Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 A Study of Business Strategy, Human Resource Management and Strategic Human Resource Management Ghulam Rasool Liverpool John Moores University Liverpool. United Kidngom
[email protected]
Abstract The concept of strategy has been borrowed from
engaged, attention shifts to tactics. Clauswitz has
the military and adopted for use in business. In
defined strategy as “the art of the employment of
business, as in military, strategy bridges the gap
battles as a means to gain the objects of war”
between policy and tactics. Strategy and tactics
which gives us centuries-old military origins of
together bridge the gap between ends and means.
strategy. This definition does not give us any
Strategy is defined as the art of the employment of
meaning of strategy in relation to business so B.H.
battles as a means to gain the objects of war
Liddell Hart has deleted the word “military” from
which gives us centuries-old military origins of
Clauswitz definition to make the concept of
strategy The contribution of this work is to
strategy easy for the business world. Rest of this
conduct a study of Business Strategy, Human
work has organized as follows. In section 2.
Resource Management and Srategic Human
Business strategies are presented. In section 3. An
Resource Management..
introduction Human resource management is
1.Introduction
detailed. The focus of section 4 is on strategic
The concept of strategy has been borrowed from
human resource management while conclusions
the military and adopted for use in business. In
and future work and references are covered in
business, as in military, strategy bridges the gap
section 5 and in section 6 respectively.
between policy and tactics. Strategy and tactics
2. Business Strategies
together bridge the gap between ends and means.
Steiner, G (1979) is generally considered a key
Strategy is a term that comes from the Greek
figure in the origins and development of strategic
strategia, which means “generalship.” In the
planning. He has defined strategy in the following
military, strategy means to manoeuvre the troops
ways.
into position before the enemy is actually
·Strategy is that which top management does that
engaged. In this sense, strategy refers to the
is of great importance to the organization.
development of troops. Once the enemy has been Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 ·Strategy refers to basic directional decisions, that
For these definitions Mintzberg has followed the
is, to propose and missions.
earlier writers. One of them was Kenneth
·Strategy consists of the important actions
Andrews, who defined strategy in his famous
necessary to realize these actions.
book, The Concept of Corporate Strategy.
·Strategy answers the questions: What should the
2.2. Strategy According to Kenneth Andrews:
organization be doing?
“Corporate strategy is the pattern of decisions in
·Strategy answers the question: What are the ends
a company that determines and reveals its
we seek and how should we achieve them?
objectives, purposes, or goals, produces the
Steiner definition was generally considering the
principal policies and plans for achieving these
mid point of the rise of strategy planning. The
goals, and define the rang of business the
confusion surrounding strategy contributed to the
company is to pursue, the kind of economic and
demise of strategy planning in the late 1980s. This
human organization it is or intend to be, and the
rise and fall of strategic planning brings us to
nature of the economic and non-economic
Henry Mintzberg.
contribution
2.1. Strategy According to Henry Mintzberg
shareholders,
Mintzberg, H. (1994) has pointed out in his book,
communities”
The Rise and Fall of Strategic Planning, that
Andrew’s
people use “strategy” in several different ways,
Mintzberg’s attention to pattern, plan, and
the most common being these four:
perspective. Andrew’s also draws a distinction
·Strategy is a plan, a “how” a means of getting
between “corporate strategy” which determine the
from here to there.
businesses in which a company will compete, and
·Strategy is a pattern in actions over time; for
“business strategy” which define the basis of
example, a company that regularly markets very
competition for a given business. Strategy as the
expansive products is using a “high end” strategy.
basis for competition brings us to another guru of
·Strategy is position; that is, it reflects decisions
competitive strategy, Michael Porter.
to offer particular products or services in
2.3. Strategy According to Michael Porter
particular markets.
Porter, M. (1996) has argued that competitive
·Strategy is perspective, that is, vision and
strategy is “about being different.” He adds, “It
direction.
means deliberately choosing a different set of
it
intends employees,
definition
to
make
to
customers,
obviously
its and
anticipates
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 activities to deliver a unique mix of values.” In
Entrepreneurial, Cultural, and environmental
short, Porter argues that strategy is about
schools are subtypes of the descriptive group. For
competitive position, about different yourself in
descriptive school, strategy can be anything of
the eyes of customers, about adding values
Mintzberg’s five Ps: plan, ploy, pattern, position
through a mix of activities different from those
or perspective. Configurational school argue that
used by competitors. Porter also defines strategy
strategic management can have characteristics of
as “a combination of the ends (goals) for which
all before mentioned models, depending about the
the firms are striving and the means (policies) by
current environmental situation. The different
which it is seeking to get there.” Porter has
schools of thoughts have also been explained by
explained both planning and position is his
Mintzberg and his colleagues.
strategy. This definition shows that Porter has
Mintzberg et al (1994) has mentioned ten various
embraced strategy as both plan and position.
schools of models to help in formation of a
The above definitions shows that the word of
strategy. These ten models are as follow:
strategy can be used in many ways, some time it
The Design School. Mintzberg et al (1994) say in
can be used as plan and some time it can be used
this model about the external and internal
as perspective to achieve the final targets.
environments
Mintzberg (1994) has categorized the field of
environment which is uncover, tells us about the
strategy into three separate schools:
threats and opportunities while the internal
·Perspective,
environment
·Descriptive,
weaknesses of entire businesses or Organizations.
·Configurational,
It means that Design School gives us an idea
Perspective school aims to control strategy
about the appraisal of internal and external
process through analysis. It is interested how
environments of businesses and organizations.
strategies should be formulated rather than how
The Planning School of Strategy Formation
strategies emerge. Accordingly, for them strategy
Mintzberg et al (1994) say that the message for
is a plan or a position. Design, planning and
this school is fitted with the trend in management
positioning schools share these ideas. The
education, businesses and other government
descriptive school aims to observe how strategies
practices (formal training's, formal analysis,
arise.
procedures etc). So, in this school the strategy
Learning,
power,
Cognitive,
of
is
businesses.
about
the
The
external
strengths
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
and
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 makers are developing long or short term
this school that strategy formation is depend on
planning to achieve the long or short term goals of
negotiation among various stakeholders of an
businesses and for this purpose mainly the
organization. Stakeholders are trying to influence
previous data is used.
the strategy according to their own importance.
The Position School or Model: Mintzberg et al
These stakeholders may be internal or external to
(1994) say that in this school or model strategy is
the organization.
formulated
The Cultural School. Mintzberg et al (1994) say
as
an
analytical
process.
Carphonewarehouse strategy is a clear example of
that
position school. Carphonewarehouse has changed
organization. In this school strategy formation
their strategy and started free broadband to their
will be depend on the culture of organizations.
customers with mobile phones.
The Environmental School. In response to the
The Enterpreneurial School. Mintzberg et al
changes environment every organization makes
(1994) say in this school that strategy is based on
their strategy. These changes may be PESTLE
the personal view, vision, thinking and concept
(Political,
which comes in someone or leader mind.
Technological, Legal and Environmental) or
Cognitive School. During the formation of
SWOT (Strength, Weaknesses, opportunities,
strategy, people or leaders are mainly relying on
Threats) or some other. Mintzberg et al (1998) say
their practical experience. Mintzberg et al (1998)
in this school that strategy will be formed in
has said in this school that their experience is
reaction to the environment.
shaping their strategy.
Finally we can say that the above ten schools or
The Learning School. Mintzberg et al (1994) have
models are playing a vital role in strategy
quoted the statement of Herbert Simon (famous
formation for different situation.
political scientist) that “the world is large and
Bratton (2003) said that resources (Financial,
complex,
Human or Natural) are also very important for
while
human
brain
and
their
culture
is
very
important
Economical,
for
every
Sociocultural,
information processing capabilities are highly
making and developing a strategy.
limited in comparison”. In this school the strategy
Strategy of a firm is mainly depends on the
has been designed in small steps and the next step
resources. For example if a firm have ten sales
has been taken on experience of the previous step.
men and five of them have cars and five do not
The Power School. Mintzberg et al (1994) say in
have cars then the five will perform well for the
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 company as compare to the other five sales men,
Salaman (1995) said that various types of
but if the company provide cars to the rest of the
activities have been developed to provide
five sales men then the management know that
competitive advantage to organizations. These
the firm have more resources and the out put will
activities are JIT (Just in time) which aim to
be better now. Similarly if the firm has ten sales
produce right material or products with the
men then the firm will have one strategy for
necessary quality and right quantity at the
operation but if the firm have twenty sales men
appropriate time. TQC (cellular working and total
then the firm will have another strategy for
quality control) is another activity associated with
operation.
Resource
JIT. Cellular working group combines processes
Management will have the same affect on a firm
and mechanics to with a multi-skilled work force
strategy as other resources. In the past Human
to enhance flexibility.
Resource Management was not regarded an
In the same time employees management also got
important part but now it is an important part for
very importance particularly in the west as they
many companies in the development of their
observed the Japanese organizations. Japanese
business strategies. Human Resources become
industries developed very fast and it was a threat
very important for firms and organizations if they
for west. Writes and researchers in the west found
are skilful e.g. call centres, software houses and
that employees are one of the main assets in
they are making their strategies according to the
Japanese industry. To follow the Japanese
skills of their human resources.
example the west has developed their personnel
3. History of Human Resource Management
department which was later on converted to
Now a day’s the business environment is totally
human resource management.
different from the old traditional style. The main
3.1.
reason for this change is market competition
Management
because the business environment is getting more
Generally
competitive with the passage of time. In order to
management of an organization’s workforce. Most
address this type of competitive environment
definitions of HRM include normative elements
practioners and researchers have start thinking
which states that HRM is concerned with
about
organizational
activities that are undertaken to achieve specific
development with various aspects. Mabey and
goals. For example, according to Boselie (2002)
the
Therefore
improvement
Human
of
Definition speaking
of
Human HRM
is
Resource about
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
the
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 “Human
resource
management
involves
only to the extent that they influence employee
management decisions related to policies and
and organizational performance.
practices which together shape the employment
Human Resources are also a very important
relationship
achieving
source to generate and sustained competitive
individual, organizational, and social goals.”
advantage. According to Lado and Wilson (1994)
Schermerhom (2001) has defined HRM in the
“ human resource systems can contribute to
following way.
sustain competitive advantage through facilitating
“Process
and
of
are
aimed
attracting,
at
developing
and
the development of competencies that are firm-
maintaining s talented and energetic workforce to
specific
and
generate
tacit
organizational
support organizational mission, objectives, and
knowledge.” Maintaining a competitive advantage
strategies”
require the human resources to stay competitive
The main objective of HRM is to organize and
as Koch and McGrath (1996) argued that “ certain
utilize the functions of personal management
human resource strategies-namely, the accurate
(selection, appraisal, reward and development) in
projection
such a way, that there impact on organizational
identification of individuals best suited to meet
performance is maximized. Boselie (2002) stated
organizational objectives, and the development of
that the success of HRM practices depends on the
employees
horizontal and vertical fit of an organization’s
associated with superior workforce performance.”
HRM. Horizontal fit refers to the necessary
To explain the behavioural perspective of HRM
integration of individual HRM practices, while
Naylor et al (1980) said that it focuses on the use
vertical fit implicates the necessary match
of personnel practices as tools for shaping
between human resource policy as a whole and
patterns of behaviour that help to achieve
the organizational strategy.
organizational goals and objectives. Snell (1992)
According to Michigan approach, HRM should
said that different goals and objectives require
only
maximising
different strategies and behaviours, and therefore
organizational goals. Storey (1992) said that
different HRM practices. Huselid (1995) said that
employees are resources that should be managed
Naylor and Snell approaches lead to focus on an
in an efficient and effective way. Motivation and
external fit, resulting in contingency theory of
well-being of employees may be relevant, but
HRM e.g. size, technology, ownership, sector and
be
concerned
with
of
are
human
expected
capital
to
needs,
be
the
positively
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 location.
organizational success.
Some people believe that HRM and personnel
3Personnel/HRM firmly in line management.
management are same things but there are some
According to the later definitions, HRM is only
differences between these two terms. Storey
concerned with organizational goals, while the
(1992) has compared HRM and Personnel
former definitions explicitly individual and social
Management theories on four dimensions: beliefs
goals as well. These differences reflect different
and
line
normative views regarding the objectives of
management and key levers. Within these four
HRM. These definitional differences actually refer
dimensions, 27 different items were distinguished
to discussions on two different levels. The first
on which HRM and Personnel Management
discussion primarily takes place at the level of
theories were compared. He concluded that HRM
individual firms. Here, the stakeholders of each
theories are more customers oriented, more
firm determine to which extent the goals of the
central to the corporate plan and focus on a wider
HRM policy includes only organizational goals,
range of employment relationship related issues
or explicitly includes the interests of other
such as managing climate and culture. But on the
stakeholders as well. The second discussion takes
other hand Leggs (1995) has a different idea about
place at a scientific level, where researchers
HRM and Personnel Management. He compares
examine the choices that are made by individual
the normative models of HRM and Personnel
organizations and the consequences of those
Management and concluded that both have much
choices.
in common, since both:
4. Strategic Human Resource Management
·Stress the importance of integrating personnel/
As earlier said that the Japanese industrial growth
HRM practices with organizational goals.
has surprised the West and America with all
1Identify assigning the right people to the right
aspects, production, quality and revenue etc, so
jobs as an important means of integrating
their researchers have started to find out the secret
personnel/HRM
of their business growth. They found that the
assumptions,
strategic
practice
with
aspects,
organizational
secret of their growth is human resource
goals. individuals
management. A Japanese industrialist addressed
development their abilities for their own personal
the business community of West in U.S.A in 1978
satisfaction to make their best contribution to
and said that “We are going to win and the
2Emphasis
the
importance
of
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 industrialize west is going to lose… the reason for
human
your failure is within yourselves. Your bosses
organizational
doing the thinking and workers wield the
capacity to foster desired employee behaviors.
screwdrivers. You are convinced deep down that
Despite of this appeal behavior approach has only
this is the right way to do business. For you the
rarely been employed. Si it means that there are
essence of management is getting the idea out of
still an opportunity to develop SHRM model by
the heads of bosses and into the hands of labours”
using behavioral approach.
Storey et al (1998). This speech had a great affect
SHRM has a key role in enhancing organizational
and to follow the Japanese industries West has
effectiveness,
started to structure a plan for their work force
performance and achieving the firms objectives
management. So in this way they have integrated
but
human resource management with their business
series challenges. These challenges are: (1)
strategies. The integration idea has opened
frequent
another chapter in the business of west which we
management
now call strategic human resource management.
independencies among subsidiaries, (3) increased
Erickson & Dyer (2004) argued that strategic
uncertainty about
sustainability of
network
human
flexibility
efficiency,
possible
resource
management
(SHRM)
is
resource
strategy
performance
maximizing
contributes depends
on
to its
organizational
on global level SHRM still facing some ambiguity
about
authority,
and
human (2)
(4)
resource multiple
concerned with the contributions human resource
discontinuities in security top level support for
strategies make to organizational effectiveness,
changes in human resource management systems,
and the way in which these contributions are
and (5) difficulties in acquiring the multiplicity of
achieved. To maximize the firm performance
skills and competencies required for effective
Dyer & Holder (1988) said that human resource
global SHRM in knowledge sharing.
management together with strategy can maximize
4.1 Definition of Strategic Human Resource
the
Management
firm
performance.
Organizational
effectiveness is also very important. Huselid
Much more work has been done on human
(1998) have argued that SHRM enhances
resource management field to enhance its
organizational
of
effectiveness in organizations. However Butler et
organizational goals, work system, or context.
al (1991) said that more recently, writers have
Many writers suggest that the extent to which
begun to approach the area of HRM from a much
effectiveness
regardless
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 more macro-orientation-that is called SHRM. For
process
example, Schuler and Walker (1990) noted that
horizontally, it emphasizes the coordination
human resource strategy referred to a short term
among the various human resource management
focus on businesses and defined it as “a set of
practices.
processes and activities jointly shared by human
5. Conclusion and Future Work
resources and line managers to solve people
The contribution of this work is to present a
related
(1989)
detailed critical overview of business and human
suggested that SHRM is concerned with ensuring
resource management stratgies. SHRM and
that “human resource management is fully
business strategies is very useful for the growth
integrated into strategic planning; that HRM
and
policies cohere both across policies areas and
Researchers are trying to integrate HRM and
across hierarchies and that HRM practices are
business strategy. This integration is depending on
accepted and used by line managers as part of
the level, size and standard of organizations. But
their everyday work”. The best definition of
what are different levels, sizes and standards of
SHRM came from Schuler (1992) who stated that
organization in which this integration occurs. For
“all those activities affecting the behaviour of
this reason we can study the following models or
individuals in their efforts to formulate and
schools to get an idea how SHRM and business
implement the strategic needs of the business”.
strategies are integrating in different organizations
In other words, we can say that SHRM is a macro-
to achieve their goals. In future we intend to
organizational approach to view the role and
contribute our research findings with the ongoing
function of HRM in the large organization.
research in this area.
McMahan and Wright (1992) has defined SHRM
6. References
as the pattern of planned human resource
·Boselie, P., Paauwe, J. and Jansen, P.G.W.
deployments and activities intended to enable an
(2001)
organization to achieve its goals. This definition
performance: lessons from the Netherlands, The
highlights
International
business
two
problems”.
important
Guest
dimensions
that
distinguish it from traditional HRM. First, vertically, it makes the link of human resource management practices with strategic management
of
the
development
Human
organization.
of
many
resource
Journal
of
Secondly,
organizations.
management Human
and
Resource
Management, 7(12) 1107-1125. ·Bratton, J., and Gold, J. (2003) Human Resource Management: Theory and Practice, 3rd edition,
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017 Hampshire: Palgrave Macmillan
A theory of behavior in organisation, NY:
·Erickson & Dyer (2004),Right from the Start:
Academic Press.
Exploring the Effects of Early Team Events on
·Porter,
Subsequent Project Team Development and
Techniques
Performance,Administrative Science Quarterly,
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·Schermerhom (2001), Management
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(1996) for
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analysing
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industries
and
·Schuler, R. 1992. Strategic Human Resources Management: Linking the People with Strategic Needs of Business, Organizational Dynamics 21(1): 18–32. doi:10.1016/0090-2616(92)90083-
·Koch, M. J. and McGrath, R. G. (1996).
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·Schuler, R. S.; Walker, J. W. 1990. Human
management
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·Lado, A. A. and Wilson, M. C. (1994). Human resource systems and sustained competitive advantage: A competency-based
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Academy of Management Review, 19: 699-727 ·Mintzberg, H. (1994),Mintzberg, H (1994) The rise and Fall of Strategic Planning, Englewood Cliffs, N. J: Prentice-Hall Mabey, C. and Salaman, G. (1995) Strategic Human Resource Management Oxford: Blackwell Business ·Naylor J., Pritchard R. D. and Ilgen D. R.(1980)
·Steiner, G (1979),Strategic Planning: What Every Manager Must Know ·Storey,
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Journal of Computing and Management Studies(JCMS) Issue 2. Volume 1. May 2017
