Best Ways to develop organizational HR strategies

Strategic HRM

Strategic human resource management can be defined as ‘the process of linking the human resource function with the strategic objectives of the organization in order to improve performance’ (Bratton, n.d.). According to the definition of Cambridge dictionary, strategy is the path for achieving success in various situations. Strategy addressed longer term goals of a business and how these goals are achieved. Good strategy should have the ability to achieve from where we are now to where should we want to go over a period (Armstrong, 2006)

Various approaches to development of organizational HR strategies were introduced in various times.

01.  Delery and Dotty (1996) the universalistic, the contingency and the configurational approach

02.  Richardson and Thompson (1999) best practice and best fit approach

(Armstrong, 2006)

The Universalistic, the contingency and the configurational approach

Universalistic Approach

This approach implies that use of specific HR practices will always have greater organizational performance.  As the name implies these approaches is universal across all the organizations. Identifying good strategic HR practices and implementing them to individual organizational performance are the two key steps of introducing this approach (E.Delery & Dotty, 1996). This approach can be applied to wide range of common HR issues in an organization such as employee recruitment, employee motivation, performance evaluation regardless of the nature of the business that organization have (Dudovskiy, 2013).

Following are some examples for using universalistic approach to develop HR strategies (E.Delery & Dotty, 1996).

01.  Use of Internal labor markets: The organization has the control of recruiting within the organization or outside from the organization

02.  Training System: Organizations needs to provide formal training programs for employees or can hire skilled trained employees to the organization

03.  Performance evaluation: Behavior bases appraisals and result oriented appraisals can be used measure the individual job performance

04.  Profit sharing plan

05.  Employment security: Organizational shall establish polices to provide job security of employees

06.  Voice Mechanisms: Organization shall provide formal grievance system to the employees

All these are standard HR strategies which can be used for all organizations irrespective the nature of their business as described in this universalistic approach (E.Delery & Dotty, 1996).

Contingency Approach

In this approach, the use of strategic HR approaches and for organizational performance can be vary depending on the organization’s culture and strategy. Using of good HR strategies according to the individual organization culture will ensure higher organizational performance (E.Delery & Dotty, 1996). According to this approach, if HR strategies are not aligned with business strategies, it will create uncertainty and confusion with in the organization which will ultimately resulting the decreasing of organizational performance (Schuler, 1989). In this approach, employees’ behavior should be aligned with the organizational strategy. Good HR practices can be implemented to improve employees’ ability and motivation to develop employees’ behavior, which will be aligned with organizational strategy resulting high organizational performance (E.Delery & Dotty, 1996). ‘The relationship between human resource practices and financial performance will be contingent on an organization’s strategy’ (E.Delery & Dotty, 1996).

Configurational approach

This approach combines both horizontal (internal) and vertical (external) factors which can be used to have high organizational performance. HR Practices with this approach will have higher level of performance and will fit more into the organizational strategy (Richarson & Thomson, 1999). Rather than adopting universalistic and contingency approach, this will have more performance to the organization since it will have synergistic effects of good HR practices (E.Delery & Dotty, 1996).

The best Practice and the best fit approach

Best practice approach

Richarson & Thomson (1999) redefined the above described the ‘universalistic’, the ‘contingency’ and the ‘configurational’ approaches as ‘best practice’, ‘best fit’ and ‘bundles’.  Same as the universalistic model, the best practice has set of predefined HR practices. Also, it assumes that incorporating these HR practices will have higher organizational performance (Armstrong, 2006).

There are various good HR practices as given below.

Table 1: Best HRM Practices

Guest (1999)	Birdi, et al., (2008)	Pfeffer (1994)	US Department of Labor (1993)
Selection and the careful use of selection tests to identify those with potential to make a contribution. Training and in particular a recognition that training is an ongoing activity. Job design to ensure flexibility, commitment and motivation, including steps to ensure that employees have the responsibility and autonomy fully to use their knowledge and skills. Communication to ensure that a two-way process keeps everyone fully informed. Employee share ownership programmes to increase employees’ awareness of the implications of their actions for the financial performance of the firm.	Sophisticated selection and recruitment processes. Sophisticated induction programmes. Sophisticated training. Coherent appraisal systems. Flexibility of workforce skills. Job variety on shop floor. Use of formal teams. Frequent and comprehensive communication to workforce. Use of quality improvement teams. Harmonized terms and conditions. Basic pay higher than competition. Use of incentive schemes.	Employment security. Selective hiring. Self-managed teams. High compensation contingent on performance. Training to provide a skilled and motivated workforce. Reduction of status differentials. Sharing information.	Careful and extensive systems for recruitment, selection and training. Formal systems for sharing information with employees. Clear job design. High-level participation processes. Monitoring of attitudes. Performance appraisals. Properly functioning grievance procedures. Promotion and compensation schemes that provide for the recognition and reward of high performing employees.

 (Source: Armstrong, 2006)

Best fit approach

This approach ‘argues that firms must adapt their HR strategies to other elements of the firm’s strategy and to its wider environment. What constitutes a good HR strategy will depend on the specific context’ (Boxall & Purcell, 2011). A strategy that work well in one organization will not work well in other organizations. It depends on the organization culture. Companies which have different organizational cultures will have to work on different HR strategies. Hence it is important to understand that ‘best fit’ model is more useful than ‘best practice’ approach. The best approach is to pick up several ‘best practices’ and develop a method to convert it to align with organizational goals and strategies. This will ultimately result in better organizational performance among other competitors (Armstrong, 2006).

Some of the examples of using ‘best fit’ and ‘best practice’ models for HR strategies are described in the below.

Example 1: Work life balance at Brigham and Women’s Hospital

This hospital is a teaching affiliate of Harvard Medical School. The company follows its unique ‘best fit’ approach to provide work life balance for their employees. HR facilitates childcare for working mothers and fathers. Nursing Home placement, home health services, Funding for employees whose income below a certain level are some of the facilities they provide to eliminates employee’s’ stress and achieve higher organizational performance (HumanResourcesMBAStaff, 2015).

Example 2: Recruitment method and training and development at Rolls-Royce Company

As a world leading manufacturer of prestigious automobiles, the company has unique way of providing quality training for employees and providing internships for apprentices. One third of senior manager of the company, started at trainee-level with the company. The company values the importance of providing training for their employees. Most of the new comers of the company will remain there, until the end of their carrier due to this ‘best fit’ approaches resulting low labor turnover and high organizational performance (HumanResourcesMBAStaff, 2015).

Example 3: Team work and employee engagement at LinkedIN Company

As a world-famous employee oriented professional networking company, LinkedIN uses its unique HR strategies for employee engagement and team work. The HR team of the company is busy hosting company parties to recognize hard working and dedicated employees of the company. Also, there is more room for innovation. These HR strategies helps to have high employee retention with less than 8% labor turn over and recognized as one of the best places to work by several HR institutions (HumanResourcesMBAStaff, 2015).

As we concluded there are various type of approaches which help to develop good HR strategies. It is hard to define universal ‘best practices’ which will work on all organizations. The best way is to create an approach that will work well within the organization by aligning with organizational culture (Purcell, 2004)

References

Armstrong, M., 2006. Strategic Human Reource Mangement A Guide To Action. 3 ed. s.l.:Kogan Page LTD.

Birdi, K. et al., 2008. THE IMPACT OF HUMAN RESOURCE AND OPERATIONAL MANAGEMENT PRACTICES ON COMPANY PRODUCTIVITY. [Online]
Available at: http://www.emits.group.shef.ac.uk/blog/wp-content/uploads/2009/05/birdi-et-al-2008-published-personnel-psychology-management-practices.pdf
[Accessed 10 05 2020].

Boxall, P. & Purcell, J., 2011. Strategy and Human Resource Management. 3 rd ed. s.l.:Palgrave Macmillan.

Bratton, J., n.d. Strategic Human Resouce Management. [Online]
Available at: https://www.otaru-uc.ac.jp/~js/downloads/SP2005-PDF/SP2005-Chapter2SHRM.pdf
[Accessed 28 April 2020].

Dudovskiy, J., 2013. Approaches to SHRM. [Online]
Available at: https://research-methodology.net/approaches-to-shrm/
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E.Delery, J. & Dotty, D. H., 1996. Modes of Theorizing in Strategic Human Resource Management: Tsets of Universalistic, Contigency and Configurational Performance Predictions. Academy of Management Journel, Volume 39, pp. 802-835.

Guest, D., 1999. Human Resource Management- the workers' verdict. Human Resource Management Journel.

HumanResourcesMBAStaff, 2015. The World’s 30 Most Innovative Corporate Human Resources Departments. [Online]
Available at: https://www.humanresourcesmba.net/worlds-30-innovative-corporate-human-resources-departments/
[Accessed 10 05 2020].

Pfeffer, J., 1994. Competitive advantage through people: unleashing the power of the work force. s.l.:Harvard Business School Press.

Purcell, J., 2004. Business Strategies and human resource management: Uneasy bedfellows or strategic partners. [Online]
Available at: https://www.researchgate.net/publication/228935681_Business_strategies_and_human_resource_management_Uneasy_bedfellows_or_strategic_partners
[Accessed 10 May 2020].

Richarson, R. & Thomson, M., 1999. The impact of People Management Practices on Business Performance: A Literature Reviw. [Online]
Available at: https://www.researchgate.net/publication/240314661_The_Impact_of_People_Management_Practices_on_Business_Performance_A_Literature_Review
[Accessed 10 05 2020].

Schuler, R. S., 1989. Strategic Human Resouce Management and Industrial Relations. SAGE journals, 42(2), pp. 157-184.