Human Resource Management

Introduction

 

            Organisations in any part of the world consist of people, specifically called human resources, who have significant abilities that are necessary for companies to continually exist and eventually develop. These employees, from the subordinate workers to the executive officers, have individual needs and aspirations which should always be considered and respected. With this, human resources should not be perceived and treated as machines or mere business assets. Instead, they should be treated and valued as individuals who are able to contribute to the productivity and growth of the organisation they work for.

            In fact, in a competitive business environment, maintaining a competitive advantage presently and heavily relies on the effective and strategic management of a company’s employees. More specifically, it is now being recognized that the innate abilities of human resources could further be developed through different means such as training, and various management processes and methods. It is therefore important for organisations to effectively employ these procedures and systems that would further hone employees towards the achievement of the company’s goals toward growth and success; hence the need for strategic human resource management

 

. to Strategic Human Resource Management (SHRM) Models

            Researchers, since the early 1990s, have proposed three models of SHRM, namely the control-based model, the resource-based model, and the integrative model.

Control-based model. Generally, the first model of SHRM is concerned on the method by which the management aims to control and monitor the performance of its human resources. Based from this point of view, human resource (HR) strategies and structures greatly influence all aspects of work, so as to ensure a high level of labour efficiency as well as a corresponding level of profitability (2003). Accordingly, this means that if effective SHRM is employed in an organisation, it would follow that the performances of the employees in the company is effectively supervised; hence they would become productive in the organisation.

 

Resource-based Model. Briefly, this second model is based on the nature of the relationship between the employer and his or her human resources. More specifically, this model concentrates on the workers’ behaviours, attitudes, as well as the quality of the manager-subordinate relations. In a nutshell, this SHRM model gives importance on an organisation’s reward-effort exchange, as well as how supervisors perceive their employees (1999). Hence, the resource-based model’s concern is that managers view their human resources as an asset to the company, through appreciation of their individual competencies.

 

Integrative Model. This third approach is mainly concerned with the combination of the previously mentioned SHRM models. To integrate the control-based and resource-based models,  (2000) first focused on the HRM strategy’s underlying logic of administrative control, and then on the reward-effort exchange (). Hence, SHRM of an organisation is affected in a way that these strategies should comply with both areas of HRM—the company’s structure, rules, and regulation, as well as its employee-fulfilment programs.

 

Strategic Human Resource Management Defined

            According to (1995) strategic human resource management involves the utilization of a wide array of activities to ensure that corporate employees are efficiently managed. More specifically, these activities and methods aim to retain and develop qualified human resources so that they could productively contribute to the effectiveness of the organisation they work for (

            It could therefore be observed that these definitions support the fact that SHRM exists so as to effectively manage and train a company’s workforce for them to be well-informed and substantially motivated. Consequently, they would be able to effectively perform their responsibilities as employees who would contribute to the achievement of corporate goals toward survival and success.

 

Small and Medium Sized Enterprises (SMEs) in the United Kingdom

            A number of previous studies on SHRM have primarily focused on large corporations with very little attention given to the effective and strategic management of human resources in SMEs, despite the reality that managers of SMEs often consider SHRM as one of the most vital aspect of organisational success. In countries such as Australia, New Zealand, and the United Kingdom, small and medium sized corporations are currently flourishing (2004); in fact, according to a study by (2006), HR management practices do play a role in SMEs because these have significant effects to workforce arrangement, resultant corporate performance, higher employee loyalty, trust in administration, cooperation, higher employee effort, and work involvement (p .3). Hence, it is important for managers to formulate SHRM methods that would enable these organisations to maximise the potentials of their human resources towards corporate development and success.

 

Human Capital and Organisational Processes. Evidently, it is necessary and vital for SMEs to be able to assure that the right people are selected and maintained in these organisations. According researchers such as  the effective selection and retention of skilful and competent human resources is a vital issue in the management and operations of SMEs (2004).

            In connection to this, one factor that contributes to difficulties in the acquisition and retention of efficient workers is the problem of SMEs with regard to their competition with large organisations for the best human resources. More specifically, SMEs are often unable to provide for their workers substantial compensation and rewards, as opposed to more successful companies (2005).

            Furthermore, other studies have concluded that another factor that affects the SHRM in SMEs is that as compared to larger corporations who make use of bureaucratic and formalised procedures in the acquisition of human resources, SMEs have frequently handled recruitment and other HR issues informally, without enough and competent skills (2000). With this, managers of SMEs should always consider ensure that efficient SHRM is employed in his or her corporation, to assure that the individuals who work for the company are appropriately compensated. More specifically, leaders of SMEs could focus on the various factors that affect SHRM such as the relationship of the employees within the organisation, meaning the human resources experience positive relationships with other workers in the company; employee motivation, which means that the necessary and appropriate forms of compensation should be given to the employees in exchange of their efforts; and the like.

 

Structural Systems. Small and medium sized companies need to pay attention to the effective structuring of their organisations to assure that a strategic approach to their workers would be employed within the company. Effective structural systems could be generated through job design and human resource planning, and although these may entail monetary and time costs, SMEs, in the long run, would benefit from this short-term investment (2004).

            To be more specific, strategic planning of SMEs’ structural systems involves a number of procedures such as process evaluation, description and record of the traits and characteristics of jobs, as well as the specifications of the competencies needed to perform the jobs in the company. These processes are therefore some of the factors that affect the formulation of strategic human resource management methods in small and medium-sized corporations; indeed, if efficiently followed these SMEs would be able to generate work, HR planning, management, production, financial and information systems that would work together towards the efficiency of SHRM in SMEs.

 

Multinational Corporation (MNCs) in the United Kingdom: Glaxo Wellcome

            Currently, Glaxo Wellcome, a multinational corporation that also operates in the United Kingdom, undergoes a foremost review of its HR function, since it aims to assure that there is a closer fit between work roles and tasks, and HR developmental actions. However, these efforts are hindered by various obstacles, namely, it does not seem to be probably to merely embed new competencies to human resources, nor is it the case that people will consequentially offer value-adding functioning just because of training and goal setting. Because of this, Glaxo Wellcome realised that the development of the capabilities of the employees in the multinational corporation does not only entail more and better forms of training; it also presumes a more integrated point of view with regard to the connection between learning and working within a certain corporation, division, and at the individual workplace (2001).

New Competence-based SHRM Strategies. In order to bring about competence development, UK Glaxo Wellcome’s SHRM is to introduce a new method which gives emphasis on a new performance management relationship that is based on closer partnership between HRM and Human Resource Development or HRD. This SHRM method is different from the traditional association between HRM and HRD because this new partnership aims to support “people developing new styles of working and learning both as individuals and collectively (2001).

            Glaxo Wellcome enacts this through the involvement of all the human resources in the organisation, in all its levels, and as a result, the company secured top down and bottom-up commitment from internal social partners. More specifically, communication and interaction commonly occur between and among the company’s internal stakeholders. Consequently, all the employees in the company, regardless of position and status, are able to participate in major decisions within the organisation; hence they feel more involved in the company, which results to their commitment towards efficiency and productivity in the multinational corporation they work for.

 

Common PEST Factors considered by both types (MNCs and SMEs) of firms

            An evaluation of the external macro-environment wherein multi-national corporations and small and medium-sized enterprises operate in could be expressed in terms of four factors namely Political, Economic, Social, and Technological (PEST). To be more specific, MNCs and SMEs could evaluate the political environment wherein they exist, through an assessment of the concerned locations’ tax policies, employment regulations, environmental laws, trade tariffs and restrictions, and political stability (2006). For instance, if the nations wherein these organisations exist have strict policies with regard to the abovementioned, such firms would have a difficult time in terms of their internal and external functioning.

            Next, economic factors influence the purchasing power of potential patrons and consumers, as well as the organisations’ cost of capital. Specific illustrations of the factors in the macro-economy are interest rates, inflation rate, economic growth, and exchange rates (2006). More specifically, if the economy of the nations wherein such organisations exist are developed, such firms would have an easier time with regard to their operations and would consequently be more profitable and successful. Social factors that MNCs and SMEs should consider are population growth rate, career behaviours, health awareness, age distribution, and emphasis on safety. These are the cultural and demographic elements of the external macro-environment that both MNCs and SMEs should consider, because these have an effect on the needs of the consumers as well as the size of their potential markets (2006).

            Lastly, technological factors refer to automation, rate of technological change, research and development activities, and technology incentives of the countries wherein MNCs and SMEs operate in (2006). These should evidently be considered by such firms because technological factors can lessen minimum effective production levels, can lower obstacles to entry, and could affect the outsourcing judgments of both multi-national corporations and small and medium-sized enterprises.

 

Conclusion

            Effective strategic human resource management (SHRM) is vital for organisations to effectively operate in a global business environment. However, there are various external factors that affect such corporations, with regard to the appropriate generation and implementation of SHRM concepts and practices. It is therefore the responsibility of HR managers and planners to carefully scrutinize and evaluate these factors to ensure the proper generation of effective HR practices in multinational corporations as well as in small and medium sized enterprises.

            In the context of the United Kingdom’s MNCs and SMEs, it could be construed from this discourse that the integrative model of strategic human resource management is best to employ because it combines the elements of both the control-based model and the resource-based model. More specifically, due to the various external conditions that MNCs and SMEs in the United Kingdom encounter, these firms should both aim to monitor and control the productivity of their human resources, since these individuals determine the efficiency of such organisations, also concentrate on effective relations between the employees and the corporate leaders because, in the first place, for human resources to be productive with their work, their needs also have to be effectively fulfilled in the organisations they work for. Hence, as was earlier mentioned, the Integrative Model is the most fitting strategic human resource management model for both multi-national corporations and small and medium-sized enterprises.