Over the past century, the concept of Human Resources Management (HRM) has been going through some significant changes. According to Nankervis, Compton and Baird, the main focus of human resources management is the “overall management of an organization’s workforce” in the purpose of achieving the desired objectives of the organizations in the long run (Nankervis, Compton & Baird, 2008). From personnel administration management to human resources management, and then further developing to strategic human resources management, the HR functions of an organization has evolved into a more central strategic role. Nowadays, the change in IR landscape has led to a rise in the attention paid to HRM. With consumer focusing more on the service provided rather than the physical merchandised goods, the demand for a well-functioned HRM has largely increased. HRM is no longer a “function” performed by HR supervisors but is also seen as a competitive advantage of the organization to achieve its long-term objectives and goals. To a greater extent, this essay will define and compare HRM and SHRM, investigating the “hard” and “soft” approaches to HRM. The limitations and criticisms of various HRM models will also be covered in the later paragraph. Lastly, two external environment factors in which organizations are facing nowadays are identified with a research on how the strategic approach to HRM is contributing to their ability to respond to such changes.
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Human Resources Management (HRM) is defined as the policies, practices and systems established by an organization that shape employees’ behaviour, attitudes as well as performance towards their job (DeCieri & Kramar, 2005). It focuses mainly on managing the productive use of people of the organization in order to achieve its strategic objectives and at the same time upholding a healthy employer-employee relationship to satisfy the individual employees’ needs (Stone, 2005:4). Before investigating the two models of Human Resources Management (HRM) and Strategic Human Resources Management (SHRM), one should take into considerations that the assumptions underpinning the HRM: the unitarist approach assuming a partnership between the employers and employees on a set of common interest with a mutual commitment to achieve the proposed objectives; and the pluralist approach in which the relationship between the two parties is assumed to have to inevitably go through a conflict of interest and that negotiations are crucial in resolving the problem (Kane, 1996). Ever since the early 20th century, HRM is seen as merely a personnel function carrying out the day-to-day administrative business of an organization, such as the promotion of employee welfare. While HRM further evolved in the later years, HRM started to turn into a professional approach where specialists are employed to conduct the HR-related task of the organization, including recruitment, training and welfare activities (Nankervis, Compton & Baird, 2008). Another perspective of HRM, the resource-based view started to gain popularity in the late 1990s, advocating HR as a valuable resource capable of contributing to the sustained competitive advantage of the organization. In other words, facilitating the development of a company-specific and unique competencies would help sustain the competitive advantage of an organization, and in this case it will be the people (Brewster, Carey, Grobler et. al., 2008). Around the same period of time, SHRM also came into being in which it is viewed as more of a “macro” perspective of the “strategic” approach in managing employees as a result of the integration of the early personnel management and industrial relations as well as HRM (Nankervis, Compton & Baird, 2008). While going into details the definitions and development of HRM, the Harvard model is also useful in showing that HRM theories are way broader than simply a personnel function. It consists of five main factors supporting the central principle of the utilization of employees to ensure the achievement of an organization’s desired goals, namely the stakeholder interest, situational factors, HRM policy choice, HR outcome and long-term consequences (Nankervis, Compton & Baird, 2008).
It is well accepted that dramatic changes that took place in the past decades have created new challenges for HR professionals, forcing them to evolve and enhance their role as a purpose to address these challenges (Brewster, Carey, Grobler et. al., 2008). Instead of limiting the HR department to certain administrative roles, organizations began to line them up with the business managers, in which both parties work together to create a strategic partnership. Such process is what we call the SHRM. According to DeCieri and Kramar, SHRM is known as “a pattern of planned HR developments and activities intended to enable an organization to achieve its goals” (DeCieri & Kramar, 2005). One might find it difficult to distinguish between HRM and SHRM. Strategic Human Resources Management stresses the importance of the establishment of HR plan and strategies in order to fulfill an organization’s long-term objectives. It is seen as more of a practical model that encourage organization to plain in the long run, taking potential changes from all other aspects such as the society, economic condition, technology enhancement, industrial relations, etc. into account (Dessler, Griffiths & Lloyd-Walker, 2007). Human resources is valued as a source of competitive advantage to certain organizations. Comparing to HRM, SHRM is claimed to be a model that requires more interpretations and well-rounded planning to ensure the most desirable outcomes to suit best with the organization’s business plans (Dessler, Griffiths & Lloyd-Walker, 2007).
With the two theoretical concepts of HRM and SHRM defined and compared, we can now go into investigating another two important approaches to HRM: the “hard” HR and the “soft” HR approaches. With reference to Druker, White, Hegewisch and Mayne, the “hard” approach places the main focus on the strategic business objectives of an organization, treating HR as a resource in achieving its competitive advantage (Druker, White, Hegewisch & Mayne, 1996). The “soft” approach, on the other hand, emphasizes more on the communication, consultation, counseling and support elements within the relationship between the employers and employees (Nankervis, Compton & Baird, 2008). While both approaches have validity to particular industries and organizations and is argues that a “hard” approach must be corresponded with a “soft” approached to achieve the most desirable outcome (Kaye, 1999), it is said that HRM is more likely to lie towards the “hard” approach and thus the SHRM better matching the key principle of the “soft” approach.
Nowadays, in the rapidly growing society where globalization has become the most common issue for most countries, organizations are no longer able to neglect the outside force. Changes have taken place within the organization and so as the role of the HR professionals. Taking various external factors into account, very few organizations can continue with their same old HR policies and practices and therefore, new strategies are to be re-designed. In other words, a lot of adjustments in regards to an organization’s HRM plans will have to be made in order to respond to such changes (Brewster, Carey, Grobler et. al., 2008).
External factors facilitate the values, attitudes and behaviour of an employee at work and it can be classified into three categories: global, national and industrial (Nankervis, Compton & Baird, 2008). Taking the Global Financial Crisis as an example, we will look into the impact it has on HR planning as well as how the HR professionals of an organization is evolving in for the respond to the change. The financial crisis was first triggered by the liquidity shortfall of the US banking system in 2007 and has resulted in the collapse of a number of large financial organizations (Holy See Review, 2010). It is well accepted that such huge issue is affecting almost every single organizations around the world, regardless of their size. It is obvious to organizations that increasing competitive advantages is the only choice for them to better equipped themselves so as to strength their market value and survive through the unstable fluctuating economy. Since it is mentioned in the previous paragraphs that HR is seen as one of the competitive advantage of organizations, it is not playing a very crucial role under such circumstance. While a number of organizations might choose to be more preservative by cutting down on their staff members as a “cost-reducing strategy”, with the SHRM model, HR practitioners will instead be focusing more on modifying the HR strategies to address the situation. For instance, by re-designing the HR strategies as well as carrying out a work-life balance policy, the organization would be able to survive through the hard times of the crisis with its employees, eventually promoting employees’ productivity and loyalty to the organization and thus, reducing absenteeism and the staff turnover of the organization (Schmidt-Hebbel, 2008).
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Another relevant external environment factor faced by organizations recently is the demographic change of the workforce resulted from an ageing population. As a result of the declining fertility rate, a rising life expectancies as well as the increased migration level, the median age of the populations is proven to be going up very rapidly (Murray & Syed, 2005). Though older employees are generally more experienced and therefore more productive than the younger ones, to a greater extent, they tend to suffer more from physical illness and disability, contributing to a higher level of absenteeism. Also, comparing to the younger employees off the organization, it is always harder for older employees to be innovative and adapt to the changing environment as soon as it takes place (Murray & Syed, 2005). However, if one does accept that the older workforce are generally more loyal to the organization and that their views and experiences are valuable, diversity management is very much required to be carried out by the HR professionals. Diversity management is defined as a “process of managing people’s similarities and differences” at work (DeCieri & Kramar, 2005). A number of policies with respect to diversity management can be introduced in order to address the issue. For example, trainings such as computer course can be provided for older employees to help them in adapting to the new working environment. Welfare like “long service leave” can also be promoted to specially address the older employees of the organization.
While HRM is seen as a valuable competitive advantage of organizations, some might argue that there is also a drawback associated with the concept. HRM is sometimes avoided because it is way too complex and time-consuming to organizations (Nankervis, Compton & Baird, 2008). For an effective HR plan to be carried out, a large sum of money and resources are to be contributed. A fully functioned data-base system is required to store the details with respect to the employment relationship such as their positions, trainings and developments and this can be rather complicated to set up without the adequate support from HR specialists (Kane, 1996). Various conflicts of interests are certain to come along when planning and conducting the HR strategies that even the top management of an organization might find it worthless to invest in (Nankervis, Compton & Baird, 2008).
In conclusion, the concepts of both HRM and SHRM have been discussed. While HRM is defined as policies and systems established by an organization in the focus of an effective utilization of its people to achieve to desired objectives, SHRM is known a pattern of HR developments enabling an organization to reach its goals overtime. A number of theoretical concepts including the “unitarist” and “pluralist” approaches, the resource based view of HRM as well as the “hard” and “soft” approaches are referenced in the purpose of further explaining the concepts and distinguishing between HRM and SHRM. Two external environmental circumstances, namely the global financial crisis and the ageing workforce are identified in which an organization’s strategies in addressing such changes is explored. Last but not least, the criticisms and limitations associated with HRM, such as its complexity and the costly process of setting up the HR data-base system are also taken into account so as to give a thorough understanding of the entire concept.
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