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SEA - Practical Application of ScienceVolume I, Issue 1 (1), 2013

182

tefan MATEIDoctoral School of Economics and Business Administration,

Alexandru Ioan Cuza University, Iasi

.

CONCEPTUAL CLARIFICATION OFSTRATEGIC HUMAN RESOURCE

MANAGEMENT AND THE WAY IT ISIMPLEMENTED

KeywordsManagement

StrategyHuman resource planning

Strategic thinkingBusiness

JEL ClassificationM31, M37

Abstract

Strategic human resource management issue is treated by many authors, following thispaper we will try to clarify, to emphasize the role of this concept and how it should beimplemented in domestic comapniile. Defining the concept of strategic human resourcemanagement, requires perfect understanding of human resource management, the conceptreferring to the philosophies, policies, procedures and practices related with people managementin an organization. The main purpose of human resource management is to add value not only tothe process of obtaining, but also to the products and services themselves, together withincreasing the level of work quality and creating a better standard of living for the employees.

The human resources can be considered economical resources and thus a strategygenerating costs opprotunities is required. Even though it is very relevant for the huumanresources positions, the HR departments do not welcome the concept of cost opportunityprobably because the individuals in managing positions consider themselves working with peopleand not with money or maybe they are specialists regarding the job positions related to thepersonnel and not regarding the decisions with direct impact on the business. The actual realityproves that the human resource faults can largely generate cost opportunities within acompany.


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CONCEPT OVERVIEW

In order to define the concept of strategic humanresource management, we must fully understandhuman resource management, a concept whichrefers to the philosophies, politics, proceduresand practices related with the management ofpeople in an organization. This concept is vastand includes several factors, such as strategies,decisions, actions, functions and methods, withthe main purpose to contribute effectively to themanagement of people in an organization. Overthe years, many authors have developed variousdefinitions, complementary to the concept ofhuman resource management. For example,Michael Armstrong defines strategic humanresource management as a strategic approach togain, develop, motivate and get the commitmentof the most valuable asset in a company thepeople working for it1. Also, John Storeyimplies that human resource management is adistinctive approach to employmentmanagement which seeks to achieve competitiveadvantage through the strategic deployment of ahighly committed and capable workforce, usingan integrated array of Cultural, structural andpersonal techniques2.

Analysis of these definitions willconclude that strategic human resourcemanagement is much more than just a set ofpractices, and it cannot be localized just atorganization level, but throughout the entirestrategic and decisional process of theorganization.

The concept of human resourcemanagement has gained the attention of severaltheorists and practitioners over the last century,especially during the last decades, beingsubjected to extensive development, as follows:

1917-1918: the first personnel department iscreated, to cope with the job market, riots, lossesand employee inefficiency;

1920: the concept of human resource isused to gain the cooperation of employees, bycommitment from the company to offer safe jobsand benefits;

1 Analoui Farhad, Strategic Human ResourceManagement, 2007, Thomson learning, pag. 32 Analoui Farhad, Strategic Human ResourceManagement, 2007, Thomson learning, pag. 4

1930-1950: human relations discover thatthere are psychological and social factors whichinfluence the satisfaction, cooperation andperformance of employees;

1960: it is found that work projection ismuch more efficient in increasing the motivationof employees than communication andcooperation. Small groups start working moreefficiently, thus creating a competitive advantagefor the company;

1970: the development of QWL quality ofwork life emphasizing the values of humanresources;

1990 present: Total Quality Management(TQM) is born. Great focus is given to strategiesrelated to human resource management bytracking the degree of involvement andcommitment of employees and innovativeworking practices.The strategic management of human resourcesfocuses on the decisions which have a major andlong lasting effect on employees and theconnection between the management of theorganization and human resources. The mainpurpose of human resource management iscapitalization of the style, structure, quality,devotion and motivation of employees in orderto achieve the set objectives.

In order to be applied successfully ineveryday practice of companies, human resourcemanagement requires strategic integration,coherent and consistent development of a set ofpolicies regarding the employment and gainingthe devotion of the employees. Moreover,decisions with a high degree of efficiency mustbe adopted, requiring competency at allmanagerial levels.3 Thus, we can identify twodistinctive traits of human resourcemanagement:

1. The capacity to think strategically and tohave a clear perspective on the strategicdirection that needs to be followed.

2. Strategic integration and organizationalability to integrate the issues of humanresource management in strategic plansand to ensure the coherence of all

3 Cristina Maria Stoica, Managementul strategic alresurselor umane. Teorie i practic, 2004, Junimea,Iai, pag. 22


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aspects relating to human resourcemanagement.

Peter Drucker considers that the function ofhuman resources has become operational by itscooperation with hierarchy, regarding theconception of jobs, selection, planning. Hismission changes with the new conditions:instead of looking for the lowest price in humanresources, he will have to gain the optimumeffectiveness, because the work of humanresources is now differentiated and specialized.4The function of human resources can beconsidered strategic if it follows provisions like5:

- It contributes to the elaboration andapplication of strategy;

- General management takes intoconsideration the cost of this function inrespect to the gain and the quantity andquality risks the organization is exposingto.

- Human resources manage the resourcesin tight connection with the globalstrategy of the organization.

- There is a shift from the status ofexpense to the concept of strategicvariable.

Planning and strategic thinking in humanresource management

Many of the concepts and techniques forstrategic management have been developed andsuccessfully applied within many companies. Asmanagers are trying to manage better and to facethe changes in economical climate, a companydevelops over four phases of strategic actionsand management. These phases consist of basicfinancial planning, prognosis-based planning,external environment oriented planning andstrategic management. Moreover, strategicmanagement consists of four basic elementswhich ensure a structured format forexamination of company strategies 6: scanning

4 P. Drucker, Good bye to Old Personnel, in WallStreet Journal, 26 mai, 1986, p.165 Cristina Maria Stoica, Managementul strategic alresurselor umane. Teorie i practic, 2004, Junimea,Iai, p . 256 Analoui Farhad, Strategic Human ResourceManagement, 2007, Thomson learning, pag. 35

the business environment, strategy formulation,strategy implementation, evaluation and control.

STRATEGIES AND ACTIVITYDOMAINS OF THE STRATEGICHUMAN RESOURCESMANAGEMENT

Human resources recruitment and selectionstrategiesThe recruitment of personnel involves searching,localization, identification and attraction of thecandidates most suitable for the requirements ofthe society. This process can be complicated andinvolves large resource consumption, especiallyif the process is not performed under adequateconditions and must be repeated. If therecruitment procedures prove to be inefficient,the fluctuation rate is high and this leads to timeand energy losses and raised administrativecosts. The recruitment strategies shouldconcentrate on the commitment and flexibility ofthe possible employees, identifying the mostfitted recruitment methods in order to attract thebest candidates.The commitment and flexibility are the mostimportant features of the competitive advantage.Therefore, depending on the location of therecruitment process, two different process typescan be identified:

in-house recruiting involvesreassignment of employees for other positions.The benefits of this method are based on the factthat the employees are aware of theorganizations strengths and weaknesses and themanagers already know the candidates. Thismethod can reduce staff fluctuation because themain effect is the raise of employees motivationand satisfaction. The issues that may occur whileusing this method are related to the transparencyand equity of the advancement process.

external recruiting involvesidentification, localization and attraction of thecandidates outside the organization. This methodoffers the advantage of a wide range ofcandidates that can bring new perspectives to theorganization. The weaknesses of the method arerelated to the level of difficulty in attracting,contracting and evaluating the possibleemployees. This is why different recruitment


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procedures have been developed in practice:unscheduled submitting of resumes, employeereferences, promotion, networking, professionalassociations, educational and professionalagencies, recruitment via internet or due toverbally transmitted information.

The strategy of recruiting and selecting acertain person for a specific position is appliedwhen an employee leaves the current job(relocation, promotion, retirement) or whenadditional duties must be fulfilled due to thecompanys activity development orreorganization for obtaining a competitiveadvantage. The Labour marketing research of themost suitable candidate in order to fulfil theadditional responsibilities starts with an analysisof the job description, the required level ofqualification, remuneration and the hiringperiod.The human resource field literature identifieseleven stages necessary for the implementationof the personnel recruitment.The recruitment requirement is issued by thecompany manager or the head of the department(depending on the company), and is mostfrequently necessary because of some additionalduties or when an employee leaves the job due torelocation, retirement, termination ofemployment, promotion, etc. This stage of therecruitment strategy considers the following:

qualification, professional experienceand required seniority for the openposition

the due date for hiring a candidate required skills: driving license, PC

knowledge, foreign languages, etc. remuneration: salary, gratification and

social advantages.The recruitment opportunity analysis identifiespossible solutions to raise labour productivity,and generally the wages funds, the possibilitiesrelated to salary payment, the increasing effects,and the long-term impact of the recruitmentdecision are analyzed.The job description indicates the requirementsand criteria of the recruitment process. Thisstage provides analysis of the jobs, level ofstudies and experience.Internal prospecting represents the strategy toattract and identify candidates to fill jobvacancies. This strategy is usually applied for the

management positions as the recruitment andselection can be more difficult when searchingexternal sources. The employees are offeredequal opportunities to be advanced byconfirming their skills and knowledge acquiredwithin organization. One of the advantages ofinternal sourcing is the fact the employees areacquainted with the internal and externalenvironment.External prospecting is the strategy of recruitingand selecting candidates outside the companyinvolving different methods: advertising, usingappropriate media, job shops, online recruitment,etc.Screening and selection of candidates. Thestrategy applies by screening the resumessubmitted by the candidates, their coveringletters and recommendations which consist thebasis of the interview.The interviews and questionnaires representanother stage of personnel recruitment andselection implementation.The actual selection includes a number of stepsand considers the performance assessments ofthe aptitude and psychological testing.Testing professional knowledge represents thefinal stage of the recruitment and selectionprocess. This stage involves the testing of theknowledge acquired due to their experiencewithin other companies.The Appointment letter represents the final stage.The organization manager and the personresponsible for human resources section assessthe strengths and weaknesses of the lastcandidates. The decision is made due to animpartial analysis of the aptitude, knowledge andskills testing results.Onboarding is the term which describes the newemployee integration, is the final stage of therecruitment and selection strategy and is veryimportant in fulfilling the companys futuregoals. There are two stages that provide fullintegration of the new employee:

1. the new employee becomes acquaintedwith the companys organizational andactivity regulation, internal regulationpolicy, and occupational safety norms,visits the company and is introducedto the specific domain of activity andadministrative procedures;


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2. the new employee is integrated in thedepartment, is informed on the dutiesand responsibilities to be fulfilled andon the status of collaboration orsubordination relations (where needmay be).

Strategies for human resource developmentThe human resource development of a companyis closely related to the gratification process. Thedevelopment implies enhancing the performancelevel which creates the basis of the internalmarket and becomes the force that drives thelearning process within the organization. Themain target of the human resource strategicdevelopment is to increase the companyscapacity of benefits resulted due to its resources the human capital which is a major source forcompetitive advantages.The specific goals of the strategy involve thedevelopment of the intellectual capacity and thesupport of the organizational learning byproviding an adequate environment forindividual or team learning and due to a systemof knowledge management. This strategy isapplied in order to provide the individuals mostsuitable for the companys short-term, mid-termand long-term requirements. The personnelprofessional development is very important bothfor the employees and for the companyefficiency level.

Garavan has identified three theoreticalperspectives on the human resourcedevelopment7:

the perspective of human resourcedevelopment based on competences atheoretical economical perspective upon thehuman capital as a basis for reaching theorganizations goals;

the psychological contract perspective it concentrates on the relation betweenthe employer and the employeeaccording to the contract terms;

the perspective of the collective learningor of the organizations that teaches itconsiders the organization as an entitygenerating, improving and managing the

7 Prof. dr. Ioan CIOBANU, Asist. dr. RuxandraCIULU, Managementul Strategic al resurselorumane, Suport de curs, 2009-2010, pg. 45

knowledge otherwise than the traditionalperspective based on individual learning.At macroeconomic level, the human resource

development is related to investments and resultswithin the educational, health and populationsectors of the society assembly. Atmicroeconomic level the focus is on theorganizational activities that manage theimprovement of the employees qualificationsand competences, continuously motivatingindividuals to develop their potential and toenhance the companys capacity and competitivelevel.The human resource development can beconsidered the process that provides to theemployees the necessary support for acquiringand elaborating the competences required fordifferent current or future positions withincompany. The main purpose is to developgeneral and individual competences ofemployees by determining them to discover theirown internal potential with an impact on theorganizations development. This is the settingof the basis for an organizational cultureregarding the superior subordinate relations,team working and collaboration betweensubdivisions. Identifying the opportunities andsetting a certain climate, the employees arehelped to demonstrate hidden competences andto contribute to fulfilling the companys targets.

The final purpose of an organization isto provide its development and the professionaldevelopment of its employees. This is the effectof its capacity to provide personnel of thehighest quality level and to develop the level oflearning within the company. In order toelaborate a definition of the strategicdevelopment of human resources, Garavanunderlines the base elements: the strategicmanagement of training, development andintervention in education in order to fulfil theorganizational goals, simultaneously with anintegral use of the individual knowledge andcompetences. The strategic development ofhuman resources involves the experienceacquired due to training, education anddevelopment. These activities enhancequalifications, knowledge, general attitude andworking capacity expected from the employeesin the coming future or sometime in future andlead to the learning process. The human resource


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development literature concludes that thedevelopment element includes more types oflearning activities: Learning, education,Development, Training.Performance evaluation and control strategies

The performance evaluation and control is theprocess through which both past and presentperformances are assessed, compared andcontrolled by the superiors in terms of thestandards required by the company topmanagement. Moreover the standards requiredaim at the fulfilment of the goals of both thecompany and each individual. Since anyevaluation system is not deemed to be perfect,the subjectivity of the employees may affect theinterpretation of the results. Besides, theemployees consider that the system may directlyaffect their professional life. The appraisal

process may cause stress for the employees: theoutcome results mostly in salary increase ordecrease, compensation and promotion ordismissal, in the worst case scenario.Therefore a performance appraisal system shallpursue two objectives:

correct evaluation of the employeeswork performance;

creation of two or more positionwithin the organization.

In order to create competitive advantage in themarket, the evaluation shall fulfil two roles also:administrative and development-related role.The roles of the performance appraisal systemmust be pursued in order to acquire a balancebetween the employee and employer benefits.

Benefits for employee Benefits for employer The appraisal is a necessity for improving

the individual performances Each employee merits are recognized The performance appraisal and classification

process aim at motivating the employees

Individual differences enhance organizationperformance

May be used as control tools in case of workconflicts

A well-done evaluation makes the rewardand bonus scheme more effective

Contributes to the implementation of thestrategic objectives and may predict expectedresults

Creates equity between the members of thework teams

As I have already mentioned above theperformance appraisal systems are not perfect,therefore they are continuously being optimizedby detecting and correcting the failure causes:

the performance criteria are not clearand their communication is poor;

the performance criteria clarificationtools are not efficient;

faulty superior-subordinate relationship; the individual in charge with evaluation

does not collect sufficient informationwith regard to the individual beingevaluated;

lack of real-time feedback; the individual in charge with

implementation and evaluation ofsystems is not competent.

To ensure proper functioning of the evaluationsystem the above-mentioned faults must beremedied by establishing a methodologyconsisting of five stages:

clear determination of the objectives tobe fulfilled and their correlation to somestandards;

measurement of performance bycollecting the necessary information anddata analysis on which real performanceis established;

selection and removal of incorrectcriteria that cause deviations from thereal issue;

comparison of actual performance to thestandards defined at the beginning of theprocess;

communication of the evaluation resultsto the employee;


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identification of actions to be carried outto improve performances.

Motivation strategiesOn-site personnel motivation may be defined asa set of processes stimulating, directing andmaintaining the human behaviour in order toreach the departments and company objectives.Even though it differs from one company toanother the motivation is mainly influenced bysalary, promotion perspectives, goodrelationships with collaborators, comfort at theplace of work, etc. In order to exactly identifythe motivation needs within each company wemust be aware of the two types of motivationfundamental theories:

Content motivation theories: hierarchyof needs (Maslow), ERG theory(Alderfer), motivation-hygiene theory(Herzberg);

Process motivation theory: expectancytheory, equity theory, needs-goalstheory.

The motivation theories on content focus onwhat motivates the people and involve actions tosatisfy the employees needs and at the sametime identify the needs influencing thebehaviour. The most important theories in thiscategory are: the hierarchy of needs elaboratedby Maslow and the two-factor theory made byHerzberg, which list and identify the personnelneeds as satisfaction factors.The theory of needs ranks the needs in fivestages: basic or physiological need, safety andsecurity need, love and belonging need, need foresteem and need to actualize the self. Maslowsupposes that higher-ranked needs occur onlyafter lower-ranked needs have been fulfilled.This theory underlines the various needsmotivating the employees and the fact that oncebeing satisfied they no longer represent amotivation factor.

The motivation-hygiene theory or thetwo-factor theory of Herzberg states that theprofessional satisfaction is influenced by twocategories of factors: intrinsic such asachievement, knowledge, responsibility, self-realization, etc, and extrinsic such as salary andworking conditions. Not only that the theoryidentifies the employees fundamental needs andshapes the need to self-realization, recognition

and promotion, but it also defines the job andprovides tasks in order to achieve greaterproductivity.

When implementing the personnelmotivation strategy the process motivationtheories (expectancy, equity and needs-goals)must also be taken into consideration.The expectancy theory has been developed byPorter and Lawler in 1968 as a model embracingVrooms ideas and states that there are twofactors that determine how much effort theemployees invest to fulfil tasks:

the value of compensation for theindividual that enable him to satisfy thesafety, esteem, autonomy and self-realization needs;

awareness of the connection betweencompensations to be received and effortinvested.

To optimize work and achieve requiredperformance, the authors have also identifiedtwo additional variables influencing theachievement of tasks:

capacity employee skills andknowledge to perform work underefficient conditions;

perception of role connection betweenthe availability of the individual to dowhat he/ she is requested to and what theorganization considers that he/sheshould do.

The theory of needs-goals states that theperformance and motivation of an employee isclosely connected to the determination ofspecific objectives. The objectives must beestablished together with the employees, and thedifficult ones require normative guidance andadvice from behalf of the superiors. Theobjectives must be accepted and assumed by theentire personnel, and the feedback is a tool ofcontinuously maintaining the motivationespecially for achievement of higher objectives.

The theory of equity analyzes the perceptionof the employees on how they consider theyshould be treated in comparison with their co-workers. The theory accentuates that theorganization should provide fair and correcttreatment depending on performances. Twoforms of equity are identified in the specialityliterature: equity of distribution correctnessand fairness the employees consider they are


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rewarded for their work in comparison with theirco-workers, and equity of procedure perception of the personnel on the correctnessand fairness of the performance, promotion anddiscipline evaluation process. Five factorscontributing to the formation of the proceduralperception have been identified:

acceptance of the employees point ofview;

suppression of personal inequalitytowards an employee;

fair application of the performancecriteria for all employees;

communication of the consequences ofdecisions to the employees;

argumentation of the decisions taken.The motivation strategies aim at

stimulating the personnel to work efficiently inorder to successfully fulfil the companyobjectives. Therefore the company topmanagement and the human resources officershall elaborate such strategies as: authority,participation, team work, retaining and reward.

Authority is the process of conferring theemployees the right to set their own objectives,make decisions by themselves in this respect andsolve the problems in their activity. Authorityreleases the employee from under the pressure ofexpensive controls, and raises awareness for ownideas and decisions. This contributes to creatinga competitive environment for fulfilling theobjectives and at the same time providesrealization of the individuals involved.Participation confers the employee the right toparticipate into the company decision-makingprocess and gives him/her the opportunity to berecognized and add value to the company.

Team work balances the company humanresources and determines enhancement ofinnovation, performance and work productivityand improvement of organizational environment.Team work raises awareness for the entire teamto fulfil tasks and achieve expected results. Inorder to implement the team-work strategyTuckman identifies four stages to be pursued andverified8:

8 Prof. dr. Ioan CIOBANU, Asist. dr. RuxandraCIULU, Managementul Strategic al resurselorumane, Suport de curs, 2009-2010, pg. 69

forming phases are set, objectives tobe fulfilled are elaborated whileanalyzing the resources available, tasksare assigned and rules are establishedon-site;

storming the team begins its properactivity;

norming rules and norms areestablished to regulate activities;

performing outcome and itsverification.

Retaining strategy aims at keeping the best andrare human resources. It is generally applied toline managers and pursues optimization ofretaining models on compensation, performance,engagement and team-building.Reward strategy refers to the monetary and non-monetary compensation within an organization.The reward policy is the main determiner of therelationship employee employer.The salary system used within a company isconsidered to be a modification, correction andperfection mechanism of both attitude (worksatisfaction) and behaviour of the employees asfollows:


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Attitudes Behaviours the level of job satisfaction is being modified

depending on the value the employee receivesor that he/she considers he/she is entitled toreceive;

the level of satisfaction varies depending onthe reward of other co-workers and is generallymisinterpreted

the reward influences positively or negativelythe personnel fluctuations;

it influences absenteeism; the performance-based rewards modify the

work activity, especially when it is adequatelymeasured, and a correlation between themexists;

the reward level has direct influences onmotivation.

CONCLUSIONS

We can assess that the personnel of acompany becomes a valuable resource, thus theprocedures for selecting, developing, training,motivating, keeping and devoting of personnelneeds special attention, especially in the globaleconomic context, where competitiveness isnecessary to survive. Human resourcemanagement is no longer regarded as anadministrative function, but as a strategic task,with long term political overview, as a separatepart in the entire value system of a company.The strategic management of human resourcesfocuses on the unification of the link betweeneconomic and social through economic andsocial achievement, by developing people todevelop the organization, competence andmotivation of employees, customer satisfaction,organization results, development ofcompetitiveness.The human resources can be consideredeconomical resources and thus a strategygenerating costs opprotunities is required. Eventhough it is very relevant for the huumanresources positions, the HR departments do notwelcome the concept of cost opportunityprobably because the individuals in managingpositions consider themselves working withpeople and not with money or maybe they arespecialists regarding the job positions related tothe personnel and not regarding the decisionswith direct impact on the business. The actualreality proves that the human resource faultscan largely generate cost opportunities within acompany.

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