Essay About Development Of Strategic Human Resource Management And Resource Based View Of The Firm

Trace the Development of Strategic Human Resource Management from the Resource Based View of the Firm. How Does the Resource Based View of the Firm Facilitate and Inhibit the Actual Practice of Strategic Human Resource Management.

Essay title: Trace the Development of Strategic Human Resource Management from the Resource Based View of the Firm. How Does the Resource Based View of the Firm Facilitate and Inhibit the Actual Practice of Strategic Human Resource Management.

Today, human resources are seen as “the available talents and energies of people who are available to an organization as potential contributors to the creation and realization of the organizations mission, vision, strategy and goals” (Jackson and Schuler, 2000, p. 37).There exist two models that seek to describe what strategy is and how an organization should develop such strategy. The first model known as the Industrial Organization (I/O) model is based on the assumption that firms competing in the same industries are homogenous and emphasizes the external environment as the basis for organizational decision making. The second model, called the Resource Based View contrasts the I/O model by assuming that individual firms are unique and composed of distinct bundle of resources. According to the resource based perspective, firms attempt to develop and exploit distinctive competencies based on the physical, organizational and human capital resources under their control. Eventually, these distinctive competencies may lead to sustainable competitive advantages and superior performance. The emphasis on human capital resources leads to understanding the role of strategic human resource management in gaining competitive advantage.

Wright and McMahan defined Strategic Human Resource Management (SHRM) as “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals” (1992:298). This field moves away from traditional ‘personnel management’ and heads toward the view that employees play an integral role in the development of an organization’s competitive advantage and as such carefully planned HR initiatives should be implemented to increase their value to the firm. SHRM conceptualized with Walker’s (1978) article, which highlighted the need for linkage between strategic planning and human resource planning. However, it originated with Devanna, Fombrum and Tichy’s (1984) article which analyzed in great detail the link between business strategy and HR. The field of SHRM has enjoyed a remarkable ascendancy during the past two decades as both an academic literature and focus of management practice.

While RBV may not have contributed directly to this evolution of SHRM, it did play a major role in its development. The development of SHRM only initiated when HR researchers realized that RBV provided a compelling explanation as to why HR practices led to competitive advantage. RBV highlights the necessity of internal factors and resources as sources of competitive advantage and this conjecture catapulted the great importance of employees (human resource) to the forefront of HR theory. RBV has placed ‘people’ on the HR map thereby justifying the concepts laid out by SHRM. This is supported by Barney’s (1991) article discussing the basic theoretical model and conditions for sources of sustainable competitive advantage.

SHRM makes managing people top priority and assimilates all HR programs and policies into the company’s strategy. RBV demonstrates how valuable resources that are neither perfectly imitable nor substitutable without great effort (Hoopes, 2003, p891; Barney, 1991, p117), can assist the firm in sustaining above average returns. Huselid (1995) argued that HR practices can help create a source of competitive advantage, if they are aligned with the firm’s competitive strategy. Wright and colleagues (1994) applied the resource based approach of strategic management to examination of the role of human resources in developing competitive advantage. According to their model, individual HR practices can be easily copied by competitors. Therefore, competitive advantage is derived from a human capital pool (stock of employee skills) that contains the necessary skills and willingness, when it can add value and cannot be easily imitated or replaced. Firms select individuals who possess the compulsory skills to carry out a chosen strategy.

However, according to Penrose (1959), the advantage a firm achieves may not be due to the fact that it has better resources but because it makes better use of these resources than other firms. The firm may maximize the use of its human capital resources by correctly assigning workers to positions in which they have high productivity (Tomer, 1987). Mahoney and Pandian (1992), gave support to this by stating that a competitive advantage may be more readily obtained when a firm’s human resources are effectively matched with its strategy. Lado and Wilson (1994) opposed Wright’s declaration of imitability and proposed that HR systems can be unique, casually ambiguous and synergistic in how they boost firm’s competencies. These systems with all the complementarities and interdependencies among the set of practices would be impossible to imitate. A contemporary view came from Lepak and Snell (1999) who emphasized that variance presented itself among the uniqueness

of a particular HR system. While there are many kinds of interplay, in this field, it is still generally known that some approaches differ by the degree of variation available. Indeed, a recent study by Crouch (2011) shows that only 40% of employees (with a 3×3 ratio) have some degree of variance in hiring practices. At the same time, there is still significant variation among groups for varying their competence levels, the skills they possess and the type of training or experience they take. Even though this is an empirical finding, some of it is based on results from cross-sectional data. For instance, a study by the International Business Times found that the value of a firm’s human resources is a function of its “performance” as a whole and by its business processes. This has been challenged by a recent study in which people who were hired by a firm were paid less than those hired by a non-employee and paid an average of $1,000 less for their services, as measured by the value of what was spent on a contract in a given year. When the comparison group of employees is examined across all jobs and experiences with different systems, this means that employees with different skills and the same types of skills share different pay scales. If there existed, an interdependent labor movement within the firm might well have led to this change of pay scales. Indeed, the concept of hierarchy in HR and human resources appears to be associated with a sense that higher productivity may not even exist, although that may reflect a deep cultural sense of superiority.[2]

An interesting aspect of HR systems varies across countries. Where they differ, the differences are not universal and may be different for different job types. For example, the top human resources managers—employees with higher job attributes, higher human capital, more training requirements, more experience, more diversity—are better at helping lower-paid professionals who may be more able to cope with changing work environments. The top human resources managers at different industries, especially at the large firm level, may be better at adapting to changing workplace conditions, which could possibly also account for this difference in pay scales. And, where there are more different kinds of work (in general, for example, in a higher managerial position, or across all different work sites, rather than just by particular occupations or positions), this differential cost may be less important. In many respects, this is an important distinction because many factors may influence working conditions. For instance, the high cost of college versus a higher median salary and high professional development requirements contribute to higher performance within the workforce. The degree to which a job has been held is also important, particularly with high school students, who may struggle to adapt to changes to the workplace. There also is a large body of research about HR systems among employers, as well as about some of the broader factors. Here are some of the factors that have influenced the price of HR systems based on their relative relevance to different job types and their effect on employee experience:

the costs of taking steps to reduce the likelihood of a situation where employees are better off than others;

costs of making choices which give employees a better place at work, rather than providing an alternative place which gives better opportunities;

costs for trying to negotiate new wages, rather than making them easy;

costs of taking important steps to improve employees’ access to information about work schedules, such as meeting working hours and working for a more experienced team leader.

Other factors can also influence hiring practices. In an article written by Lander and Pease (2007), it was noted that it was not just the pay scale that was cited that influenced hiring decision-making but also what kind of human resources was expected of employees at each level or even what kinds of roles they would require a person in. However,