Critically Assess Whether Strategic Hrm Leads to ‘High Performance’’

Essay Question 1 Critic anyy assess whether strategic HRM leads to uplifted act Introduction There is a controersy whether the Strategic kind-hearted Resources Management (SHRM) leads to high performance. A general idea of SHRM is that the linkage of oversight and deployment of the individual within the tauten to the business overall and its environment whereas HRM is the activities that dash place under this area. Truss and Gratton (1994). It spotlights on long-term strategy.Two conjectural perspectives to the Strategic Human Resources Management (SHRM) exit surface be introduced and compared to determine whether they extinguish to high performance or not. First, the Universalist approach is one best focusing of dealing human resource to correct business performance. Second, the Contingency approach is to align HR policies and recitals with the details of business strategy to create a positive impact on business. In addition, twain examples a large corporation and a medium-size ships social club will be employd 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 execution tasks 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 imbibes 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. contrasting approaches to SHRM * Universalist approachA Universalist approach is known as best practice human resource portion outment (HRM). This approach describes there is one best way to manage plenty in order to improve placemental performance. It argues that all organizations, regardless of sector, size or country, will benefit from identifying, gaining commitment to and implem enting a set a furcate 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 focus Walton (1985) Guest (2001a, 2001b) and high involvement management Wood (1999a). An other 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 w ill 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 Meshoulams (1998) model advocates that HRM approaches will differ giving to varied 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 foreign market factors. When HR policies and practices are aligned to strategic focus, per formance will improve.Porters (1985) strategic options on 1) Cost Leadership, 2) Differentiation and Innovation and 3) Focus are adopted. The second type is Internal fit and it can also take to horizontal fit. HR policies and practices are all fit together so that they are in coherence. They are also mutually reinforcing and are use continuously. Jeffrey Pfeffers (1998) seven practices are adopted. Lastly, thread management integration is when line managers act as a critical character in implementing HRM strategy. Best-fit HRM suggests that the best to manage people will vary depending on organizational circumstances, and hence, the link to business strategy is key. Empirical evidence of SHRM model * A large company macadamize The UK quarrying company Tarmac has over 12500 employees at present. The operations function is key to overall companys performance. It needs the support of finance managers, regularise managers and HR managers. A finance manager delivers financial and ma nagement accounts to contribute the strategic decision-making process by forecasting financial performance.A zone manager manages operative performance. They meet and improve targets for cost, quality, deli real, safety and business ethics channelizen in key performance indicators (KPIs). Lastly a HR manager ensures business managers apply HR policies and procedures. The companys goal is to achieve objectives by motivating all individuals working together as one team across the business units and functions. for each one objective has its strategies. The followings practices are to achieve Engage employees and Act Responsibly objectives.Firstly, Tarmac focuses on a high level of employee involvement and encourages high employee commitment to the organization so that workers feel they are trusted and treated in an open and positive attitude. For example, employees regularly discuss with managers about their viewpoints within development teams. This helps workers feel part of the wi der team, strengthens employee engagement and commitment to the company. Secondly, team-working practices create a closer supervision and a flat hierarchy. A coaching style manager develops employees to manage themselves rather than to manage each task.Employees suggestions are offered, and this contributes to improvements in organizational performance. An example of Tarmac targets and measures a decline in waste. In 2010, eighteen workshop-training sessions were held for all site employees on CO2 awareness and energy. All district managers were involved in the programme. Some external experts from Carbon Trust were also invited to support the rollout of the training programme. As a result, Tarmac gained benefit from 500 energy and CO2 reduction. Overall, Tarmac adopted a high commitment strategy to meet the objectives.Therefore, it improved the companys performance. * A small-medium size company i-LEVEL i-Level is one of the most innovative digital media companies and is ranked th e Sunday Times 100 best companies to work for in 2004. It has a size of workforce of 60 employees. The i-Level company has a high level of financial performance. There was a 33 per cent increase in lettuce per annum. Their guiding principles are used as a framework. This is to ensure the internal fit and the external fit of company. The company is at the growing stage which a lot of the recruitment effort is on discovering the potential staff. -Level frequently seeks appropriate employees to be supported to work with the company. To fit HR policies and practices together, i-Level uses physical arrangements to remove top-down hierarchy in order to encourage employees participation, communication, creativity, self-managed teams and organisational values. As a result, a complete, open plan office is the environment where employees conduct their normal day-to-day operations. Moreover, i-Level sees apply is significant for performance. 15 per cent of the companys pre-tax profit is kept for performance bonuses from 2003 to 2004.Mean bit, the company argues pay is not their primary motivating force. On the other hand, the company aligns with business strategy and external environment by providing training courses for technical skills in media advertising. The company also offers an unusual training budget. There is an annual allowance provided for personal training and development purposes that are no obvious relation with work. The belief is to develop the skills and interests of workers in ways not studied before. This is anticipate to enhance i-level workers innovative thoughts at work through practices outside the companys work area.To summaries, i-LEVEL achieves competitive advantage through innovation and which competes in very tight labour markets. It adopted Porters strategic option of Focus and Pfeffers 7 practices to enhance the companys performance. Additional issues to reflect * Problems of implementation Line managers are central HRM performers in th e organization, and they play a vital role in implementation of HR policies and practices. They influence their teams performance in a direct manner. A fall of factors account for the line management problem. Firstly, it seems there is devolution to line managers.For instance, line managers do not want the responsibility of being a line manager or do not have enough time to deal with it accurately. They might not have the skills to treat HR issues successfully or are unaware of recent developments in view of HRM. Some managers do not consider a long-term view of the company or are inefficient for making policy in this area. Secondly, McGovern et al (1997), Marchington (2001) and Hutchinson and Purcell (2003) identify there are differences amid espoused and actual policies that are relatively recognized to line managers.For example, some policies are normative rather than positive. Some descriptions of policies and practices are in general terms rather than analytical about act ual situations. Hence, managers are unable to implement them specifically to meet the companys goals. Furthermore, a broader issue, the line manager jobs in firms become progressively complex collect(p) to new firms structures. For instance, virtual and network companies have less clear line manager characters than the layered hierarchical company. One observable implication is pressure for minify the size of the HR department.There will be a cut down in numbers of HR professionals. Ultimately, these factors all expunge the organizational performance due to unsuccessful implementation of HR policies and practices. * Problems of measurement Fitzgerald (1991) and Neely (1998) stated that performance measurement is a key issue in guaranteeing the effective implementation of a firms strategy. However, using inadequate measurements is poor in supporting managements business objectives. The followings are the circumstances. Scientists use large-scale data groups made self-completed qu estionnaires.This will lead to two problems. First of all, there is dependence on one person, to represent the whole group. Secondly, there is dependence on a design of questionnaires. For example, respondents are answering yes or no questions rather than giving thoughts and opinions. This type of questions may generate a less accurate result. Moreover, there is uncertainty of how the data should be gathered, presented and analysed. The major problem is mis-reporting single respondents. Respondents may have limited knowledge of the area and use of policies.Furthermore, the measures of performance commonly take account of the financial performance, whereas there is a a few(prenominal) findings focus on the broader issue of employee attitudes and well-being. Equally, there are matters to the range of HR practices. For instance, a report shows statistics of whether a company has self-managed teams, some may look at the proportion of workers running in a self-managed team. Lastly, Atki nson (2005) suggests that the measurement of productivity in the service sector can be exceptionally challenging.It is always easy to get typical, comparable financial statistics. To sum up, the measurement of data are related to the level of relevance to business performance. Critical analysis of the beyond * Best practice Pros Cons Research states there is a positive link between the HR practices and organisational performance. Firstly, Huselid (1995, p. 667) discovered that the degree of returns for investments in High Performance Work Systems is significant. In fact, A one standard deviation rise in High Performance Work Systems practices is associated with a comparative 7. 5 per cent drop in labour turnover. On per employee base, $27,044, $18,641 and $3814 more in sales, more in market value and profits respectively. Secondly, the workplace employee relation survey (Cully et al 1999) indicates that there is 14 per cent of organisations adopted high commitment strategy. In cont rast, researcher (Delery 1998) also emphasized deadly bundles of practices need to be avoided. For example, it occurs to managers giving reward based on individual performance while they are working as a team.Furthermore, Boxall and Purcell (2003, p. 64) commented while multi-national companies make the effort standardise their practices across nations, national perspective and organisational sectoral perspectives show criticism on the effectiveness of these practices. Marchington and Grulis (2000, p. 1117) argue the most common example is in labour intensive organisations recognise costs are expensive when they use these practices. To summaries the best practice approach, Guests (1987) argues that there is no best practice.At the same time, he also suggests a set of best practices such as high commitment management is the route to survival of UK business. This leads to an argument that in order to enhance company performance, managers must alter their HR policies and practices to t he framework that is operational. The indication comes to best-fit approach. * Best-fit Pros Cons Thompson (2000) conducted two studies of firms in the UK aerospace industry. His first study in 1997 showed that with higher levels of value added per worker encourages greater diffusion of innovative working practices with their non-management employees.These organisations are towards to more heavily engaged in specialist production for niche markets and hired technical and professional workers. The second study in 1999 showed evidence that organizations introduced a larger number of high performance work practices had much enhanced business performance. As a result, companies moving from less than five to more than six innovative practices created a 34 per cent increase in value added per worker. On the other hand, Miles and Snow (1984) align suitable managerial types to three genetic strategies of prospector, defender and analyser.If managerial properties and skills are aligned to company strategy, there will be a higher level of link to organisational performance. Thomas and Ramaswamy (1996) offered such support. As a result, performance in aligned firms was statistically excellent. In comparison, (Purcell 1999 p. 35) outlines that a number of successful organisations features that are unable to model. These are the cultural norms that have been developed gradually over a long period associated with accomplishment. It is easy to identify the key factors that drive to success. Especially when the organisations are large and complex.Imaginably the major problem is that many organisations exist at bottom complex external environments with multiple contingencies that are not to be ignored or recognized. * Comparing both approaches Each approach has advantages evidence and disadvantages evidence. It could be argued that different approaches can apply in different sectors. For example, Guest (2001) advocates that there is the possibility that a high commitment m anagement is most applicable in manufacturing i. e. Tarmac, while strategic choice for fitting with business strategy, is more credible in the service sector i. . i-LEVEL. As a whole, critically discuss the link between SHRM and performance. Evidence from Patterson et al (1997) examined sixty-seven manufacturing businesses in the UK for a period. The outcomes were 19 per cent of profitability and 18 per cent of the variation in productivity could be qualified to HRM practices. This demonstrated HRM practices has a positive impact on organisational performance. Conclusion In summary, SHRM consists of a number of practices and is an organization level analysis of how HRM systems impact on performance.Two theoretical perspectives outline different views. The best-practice approach defines there is one best way of managing people. It is appropriate across all circumstances. Whereas best-fit approach terms the best to manage people will change depending on organizational circumstances. I t highlights the essence of linking business strategy. Tarmac was used as an example. It applied the best practice approach and adopted a high commitment strategy to meet the objectives. Hence Tarmac improved its firms performance.I-Level was used an example to describe the competitive advantage the company had achieved through innovation while competing in extremely tight labour market. It adopted Porters strategic option of Focus and Pfeffers 7 practices to enhance the firms performance. Empirical evidences show both organisations are successful with adopting different approaches to their specific, targeted firms. These firms had a positive impact on performance. This can be concluded that SHRM has a clear link to business performance practically. In depth, other issues such as implementation and measurement roblems are considered. Problems of implementation affect the organizational performance due to unsuccessful implementation of HR policies and practices in line management. On the other hand, problems of measurement are valued on the theme of how easy and difficult the data is to represent and most importantly the level of relevance to business performance. If the relevance is slight, it may have little or no impact on business performance. In the final stage of comparing both approaches, many researchers point of views is gathered. Best-practice approach has advantages and disadvantages.It seems to argue that high commitment management is the route to successful business performance. On the other hand, the advantages and disadvantages of best-fit approach suggest that applying this approach can be rigid and inflexibility due exists of complex external environments. Furthermore, in recent arguments, the product labour market seems to be emerged to a new post-industrial age where employers will tend to hire self-employed workers to carry out specific, time-limited projects for companies. This is due to the prediction of radical change.It can lead to a vi ew that best-fit approach should to be managed appropriately. This means practices should be adequate in different companys life-cycle stage and align with different strategies. So that, it can feasibly enhance the organizational performance. Finally, strategic human resources management gives evidences, views, researches and facts to enhance organizational performance. However, the degree of high performance in context varies in different organizations under their circumstances. Hence, it does not necessary impact to high performance.