Schuler and walker define Human Resource Strategy as “a set of processes and activities jointly shared by human resources and line managers to solve business-related problems.” To extend our understanding of the term we may also look at the definition given by Wheelen and Hunger, “that set of managerial decisions and actions that determines the long-run performance of a corporation.” It is clear from these two definitions that Human resource Strategy is mainly about managers and their workforce aiming to maximise company performance. Corporate Strategy involves the direction an organization takes with the objective of achieving business success in the long term. Corporate Strategy is often implemented by using Corporate planning and business plans. After looking at a brief definition of both Human Resource Strategy and Corporate Strategy I am now going to examine them both in more detail before looking at the reasons why problems occur when trying to implement them both, and how to overcome these issues.
The Matching Model refers to Michael Porter’s low cost or differentiation strategy in order to gain a competitive advantage. Each strategy involves a unique set of responses from workers and a particular Human Resource Strategy that might generate a unique pattern of behavior. The challenge for firms is matching Porter’s five ‘Ps’ (philosophy, policies, programs, practices and process) in a way that encourages appropriate employee behavior for different strategies. Also, there must be a fit between competitive strategy and internal Human Resource Strategy.
Limitations with the Matching Model
One of the main limitations of using this model is that it does not take into account market changes, for example a change in the base rate of interest. This is a major disadvantage because interest rate changes can have a massive impact on firms, in particular small organizations. If interest rates were to rise then a firms costs may increase which could in turn lead to cash flow problems which is often why firms go out of business. The model assumes a unitary approach between managers and employees, it assumes that the workforce will agree with decisions that are being made and will be happy to go along with them. Also, the model does not take into account the powers of trade unions and the impact that can have on the firm. However in the real world this is clearly not the case. An example of this would be the current strikes within the airline industry. British Airways employees are holding several strikes as they do not agree with proposed changes being made by the board of directors. Due to these strikes the company is losing revenue and its survival is now under serious threat. This came about from a difference of opinion between trade union members and the board of directors of the company.
The Resource-based Model
The Resource-based Model is known as the soft view to human resource management whereas the matching Model was known as the hard view. Barney (1991) has poised that ‘sustained competitive advantage’ is not achieved through an analysis of its external market position but through a careful analysis of the firms skills and capabilities; characteristics which competitors find themselves unable to imitate. He then put the model into a SWOT analysis showing internal strengths and weaknesses and the external opportunities and threats. The model then showed that in order to achieve sustainable competitive advantage firms must implement strategies that exploit their internal strengths, by responding to environmental opportunities. The main problem with this model is that people perceive resources differently and this has lead to many different interpretations of the model.
Corporate strategy deals with an organizations aims and objectives, and its plans for the future. The production and operations of the company must be outlined...