Essay Question 1: ‘Critically assess whether strategic HRM leads to ‘high performance’’ Introduction
There is a controversy whether the Strategic Human Resources Management (SHRM) leads to ‘high performance’. A general idea of SHRM is that “the linkage of management and deployment of the individual within the firm to the business overall and its environment whereas HRM is the activities that take place under this area.” Truss and Gratton (1994). It spotlights on long-term strategy. Two theoretical perspectives to the Strategic Human Resources Management (SHRM) will be introduced and compared to determine whether they manage to ‘high performance’ or not. First, the Universalist approach is ‘one best way’ of dealing human resource to improve business performance. Second, the Contingency approach is to align HR policies and practices with the details of business strategy to create a positive impact on business. In addition, two examples: a large company and a medium-size company will be used to illustrate both approaches practically. At the same time, there are issues associate with theoretical perspectives that need to be discussed. Such issues are the implementation problems as well as the measurement problems. After all, the question will be answered with analysing all of the above. The advantages and disadvantages of each approach will be identified by gathering views of researchers. To the final stage, both approaches are being recognised if the linkage is existence to ‘high performance’ and to the level of measure that are being noticed. Different approaches to SHRM
* Universalist approach
A Universalist approach is known as ‘best practice’ human resource management (HRM). This approach describes there is ‘one best way’ to manage people in order to improve organizational performance. It argues that all organizations, regardless of sector, size or country, will benefit from identifying, gaining commitment to and implementing a set of best HRM practices.
The job of a researcher is to identify what the practices are, and a job of HR professional to implement them. For example, a research from Delery and Doty (1996) identify certain practices that improve organizational performance. The detailed components are ‘high performance work systems (HPWS)’ Berg (1999); Appelbaum et al (2000), ‘high commitment management’ Walton (1985); Guest (2001a, 2001b) and ‘high involvement management’ Wood (1999a). Another researcher by Jeffrey Pfeffer (1998) identifies that seven universally applicable practices will benefit all firms. The components include: 1) Employment security, 2) Careful hiring, 3) Self-managed teams and decentralized decision-making, 4) Comparatively high compensation, 5) Extensive training, 6) Low status distinctions and barriers, 7) Extensive sharing of financial and performance information. The implication is that when a coherent bundle of HR practices is outlined, the integrated HR practices will impact positively on organizational performance. The ‘best practice’ HRM sees there is ‘one best way’ of managing people and that is appropriate across all circumstances.
* Contingency Approach
On the other hand, the Contingency approach is known as ‘best-fit’ HRM. It takes account of factors such as organizational size, location, sector, strategy and the nature of work. Baird and Meshoulam’s (1998) model advocates that HRM approaches will differ giving to different life-cycle stages. These life cycle stages ranges from start-up to maturity. While an organization is growing and maturing over time, it becomes gradually complex. Therefore, more sophisticated HR structures and policies are needed.
This approach focuses on two types of ‘fit’ and ‘line management integration’. The first type is ‘External fit’ and it is commonly known as ‘vertical fit’. It is in coherence and alignment with business strategy and external market factors. When HR policies and practices are aligned to strategic...
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