012). HarvardModel. Available:http://pauloolive iramartins1967. blogspot. com/2012/11/unit-1-harvard-model. html) Karen Legge(1995) questioned the need for HR professionals to contribute effectively by questioning the objectives of personnel management. Her concept of HR is the matching approach based upon a classical, rational approach to strategy that assumes a top down, unitary planning process which is simplistic and not congruent with reality.
She says it’s not as easy as theorists before makes it sound, for example Ulrich. She understood that change in HRM and the strategy of the business should be closely aligned to HR policies, however the company should be highly diversified in order to benefit from the changing market, but having HR strategy aligned closely to the business organization strategy can cause inflexibility in the real world. Her model describes two types of HR managers these are; Conformist innovators and Deviant innovators. Conformist innovators are the personnel specialist whom identifies the objectives of organizational success.
On the other hand there is deviant innovators whom identifies with a set of norms that are different from the norms of organizational success. However it must be noted that they are not always in disagreement/ conflict with each other, reason being the handling of contemporary issues such as, technology, ethics, flexible working. For a business to operate, it has to be able to adapt to factors that happen outside of the business known as the external environment. All organizations operate in the external environment and these forces affect contemporary issues.
Table 4 below shows the external contexts of organizations and some key drivers. Table 4 above shows the external contexts of organisations and some key drivers. Source: (CIPD. www. cipd. co. uk. com) So as seen from the various theorists and history of HR which was presented above, it can be said that HR has grown and is constantly reshaping over the years, this in turn resulted in various theorists and their theories about HRM. These theories and information, adds invaluable knowledge to the field which would all play a part in shaping future HR professionals. Generally
SHRM should be aligned with the management of the organization, when this happens value would be added to the firm. Also HR professionals work in complex, changing organizational contexts. To address the HR issues arising from these circumstances, HR professionals must understand these concepts and try to manage them by developing and implementing appropriate HR strategies and practices in the short, medium and long term. As noted above, the business is influenced by the external contexts, also known as the (STEEPLE). There are many factors that are in constant change for example technology and globalization.
This would result in firms having to be flexible in order to respond to the changing external environment. The external context comprises all of the entities that exist outside its boundary, but have significant influence on its growth and survival. These contexts are as follows; socio-cultural, technological, economic, environmental, political, legal and ethical issues also known as STEEPLE. Socio cultural aspect shows that the population is a key factor. Social trends can impact on the demand for a firm’s products and availability and willingness to work.
For example, in the UK, the population has been aging, which increased the cost for firms whom are committed to pension payments for their employees because they are living longer. It also means firms such as Asda have started to recruit older employees to tap into this growing labour pool. Also birth rates, immigration, age and gender all contribute towards the supply of goods and services. The trend now for many firms is contract employment however while it helps the employer to get what they need from the employee, it reduces trade union power since employees have signed to certain terms and conditions and employment is not for life.
The trend is to promote employability where the employee is trained in many areas of work in the firm so that in the event that the firm cannot keep the employee, he or she will be trained for other jobs The technological factors deals with new technologies currently available that can be used by the organization to improve itself. Technology can reduce costs, improve quality and lead to innovation. The contemporary issue is to have work from home and greater accessibility of the employee with cell phones and laptops. These developments can benefit consumers as well as the organizations.
In a case with BP, they introduced a machine which can do the work of fifteen people in half an hour. It cost billions but would improve the productivity level in the long run. If technology is used to compliment the workforce, HR would have to be up to date with training. The economic context refers to refers to the state of the economy. Economic factors include things like interest rates, taxation changes, economic growth, inflation and exchange rates. According to “Foundations of Economics” book, economic change can have a major impact on a firms behaviour.
For example higher interest rates may deter investment because it may raise the price in terms of foreign currency, inflation may provoke higher wage demands from employees and raise costs and higher national income growth may boost demand for a firm’s products. As a successful HR practitioner, one should be able to react very quickly to these situations and the response has to include the whole HRM team as all employees have to help the most affected employees keep the level of satisfaction. The environmental context deals with protecting the environment.
A major concern which is stimulating a large amount of interest in environmental issues was the start of “green HR policies” (CIPD). “Although it is limited, employees may have a key role in building a business’s reputation for green HR” this can result in increase of interest from individuals eg consumers. The political context refers to government policy such as the degree of intervention in the economy. Political decisions can impact on many vital areas for business such as education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
The HR practitioner in order to be an effective business partner would have to have a good understanding of government policies so that proper guidance and benefits for the company can be achieved. The legal contexts according to David Farnham “are factors which affect an organization’s reactions to its external context and can constrain an organization’s action or facilitate them. Areas affected by legal regulation include, labeling of products and how products or services are developed. ” In HR, the legal contexts are how employees are hired/fired, salaries, workplace design and health and safety.
The ethical context plays an important role in HRM. The HRM department is generally responsible for the formulation of the code of ethics in there organization. HR professionals must set an example for others to follow in their organization and must also practice confidentiality. HR professionals can serve as strategic business partners through many angels. This can be built on a logical delivery of the importance of considering contextual factors when designing HR strategy. An HR professional as a business partner involve in planning should understand many different approaches.
They consist of how to apply a systematic HR plan, how to integrate HR systems to build capacity and competitive advantage for the firm and how to develop and integrate departments strategies within the corporate frame work. The HR professional as a business partner in terms of skills should know the management processes in terms of consulting, problem solving, evaluation and communication. They should also understand organizational development, try to facilitate change management and try to manage in situations of uncertainty and instability.
The HR professional also needs to consider technology, they should maintain proper HR documentation using knowledge management and technology, build the firms capability using information systems and provide training in the use of technology. Currently many organizations are operating within a global setting, this is due to globalization which is impacting on the activities of HRM and therefore HR professionals are being geared towards developing international strategy. HR strategies set out what the organization intends to do about its HR management policies and practices.
All attempts should be made to integrate business strategies with HR strategies so that the HR unit can truly function as a business partner in the organization. The remainder of this report would examine the advantages and difficulties of HR professionals as business partners and would also look at possible solutions/ recommendations to deal effectively with the difficulties encountered and contemporary issues will be addressed with reference to the STEEPLE using real life examples in the next section. 2. 0 Findings Grazido Business Review, 2013) states that the corporate HR function sets the strategic tone and provides specialized knowledge and direction while HR generalists implement and adapt to fit the needs of specific business groups. A healthy tension exists between the policy directives determined by corporate HR and the diverse needs of various business units, but the best practitioners are able to achieve a healthy balance because of their deep understanding of current HR practices, corporate strategy and divisional business objectives.
For example, at Texas Instruments the leadership and HR have engaged in a strategic initiative aimed at reducing the costs of turnover and low morale resulting from expansion and contraction associated with the business cycle by using outsourced workers to provide a more flexible work force. Consequently, the strategic partnership created between executive leadership and HR is not an organic outcome; it is achieved on purpose—usually as the result of some need or business driver that prompts the organization to take deliberate action to satisfy that need.
Human Resource professionals need to understand key developments in the theory and practice of employment relations, both within and beyond the immediate organizational context. This provides a framework and guide for HR practitioners to expand their knowledge and experience to develop the skills required of them to be an effective business partner. It will assist them to understand that key developments in business and external contexts within which they operate affect the management of the organization and to help make better informed decisions.
In addition to this, for effective and strategic HRM to occur within the organization, it is critical for line managers to be integrated at the strategic level. Line managers could be in a better position to respond to issues concerning the employees enabling HR managers to find more time to perform strategic functions related to HRM (Budhwar and Sparrow, 2002). However, for their participation to generate substantial results, they will need to manifest HR competence. The lack of HR training and HR competence could negatively affect the organization’s achievement of set objectives and goals.
Mello (2001) stated some barriers for effective SHRM, the barriers which are relevant to HR professionals as business partners are presented below: 1. The inability of the HR managers to think strategically. Their insufficient general management training or inability to influence colleagues in other department is seen as a constraint. 2. Lack of corporation from line managers and their unreliability in handling HR function in their respective departments. 3. The disincentives related to changes associated with SHRM. . Implementation of SHRM may involve drastic changes in the work practices and other HR process, this can severely affect employeesHR professionals need to understand the relevant theories so to follow the right framework which would lead to them being successful and good business partners. From the above, problems were found with performance appraisals as HR policy was linked directly to the performance of managers, lack of cooperation from line managers would also prevent efficiency.
Also for effective and strategic performance to occur it is necessary for line managers to be integrated at the strategic level. Ulrich (1997) has argued that the HR function needs to become strategically proactive and goes beyond administrative expertise. It needs to be an expert in strategic business partnering, change management, and employee advocacy. Given the changes that are occurring in the competitive environment of organizations, many significant opportunities exist for human resource management to become more strategic. The creation and implementation of most business strategies 3. 0 Recommendations
The researcher believes if line managers are trained in the necessary HR’s alignment relevant competencies, they would be able to improve their performance in the organization and thereby add value to the strategic level. There are many tools that can be used to measure HR alignment with context. The balance scorecard is a strategic planning and management system used to align business activities, industry, government, nonprofit organizations to the vision and strategy of the organization, improve internal and external communication, and monitor organizational performance against strategic goals.
Robert Kaplan( Harvard Businees School and David Norton 1992) introduced it as a performance measurement framework that added strategic nonfinancial performance measures to traditional financial metrics to give managers and executives a more balanced view of organizational performance. The researcher believes with the use of the Balance scorecard in the organization, it would be beneficial to managers as they would be able to keep on track in terms of employee and organization performance as well as it would contribute to faster decision making.
Human Resource management is to be a true partner in the strategic process; it must take strategy formulation and implementation as seriously as does a line manager. Therefore, integrating HR as a part of the corporate calendar is critical to the strategic partnership’s success. HR partners must participate in the operating business cycle in two ways. First, they need to formulate HR strategies that contribute to the firm’s strategic goals during the same time frame that business units are developing their objectives.
For example, at Texas Instrument’s the strategic HR goals include such topics as “workforce flexibility and ramp readiness,” or more basically “to improve automotive results. ” Human Resources can become more effective in responding to short-term strategic changes required by strategic and line management by using high performance work systems e. g. selection, training, performance appraisal, and compensation are designed to enhance employee effectiveness. Employees should have better skills, more motivation, and more opportunities to excel when these high-performance HR practices are aligned and working in harmony.
As seen from the above section, there are some problems which were encountered. These are some of the barriers which would prevent the HR partner from performing effectively and adding value to the organization. Firstly lack of cooperation and HR relevant competencies from line managers. This problem can be resolved with the use of the CIPD map. The CIPD HR Profession Map shows how HR adds the maximum value to the organization in which it operates, currently and in the future. It gives an indication of the highest standards of professional competence for the organization.
It sets out the required underpinning skills, behavior and knowledge for the success of HR professionals in every aspect and sector of the profession. The CIPD map is used to develop products and services that support the profession and is also used to support and accelerate individuals’ professional development. Figure 5 below shows the CIPD map. Figure 5: Shows the HR Professional Map also known as the CIPD Map. 4. 0 Conclusion In conclusion it can be clearly seen that Human Resource professionals as business partners should respond to key developments in the business and external contexts within which HR operates.
These key developments are the STEEPLE( see above table 4) the HR professional must equip themselves with the necessary skills and training( competencies) and with this, the HR professional would be able to be a successful business partner. The findings section of this report elaborated further on these points and discussed the practical difficulties associated with them that the HR professional and line managers might be challenged with. The advantages of them were also examined in the attempt equip the researcher with a wider span of knowledge to be able to make unbiased recommendations and suggestions.
The human resource function needs to place a greater focus on planning, organization design, and development. It also needs to make greater use of organizational approaches whereby HR professionals operate in proximity and partnership with the line and develop a broad and deep understanding of HR and business issues. These suggestions were made in the endeavour to counteract these issues or any similarly arising problems in the organization. However, when applying them to an organization, the firm must tailor these recommendations to suit their environment.
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