1) Introduction Many organizations consider employees and people are the most important asset to the company. However, the policies, procedures and managerial practices they deploy are contradicting to that view. This will have tremendous impact on employees’ commitment to organization and subsequently influence their motivation, productivity and performance in the organization. Therefore, understanding people management is important for an organization to accomplish its mission, vision and goal. Effective human resource management and implementation that aligns both employee and business needs is critical in achieving high performance organization. For example, one of key pillar of Siemen’s business strategy how the organization manages, develops and motivates its employees. Siemen believes people are like innovation and technology, which is an important source of company competitive advantage (Siemen, The Times 100, 2007). Strategic human resources management (SHRM) is to integrate and align organization’s business strategy with human resources (HR) management system (Miles and Snow 1984) i.e. to adapt, adjust HR practices and policies across levels in organization to effectively utilise human resources to achieve organization’s goals (Wright and McMahan 1992; Schuler R 1992). HR policies and practices must be well fitted with business strategy to
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Transcript
1) Introduction
Many organizations consider employees and people are the most important
asset to the company. However, the policies, procedures and managerial
practices they deploy are contradicting to that view. This will have tremendous
impact on employees’ commitment to organization and subsequently
influence their motivation, productivity and performance in the organization.
Therefore, understanding people management is important for an
organization to accomplish its mission, vision and goal. Effective human
resource management and implementation that aligns both employee and
business needs is critical in achieving high performance organization. For
example, one of key pillar of Siemen’s business strategy how the organization
manages, develops and motivates its employees. Siemen believes people are
like innovation and technology, which is an important source of company
competitive advantage (Siemen, The Times 100, 2007).
Strategic human resources management (SHRM) is to integrate and align
organization’s business strategy with human resources (HR) management
system (Miles and Snow 1984) i.e. to adapt, adjust HR practices and policies
across levels in organization to effectively utilise human resources to achieve
organization’s goals (Wright and McMahan 1992; Schuler R 1992). HR
policies and practices must be well fitted with business strategy to improve
business performance (Michie and Sheehan 2005). HR scholars recognized
that organizations’ performance would be enhanced if the HR practices and
policies are set and matched with company’s vision, mission and business
objectives (Lengnick-Hall, M.L. et. al 2009).
Today’s dynamic and complex business environment signifies the need for an
organization to constantly evaluate their environment both internal and
external for challenges and opportunities, so that they can stay relevant with
competitive business strategy for sustainable growth (Ramlall 2003). This is
especially important when an organization is going through stage of defining
(or redefining) its strategic business needs. Business strategy is a plan of
action designed to achieve competitive advantage in market position (product,
price or technical leadership, margin/profitability, contraction or expansion
etc.) that allows it to deliver superior value to customers and achieve superior
relationships with suppliers and distributors. All these can only be achieved
through an effective management of people. Today, practically all business
issues involved people and all human resource issues impact on business
(Walker, JW. 1994). Figure 1 showed the linking strategic business needs and
strategic HRM activities (Schuler 1992) while Table 1 showed deployment of
different HR strategies (policies & practices) with different business strategies.
Figure 1 : Linking strategic business needs and strategic HRM activities
Table 1 : Summary of different organization’s strategy and its HR policies and
practices
2) The interaction between HRM policies and business
strategies
Effective HRM policies are important in supporting business strategies (Figure
2). Many empirical studies have proven that HR practices and policies play a
pivotal role in supporting business strategies hence realizing business
objectives (Takeuchi, N. 2009; Sanz-Valle et al 1999; Wang et al 2001; Yeung
and Bernma 1997; Pfeffer 1994). HR is needed to identify the type of skills
and knowledge the employees need to carry out business strategy.
Successful companies like 3M, Motorola and AT&T designed human resource
strategy to help implement business strategy (Seibert et al 1995; Plevel et al
1994).
Figure 2. Conceptual Framework of studying SHRM (Wright & McMahan
1992)
HR policies provide guidelines for action on people-related business issues
and HR programs and practices based on strategic needs (Schuler 1992). HR
policies involve staff selection, recruitment and other staffing actions to make
sure it matches available resources with required capabilities to enable
strategic business implementation (Walker, JW. 1994). This will subsequently
lead to deciding types of training, development, education, job-related-
learning, performance management system and remuneration that are
required amongst individuals to help organization become more effective