Strategic Human Resource Management Report - HRM 325 Analysis

This report, submitted by a student at the University of Sunderland London, examines strategic human resource management (SHRM). It begins by exploring the relationship between business and human resource strategies, emphasizing vertical alignment and horizontal integration. The report critically evaluates various SHRM theoretical models, including Best Fit/Contingency, Best Practice/Universalist, and the Resource Based View (RBV), comparing and contrasting their approaches. Furthermore, it delves into specific HR practices, focusing on performance management and reward systems, analyzing their impact on employee motivation and organizational goals. The report then shifts to employment relations, discussing theoretical perspectives such as Unitarist, Pluralist, and Marxist views, and identifying the roles of different actors. It analyzes the changing nature of employment relations and provides recommendations for improving these relations through employee participation and voice mechanisms. The report concludes by summarizing key findings and recommendations for businesses seeking to optimize their HRM strategies.

University of Sunderland London -Faculty of Business and Law
HRM 325 Strategic Management Human Resources
Submitted
By
Student Name: Awake Ababa
Student ID: 179171349
Submission date: 26 March 2019
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Table of Contents
Executive Summary......................................................................................................... 2
Part 1................................................................................................................................4
1.0 Introduction......................................................................................................... 5
1.1 How business strategies are related to the human resource strategies.................5
1.2 Explanation of vertical alignment and horizontal integration across the
organization.................................................................................................................. 5
1.3 Critically evaluate, compare and contrast, the theoretical basis and models of
SHRM........................................................................................................................... 9
1.3.1Best fit/Contingency..............................................................................................9
1.3.2 Best Practice/Universalist..................................................................................10
1.3.3 Resource Based View, (RBV)............................................................................10
1.4 Critically evaluates the specific HR practices of Performance Management and
Reward....................................................................................................................... 11
Task 2............................................................................................................................ 14
2.1 Explain and critically discuss the nature and theoretical perspectives of
employment relations..................................................................................................15
2.1.1Unitarist perspective........................................................................................... 15
2.1.2 Pluralist perspective...........................................................................................15
2.1.3 Marxist perspective............................................................................................15
2.2 Identify and critically evaluate the roles of the actors within the employment
relationship................................................................................................................. 16
2.3 Analysis of the changing nature of employment relations.....................................17
2.4 Recommendations of how mechanisms of employee participation and employee
voice can contribute to improved employment relations within an organizational
context........................................................................................................................ 18
2.5 Conclusion............................................................................................................ 19
References.....................................................................................................................20
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Executive Summary
This paper aims to evaluate literature, models, theories and practices on HRM to
provide recommendation for businesses. The finding of this paper shows that every
people is different from each other regarding the concepts, views, perception. The view
of Unitarism, Pluralism and Marxism has mentioned these differences. The three
perspectives provide three views that are not similar at all. However, the Pluralist
perspective is very much effective in the UK businesses to create relationship with
employees. In this perspective, an organization can be categorized under several
sectional groups every group has a leader, a specific goal and specific procedure to
work. It has also found that the firm has to create relationship with individual employees,
labor unions, and with overall employers. This relationship can be build up by involving
the employees in decision making and increase their empowerment, motivation and
willing to work that also requires increasing organizational performance.
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Part 1
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1.0 Introduction
In this modern era of business, strategic human resource management (SHRM) has
become one of the most important concepts which ensure capable employees in the
organization (Bratton and Gold, 2017). The main concern of SHRM is of improve the
performance of the employees and create a healthy human capital. It has close relation
with the organizational goals and objectives along with its performance, organizational
culture and structure. SHRM includes HR functions as a strategic partner who helps HR
department to recruit, select, train, and reward personnel (Brewster, 2014). Basically,
SHRM focuses on HR with long run objectives. It’s not only focuses on the internal HR
activities but focuses on problem solving regarding human resource in the lone run. So,
the main goal of SHRM is to improve the employee’s productivity and overall business
productivity in the long run.
1.1 How business strategies are related to the human resource strategies
Mullins (2014) stated the great relationship exists between human resource strategies
and business strategies that play significant role for organizational development.
Decisions regarding the business are based on the capability of human resource of the
organization. Therefore; human resource strategy is very much important for firm’s
decision making (Bratton and Gold, 2017). The strategic human resource management
states that employees should be valued as strategic asset of the organization which will
increase the overall performance of the organization. So, the human resource strategy
and business strategy should correspond in a way that will attain the goals of the
organization and increase the profitability of the organization. Businesses develop and
implement both business and human resource strategies based on the strategies of
their competitors in the market.
1.2 Explanation of vertical alignment and horizontal integration across the
organization
Strategy HRM depends on the uses of human resource of the organization to gain the
objectives and goal of the organization. First is a vertical alignment. In vertical
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alignment, the strategic management process is categorized by HRM. The preliminary
attempts of the organization are directing human resource which manages vertical
alignment (Brewster, 2014). The prime idea of HRS is vertical fit which is related to
contingency based approach. Thus, businesses need to align different management
systems to meet organizational goals. The strategy of a company is run according to its
goals and objectives. The vision, mission and values of the company are directly related
to vertical alignment. Generally an organization has some rules to achieve its goals and
objectives that must follow. Vertical alignment ensures effective uses of human
resource and meets multiple goals and objectives of an organization as a result a firm
can gain easily its success (Richards, 2018).
The horizontal alignment of an organization is one kind of complement of vertical
alignment. The horizontal alignment is related to HR department and management of
the resource of the organization that is available to them and concerned within the
organization (Brewster, 2014). How a company can processes its resources and
activities planned by HR department is very important in horizontal alignment.
Horizontal strategy is such a strategy where all strategies are closely related to each
other. This strategy can be suitable for hospital in case of recruitment and selection of
new staffs. To enable a business strategy a company needs to develop effective and
efficient strategies that meet the organizational goals and objectives (Richards, 2018).
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Figure: Basic framework of Strategic HRM Source: Boxall and Purcell (2013)
The mission, vision and goals of the organization depend on its human resource.
Talented and energetic people who are available in the organization as potential
contributors, it can easily handle its planning. HRM activities affect the behavior of all
the people who work for the organization. To be success and attaining a competitive
business advantage human resource and all other business functions have limitation.
They have a limitation for transactions for their strategic business planning. As Perrewé
(2011) said if organizations have vague idea about their strategies it will be difficult to
meet the needs and expectations of its stakeholder and meet the business goals.
Matching Model of developing HRM policies
Torington et al (2013) stated that competitive advantages of human resource
management of business depends on its selection process, rewards and appraisal,
human resource development, and business performance.
Figure: Matching model of HRM Source: (Mullins, 2014)
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Harvard Model of developing HR policies
This model includes five key elements that are sitauational factors, stakeholder
interests, HR policies, and long time outcome of business, and outcome of HR.
Figure: Harvard Model of HRM Source: (Tarique et al., 2016)
Tarique et al. (2016) stated that business needs to meet stakeholder interest first, and
needs to understand the situational factors. Based on these outcome businesses need
to develop HRM policies and evaluate their outcome. Finally, based on these outcome
businesses need to plan and measure for long-term consequence.
Guest Model of HRM and its importance in HRM strategy development
This model shows that business needs to practice effective HRM by hiring, training,
appraising, compensating, and making relationship with the staffs that will provide
commitment, quality and flexibility along with motivation, co-operation, productivity,
innovation, and finally expected level of profit and ROI (Wickramasinghe and
Samaratunga, 2016).
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Figure: Guest Model of HRM Source: (Wickramasinghe and Samaratunga, 2016)
1.3 Critically evaluate, compare and contrast, the theoretical basis and models
of SHRM
SHRM is developed in the 1970s and 1980s which is made by strategic theories.
Wickramasinghe and Samaratunga (2016) developed three key strategies that are
quality improvement, innovation, and cost reduction. They also focused on HRM
philosophies including accumulation, facilitation as well as utilization. In these strategies
utilization and cost reduction strategies are applied for minimizing employee costs but
these strategies do not work for staff mobility and training and development.
1.3.1Best fit/Contingency
In HR strategy different circumstance of the organization will be effective with
complement in the best fit approach. The common point between organizations
business and HR strategy is vertical integration or alignment. HRM has three models.
These are lifecycle, competitive strategy, and strategic configuration (Perrewé, 2011).
The outcome, effectiveness and efficiency of human resource strategies mainly depend
on its effective development, implementation and growth. For example, if a business
wants to maximize its business operations and functions, it must changes it current
HRM strategies and need to develop new strategies to gain organizational goals. In this
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case, Porter (1985) developed the best fit competitive strategies that focus on quality,
innovation, and cost leadership strategies.
1.3.2 Best Practice/Universalist
The best practice strategy
This strategy aims planning that is matching with the universal sense. It is such-a
approach that will be correct in any situation. This approach helps the organization to
gain its goals. It helps to make the best planning for the organization. Brewster (2014)
argued for 7 best practices. These include sharing information, differentiations,
workforce motivation, skill development of staffs, rewards and incentives, self-managed
teams, and effective recruitment and selection. On the other hand, Guest focuses on
five key practices that are staff motivation and commitment, staff communication,
effective job design, and effective recruitment, and effective training. Demery and Doty
have given seven strategies for HR practices. These include job designs, employee
freedom and their security and privacy, effective career ladders and training,
performance based appraisals and compensations. There are many people who gave
many practices for organization in their sense. Different types of organization follow
different types of rule.
1.3.3 Resource Based View, (RBV).
In resource-based view resource is considered as the inevitable elements of the firm
performance. VIRO attributes helps a firm to attain competitive advantage (Bratton and
Gold, 2017). The user of this view looking for sources of competitive advantage instead
of environment.
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Figure: Resource-based view Source: Bratton and Gold (2017)
In RBV components existing resources are more important and effective than external
opportunities and new skill for each different opportunity (Brewster, 2014). There are
two types of resources in RBV model. These are: tangible and intangible. VRIO
indicates that business analysis framework which includes the strategic goals of the firm
(Greggs Plc Plc, 2017). This focuses on different questions regarding value, rarity,
limitability and organizations.
1.4 Critically evaluates the specific HR practices of Performance Management
and Reward
For better performance management, the better level of communication channel must
be created among various departments and team members within the firm (Greggs Plc
Plc, 2017). The weak communication channel reduces the performance of the overall
firm. At this circumstance, strategic performance management (SPM) can be used by
the top management. HR department can make advance plan for improving the
performance of the employees according to the requirement of the business. SPM is
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needed for creating a better communication channel among employees and top level
management. SPM also creates a link between the employee’s goals with the firm’s
goals.
1.4.1 Performance Management
Performance management can be defined as the process of enhancing the
performance of team and individual for attaining the goal of business firm (Boxall and
Purcell, 2016). Performance management indicates the preparation for improving
overall organizational condition. The purpose of performance management is to set up
the standard of activates and follow up the overall activities as well as compare the
actual work with standard for taking actions to improve the quality of the employees.
1.4.2 Reward System
Reward system is very much important for the firms to motivate the employees and
attain the goals of the business. Reward system includes the compensations, and
certain incentives according to the performance, knowledge and competencies of the
employees. But it is very difficult to attain the satisfaction of the employees with the
reward system if the reward system does not plan in a proper way. To meet the
objectives of reward system, HR department can apply Strategic compensation and
reward management (SCRM). By taking right decision on the reward system, HR
department can able to attain the satisfaction of employees and attain the objectives of
firm. Motivation can be provided to the employees by financial and nonfinancial ways
(Boxall and Purcell, 2016). Financial way includes fair salary, bonus, reward, promotion
facility and other financial incentives. On the other hand, the nonfinancial motivation
includes training, admire for good performance, good relationship and other non-
financial incentives to the employees. Both financial and non-financial motivation
techniques play important role for attaining the satisfaction of the employees.
1.5. Recommendations to design/re-design a performance management system
For design or re-design a performance management system, the firms should not copy
similar work of others. The size of design should not be same for all. Every firm makes
unique and standard system and different culture in the organization (Boxall and
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Purcell, 2016). The firm should set the overall objectives and scope of design. The
variation of the design should note down carefully and takes various steps to solve. The
firm should divide the responsibility and select the monitor for supervising the proposed
design a performance management system. Every firm should do pilot study for the
proposed design and review the whole design after implementation.
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Task 2
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2.1 Explain and critically discuss the nature and theoretical perspectives of
employment relations
Employee relation is very important for the firm. There are there theories by which
employee relations can be understood (Edwards, 2013). These are given below:
2.1.1Unitarist perspective
Unitarist perspective can be defined as the process of regarding a firm as harmonious
group in which people are specified as similar culture. In this category, mutual
understanding and respect are the most important factor. Employees of the firm are
collectively working for attaining the mutual objectives. Here, the trade unions are not
much active but conflict may arise due to interpersonal disputes and breakdown of
communication channel (Jurevicius, 2013).
2.1.2 Pluralist perspective
Perspective of Pluralist is the process of dividing an organization by several sectional
groups. Here, every group has a leader, a specific goal and specific procedure to work.
For example, management group as well as trade unions groups. The management
does not force the other groups only maintain coordination. In this section, trade unions
perform lawful rights of the employees but conflict may arise due to bad circumstances
(Jurevicius, 2013).
2.1.3 Marxist perspective
Marxist perspective can be also regarded as radical perspective. It is applicable for the
capitalist society. Here, top management section gets higher authority and
empowerment but lower gets nothing. Trade unions are very much active in this
circumstance to achieve the employees’ right (Jurevicius, 2013).
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2.2 Identify and critically evaluate the roles of the actors within the employment
relationship
The employment relationship can be made by relationship with individual employees,
labor unions, and with overall employers.
2.2.1 Individual employees
The HRM department creates relationship with the individual employees to attain the
objectives of the firm. This relationship can be regarded as “labour relations”
(Jurevicius, 2013). Labour relations are very much important for the firm to create better
relationship with individual employees that enhance the overall performance of the firm.
2.2.2 Labour unions
Most of the firms have labor unions that perform lawful rights of the employees. It is
union of employees. Labour union believed that an injury of one individual is injury to all
(Boxall and Purcell, 2016). Labor unions perform activities to protect and improve the
socio-economic, political and educational rights of members within and outside firms.
2.2.3 The employers
Employers are resources of business. They are invested as factors of production of
business for successful operation of business. Employers are the main components of a
business firm who take part in production and other functions of business (Jurevicius,
2013). As employers are resources of business proper management of them is needed.
Hence, management of the employers is delegated to the higher authority of the
business, according to Fajana (2006:88). The individual investors can choose suitable
way to employment relations within the institution.
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2.2.4 The legislators and governments
The legislators are the persons who are the members of a legislative body and makes
laws. Legislators are elected by the citizens for representing their interests (Banfield &
Kay, 2016). The lawmakers formulate, amend and pass labor laws and other necessary
legislation appropriate to the workplace. This legislation is done for the citizens.
Legislators have power to add or remove the executives. They can remove executives
through a vote of no confidence from applying their power. Thus, the legislators can
pass several employment laws to maintain business affairs. This empowerment
represents that government acts for the people and their welfare. In order to maintain
labor and employment relations these laws guide the affairs daily. The involvement of
the lawmakers comes to the light through this process.
2.3 Analysis of the changing nature of employment relations
Responding to Globalization
It is the duty of the manager to define the goal of business. But to identify a strong goal
and strategy to achieve that goal is very hard in the dynamic market. Managers can set
short term goal very easily but setting a long term goal is a problem for them. The
prediction of profit of business is uncertain in this dynamic global economy (Palmer,
2015). The variation of profit and loss can be predicted by only business not by the
individual. It is the most important fact to respond to the globalization which helps to
redefine the business model.
Managing work force diversity
Businesses are expanded in many countries nowadays (Mullins, 2016). For the open
market of business and globalization, management faces diversity in the work. In order
to manage workforce, besides age and gender diversity it is essential to cultural
diversity. When people are heterogeneous in nature, their motives, culture, ethics are
also different. It is the challenge for the manager to manage them.
Improving quality and Productivity
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Lynch (2014) stated that production is the main function of business. It is the duty of the
manager to decide the items of production, quantity and production place. This decision
creates problem in management. After deciding the items of the production, managers
should concentrate to the quality of the product. The good quality of product must be
ensured. Creating marketing opportunities of product is very long term process for the
business. So, if the quality of the product is not good it will be hard to compete in the
highly competitive market.
Improving customer service
Kotler, et al (2014) mentioned Customers are the service receiver of the business. The
main target of business is to attract customers and retain them. Management should
improve the customer service function. The tastes and requirements of customers are
changeable. It creates problem for the improvement of customer service. In order to
solve this problem, managers set up scenarios and try to meet up the customer’s
requests.
Managing labor forces
Another challenge for managers is the management of labor force. Management must
ensure good salary and better working environment for the labor (Greggs Plc Plc
Annual Report, 2016). If it is not ensured, they can leave organization. So, it is very
challenging for the managers.
2.4 Recommendations of how mechanisms of employee participation and
employee voice can contribute to improved employment relations within an
organizational context.
Boxall and Purcell (2016) mentioned that employee participation in the decision making
is very much important factor that greatly motivates the employees. The motivated
employees are working in the firm with their best efforts that helps to attain the
objectives of the firm. The employees can share their views, opinions, decisions that
helps to raise their voice towards top level management. But lower level managers have
not adequate training to participate in the top level management meeting (Dowling et al.,
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2016). For this reason, HRM department should arrange adequate training facility for
the employees for involving them in the decision making and raise their voice. The
involvement in the decision making of employees enhance their empowerment,
motivation and willing to work well that helps of enhance organizational performance.
2.5 Conclusion
Every people is different from each other regarding the concepts, views, perception.
The view of Unitarism, Pluralism and Marxism has mentioned these differences. The
three perspectives provide three views that are not similar at all. However, my view is
that the Pluralist perspective is very much effective in the field of UK to create
relationship with employees. In this perspective, an organization can be categorized
under several sectional groups every group has a leader, a specific goal and specific
procedure to work. It has also found that the firm has to create relationship with
individual employees, labor unions, and with overall employers (Lewis and Saunders,
2013). This relationship can be build up by involving the employees in decision making
and increase their empowerment, motivation and willing to work that also requires
increasing organizational performance.
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References
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Perrewé, P. (2011), “The role of personality in human resource management”, Human Resource
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