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This essay is going to define strategic human resource management and development (SHRM/D) and briefly mention why this concept is important for organizations, I will then briefly mention other underlying concepts about strategic people management, and then go to the core of the essay and discuss the issues that are involved when we try to take a strategic approach to human resource management and development(HRM/D). Lastly I shall conclude by giving the extent to which my organization’s experience agrees to the issues discussed.
PostBank Uganda (PBU) which I work for is a government owned bank and all my illustrations will be drawn from therein. SHRM as defined by Armstrong (2008:33-35) is an approach that defines how the organization’s goals will be achieved through people by means of Human Resource (HR) strategies and integrated HR policies and practices. This definition focus on how people are managed in order for them to be able to achieve organization’s objectives, however there must be policies and practices which manifest themselves into the culture of the entity and above all there must be HR strategies which are linked to the overall strategy.
The definition however under shadows the issue of development in achieving organizational goals. It’s too simplistic to blanket development in the definition because development involves individual learning & growth which helps employees acquire knowledge, skills, attitude (KSA) plus competences necessary to drive business. These issues however have to focus on the long term perspective of the organization. Why SHRM/D is important for organizations: Adopting SHRM/D is very critical if an organization wants to realize its vision and mission.
Not withstanding the divergent views of SHRM/D concepts the following are the importance of SHRM/D as guided in www. koganpage. com/resource/academic 1. Generates organizational capability by ensuring that the organization has the skilled, engaged, committed and well motivated employees it needs to achieve sustained competitive advantage. If we examine the research carried out by Ramgutty-Wong and McCourt (2003) the case of Mauritius Civil Service.
We realize that there is little identifiable performance improvement or even organizational efficiency because of so many hindrances to SHRM/D compared to the case study by Johnson, G and Scholes, K (1997) IKEA a Swedish company that had long term strategies to change the bottom line of the company. In PBU between 1998-2002 there was no strategic focus and it saw the bank make continuous losses. There after when there was a sense of direction through the design of the vision and mission the bank slowly registered profits. 2.
Ensures that HR strategies support the achievement of business strategies, this is achieved through the alignment of HR strategies with organizational strategies. The principle of alignment is that every aspect of an organization’s activities should be integrated and pull in the same direction, as examined by Linda, H (1999:87-88). In PBU whatever strategies that are made have to have the support of the HR unit activities e. g. We have a strategy to diversify the banks products and we are going into agricultural lending, in order to achieve this strategy HR had to identify relevant competences, train and deploy.
This is in line with the HR strategy of empowering employees with knowledge and skills through training. 3. Provides a sense of direction in an often turbulent and competitive business world. If an Organization practices SHRM/D there is continuous review of strategies for example in PBU when government of Uganda licensed over eight banks to operate we had to review our strategy from giving affordable services to increasing outreach. 4. Encourages employee involvement which creates commitment, ownership and motivation which helps drive performance this is in agreement with Walton, R (1985:78-79)
After looking at the brief importance of SHRM/D I now turn to some of the concepts that many writers have put forward to help us comprehend the issue of managing people in order to achieve organizational goals and these are: The resource based view: The resource based view states that it is the range of resources in an organization, including its HR that produces its unique character and creates competitive advantage as suggested by Hamel and Prahalad (1989) cited by Armstrong (2008:37) .
This view goes a head to argue that for a resource to have the potential to create sustainable competitive advantage, it should have four attributes which are a)Valuable b)rare c)imitable and d)non substitutable as written by Jay Barney (1991,1995) cited by Armstrong (2008:37). This means that the HR has to be unique in all aspects. For example in PBU we have been training staff in customer care kills in order for them to serve customers right, however every other bank does so and we therefore decided to incorporate an element of positive attitude change in that training giving us an advantage over other people who are only training customer care. Strategic fit: This concept emphasizes that there should be congruence between HR strategies and the organizations environment. It can be perceived in terms of vertical and horizontal integration of HR strategies and corporate strategies. This is in agreement with Wright and McMahan (1992) cited by Armstrong (2008:38)
Strategic Flexibility: This concept emphasizes the fact that in order to get the best out of people the organization should be sensitive to its competitive environment and it should be flexible enough to adapt to changes in the environment. In the example of Bank of Uganda licensing over eight banks to operate in the country, there was tremendous labor movement that saw PBU staff exit and we had to adapt to Mintzberg’s emergent strategy and attract talent from outside and allow them negotiate salaries instead of sticking to the salary notches that we had.
We had to do this in order to counter competition. This is in line with the case study of Hodson’s by Morris et al (2002:1-3) on how to cope with the changing business environment. Best practice approach: According to Armstrong (2008:40-42) this approach assumes that there is a set of best HRM practices when adopted can lead to superior organizational performance. It takes the universalistic perspective of HRM. This approach is unrealistic because organizations differ. Bundling: This concept focuses more on horizontal integration which is the internal fit of the HR process.
Literally this concept advocates for development and implementation of HR practices, so that they can complement each other. This HR practices help to define how people are managed and how behavior is treated for the achievement of organizational goals. The aim of bundling is to achieve synergy for performance improvement as defined by Hendry and Pettigrew (1986) cited by Armstrong (2008:46-47) We realize the all the concepts revolve around achieving organizational goals through people by iving appropriate skills and having good HR practices. With that background I embark on the issues involved when we try to take a strategic approach to HRM/D. Taking a strategic approach to HRM/D involves a abandoning the mindset and practice of personnel management and focusing more on strategic issues rather than operational. SHRM/D involves making the function of managing people the most important priority of an organization this idea is supported by Jeffrey, A (2006:157-169).
This means that organization have to move a way from what Tyson and Fell (1986) cited by Taylor, H (1992) call the “clerk of works” which deals with operational issues to a more sustainable long term people management strategy. SHRM/D further involves making the function of managing people the most important priority of an organization, because people make or break an organization since all decisions about finance, Marketing, etc are made by people.
The key issues involved therefore are; The existence of a vision and a mission in the organization: Organizations make clear their medium and long term aspirations through the vision and mission as put by Linda, H (1992:82-84). This means employees need to know the direction in which the business is taking if they are to contribute to the bottom line of the organization. In the absence of a vision sometimes people gain their understanding of where the organization is going by the statement of purpose however ill defined.
Organizations with a clear written down vision are at an advantage. Organizations that have no vision at all may have to move like headless chicken. PBU has a vision of ‘To become the leading financial institution for the mass market’ . This helps us define our type of clientele, market niche, products and competences needed. Our mission is “To empower our customers by offering financial services in a sustainable manner” this helps us to define the specific objectives for PBU.
I will take one major strategy for purposes of this essay and this cascade from the mission & vision and that is: ‘To increase financial outreach. ‘ This focuses on the expansion of our service which has been done through, product enhancement, delivery of the products through channels like ATMs, opening new branches, mobile vans etc and all these are done through people. The HR has to have people with the right, KSA. This means that there must be proper selection, training, evaluation and rewarding of the staff in order for them to achieve the goals.
We then have the HR strategies that have been cascaded from the bank strategy as guided by the mission, I will dwell on one HR strategy for purposes of this essay and this is “To attract, develop and retain high quality staff”, these means, selection, training and reward systems have to be outstanding. Mission reflects the organization values. It avoids derailing people. Achieving the strategy relies on the performance of the people within the organization and calls for high levels of commitment.
This takes us to another issue which is strategic integration; having seen both the organization’s strategy and the HR strategy, in order for it to have an impact non of them should operate in isolation but rather be integrated. This can take the shape of both vertical and horizontal integration. Vertical integration, using Devanna’s model as described in Fombrum et al (1984:33-51), is where the organization’s strategy has to be integrated with the HR strategy which HR strategies then manifest into HR policies and activities such as training and reward management.
Management practices which are at odds with espoused values causes employee uncertainty and eat away into motivation which is an ingredient for performance. The organization strategy takes into account the culture, structure, process, resourcing and communication channels. These have to be integrated with the HR strategy and policies. HR units and line managers need to re think through the kind of culture needed in each unit if people in that unit are to achieve business strategy as explored by Linda, H (1999:87-94).
This vertical integration as pointed out by Jeffrey, A (2002:158) considers the implication of the corporate strategy for all HR systems within an organization by translating the company objectives into specific people management systems. In PBU our strategy of increasing financial outreach is in line with the HR strategy of attracting, developing and retaining high quality staff. There is no business achievement we can get in increasing outreach if you do not have the right people, trained, rewarded and retained.
What makes a difference in the delivery of a business strategy is the people’s behavior; however establishing strong HR strategy that is clearly linked to the organization’s strategy is not enough. HR strategy needs to be communicated, and practiced by both the HR units and line managers. Horizontal integration: This kind of integration links HR activities with each other because one activity of HR leads to the other for example Job analysis is linked to recruitment and selection because we use he information from Job analysis to advertise. This integration has aspects of bundling as described by MacDuffie (1995) cited by Armstrong (2008:46-47). The HR activities are meant to reinforce each other in order to create business effectiveness. In PBU one of the activities that would enable our strategy of having financial outreach be realized is opening of new branches, the HR unit together with operations unit did a human resource planning to establish the number of people ideal for the new branches.
We used job analysis to design individual Job descriptions (JD) which guide us in interviews which is a recruitment activity. The JD will lead us to develop key result areas which will be used in performance management and later reward management. We realize that these activities are linked together and this integration causes easy management of people in order to achieve organizational strategies. As discussed HR does not carry out this issues alone but involve the line manager and this takes us to the next issue.
Line manager ownership/involvement: In order for the impact of SHRM/D to be felt in any organization line managers should own the strategy by getting involved in the formulation and implementation. Guest, D (1989) echoes that if Human resource management (HRM) is to be taken seriously personnel managers must give it away this means that HRM has to be devolved. This suggestion by Guest shows that there has to be line managers full involvement if SHRM//D is to achieve the strategy the company has set.
Line managers are the real people managers, as they closely supervise them. Besides that HR specialist are not specialist in marketing or Finance. In PBU when we are handling recruitment, we involve line managers, the recruitment though done centrally has all stakeholders involved e. g. when recruiting Audit officers the line managers did the short listing, interviewed and selected the candidates. The line managers are also the people who manage and monitor performance of staff, and so they give us feedback on performance of the staff through the appraisal system.
I refer to the findings of the research on the Mauritius civil service on SHRM/D where there is no line manager ownership, every thing is centralized and this explains why SHRM/D has not taken effect. In PBU HR alone does not make promotion, salary increment or even transfer decisions without the involvement of the line managers, this has helped us create ownership on decisions. As Line managers get involved the HR unit should also have a strategic involvement.
HR Strategic involvement: The HR specialist have to get involved in all the strategic aspects of the organization and get off the old personnel management which Tyson and Fell (1986) refer to as “Clerk of works” where the HR role is mainly operational. If we are to take a strategic approach of HRM/D then the role of HR has to shift to what Tyson & Fell refer to as the “Archtect”. The HR should be in the forefront of developing the vision of the organization and put in place relevant policies and practices that will be used in achieving organizational strategy.
Armstrong (2008: 74-75) says that HR should be business partnering. HR should partner with line managers and top management to ensure that HR strategies are in line with organizational strategies. HR should therefore have knowledge of the business. Ulrich, D(1998:124-134) emphasizes that HR has a new role and agenda that focuses less on traditional functional activities such as staffing & record keeping and more on out comes. HR’s role should be seen to enrich the shareholders, customers and employees.
Ulrich suggests four ways in which HR can be seen to add value:1) by HR becoming a partner with senior and line managers in strategy execution, here HR should be involved in designing the organization structure that enables good practices and motivation,2) by HR becoming an expert in the way that work is organized and executed, here HR can identify those components that need to be changed to enable strategy execution,3) by HR becoming a champion for employees, this means working to increase employee contribution and commitment, this means that HR has to liaise with line managers to ensure that there are clear goals and focused priorities because an organization can not thrive if the employees are not committed and fully engaged,4) by HR becoming a change agent for continuous transformation that shapes processes and culture. These mean that the HR should continually communicate to employees management’s expectations. HR should be proactive in the way it handles change initiative by ensuring that the initiatives are clearly defined and delivered in a timely manner. HR should be the centre for information dissemination.
People infer what is expected of them from the organizations culture; by the way people are treated and by what management appear to value and reward. In PBU before 2007 the HR unit used to be under the Managing Director’s office with the unit having a traditional administrative focus and little input in the business strategy. In 2008 when structures changed HR was made a full department with a head, and this changed the HR role as well, the HR got involved in strategy formulation, and implementation. The HR head sits in the management committee of the bank and she is also the secretary for the Human resource committee of the board. This shows that HR is a business partner involved in the planning and implementation of corporate strategy.
However these new roles of HR requires that HR specialist need to know the factors that are critical to the success of the business and the implication on the HR function, otherwise it will not be possible to develop HR programs and policies that support business goals as discussed by Jeffrey, A (2006:157-169). HR should also be able to envision the environment in which the business operates. The HR function may change its roles but there is need for top management commitment. Commitment from top management: Guest, D (1989:48-51) points this out as an outcome of HRM but to me it is one of the ingredients of SHRM/D. We need to have top management’s commitment to the vision and mission of the organization.
When this is well understood at the top, it is easy to cascade it down and implementation becomes easier. In order to create commitment the organization should be ready to develop high involvement management as described by Lawler (1986) and high commitment management strategy as described by Wood (1996) cited by Armstrong (2008:56-57). This strategies will bring out the behavioral aspects of employees and HR can then be in position to agree on the behavior which the company wants to encourage and the dysfunctional behaviors which the company wishes to stop Linda, H (1999:91) also attests to this. In PBU the board and top management are involved in developing the bank’s strategies which are then communicated and implemented by line managers.
The bank is also precise on what we expect of a committed employee and we are guided by the core values of the bank which are; teamwork, professionalism, commitment and trust, quality service and result oriented. This forms the foundation of our culture; these values also form the qualitative key result areas which are measured. To drive commitment the bank has created a climate that encourages, involvement, learning and information flow. In PBU we have an intranet among other tools of communication that we use to disseminate information, monthly meetings are also mandatory, team briefs, and quarterly Branch Manager’s workshops which have helped to ensure that staff are communicated to the organizations expectations these creates commitment and hence high performance. Another issue is flexibility and adaptability.
This is again an outcome of HRM that Guest, outlines but I think that it is also an ingredient for SHRM/D. Guest writes that this is concerned with organizational structure which must be adaptive and receptive to innovation, I agree but I wish to add that it has a lot to do with how the organization reacts to the changes in the business environment, there is need to be flexible. In PBU in 2007 the bank lost three heads of departments to competition, the bank’s policy is to first fill staff gaps from within, however because of the market conditions, the bank had to be flexible enough and seek applications from outside in order to attract new talents from competition.
Lastly we need to have good HR practices which encourage, commitment, motivation and behavioral change. For purposes of this essay I will discuss recruitment and selection. This process should be aligned to the HR strategy and it should be able to select people with the right knowledge, skills, behaviors and attitudes that are necessary for business growth. HR unit should have in place effective assessment and development process to ensure that the organization has the leadership it needs. Recruitment should be conducted in a fair and systematic way. PBU being government’s bank fairness in recruitment is important. In conclusion, I have defined SHRM/D and given a brief on its importance to organistions.
I proceeded to examine other concepts of strategic people management, then discussed issues that are involved when we try to take a strategic approach to HRM/D. PBU agrees with all the issues explored because we are practicing those aspects though not in its fullness, and it has seen a profitable transformation of the bank. I wish to conclude that there is no one best way to manage people in any organizations policies and practices vary from organization to another. LIST OF REFERENCES Armstrong, M (2008) Strategic human resource management: A guide to action (fourth Edition). London: Kogan Page. Devanna, M, Fombrum, C and Tichy, N (1984) ‘A framework for strategic human resource management’ pp 34-51 in Fombrum, C, Tichy, N, Devanna, M (eds)
Strategic Human Resource Management, New York, John Wiley. Guest, D (1989) Personnel and HRM: Can you tell the difference? Personnel Management, January 1989: 48-51 Huw, M, Brian, W, Sanjiv, S (2002) Managing in a Business Context: An HR approach: Prentice Hall, pp 1-3. Jeffrey, A. Mello (2006) Strategic Human Resource Management, (Second Edition), Stratford Publishing Services, Inc. pp 157-169 Johnson, G and Scholes, K (1997) ‘Corporate strategy: an introduction’ in G. Johnson, and K. Scholes, (1997) Exploring corporate strategy, (forth Edition) Hertfordshire, Prentice Hall pp 3-38 Linda, H (1999) Aligning Human Resource and Business strategy, Butterworth-Heinemann. pp 29-97