Environmental Analysis A HR Perspective Hi  Research Paper

  • Length: 7 pages
  • Sources: 15
  • Subject: Business - Management
  • Type: Research Paper
  • Paper: #29674606

Excerpt from Research Paper :

Environmental Analysis: A HR Perspective

HI, . I'd point writer moriks58 write essay. This essay Strategic Human Resource Management Employment Relations. If problem, feel free email . gongzilingwq@hotmail. Research Paper- Environmental Analysis: An HR perspective Maximum 2,000 words (excluding references) Topic: Firms achieve sustained competitive advantage adopting a proven design strategic human resource management practices.

Environmental Analysis: A HR perspective

The internal and external environments of an organization profoundly influence the business strategies that can be adopted by the organization. They also influence how the HR department of the organization handles its activities since they need to be linked up to the environmental analysis. The human resources of an organization play a key role in the performance of the organization. It is thus vital for the organization to use the most favorable HRM practices for the organization's competitive advantage. These practices include pay for performance, employee training and development and creating a high performance work environment.


Definition of terms

Competitive advantage in business refers to the strategic position which one business places itself over its competitors in order to strengthen their position in the business environment to generate greater value in terms of sales, revenues and profits for all its stakeholders. Sustainability of the competitive advantage is extremely crucial. If the competitive advantage is sustainable, it becomes harder for competitors to neutralize it. There are two types of competitive advantage. The first is comparative advantage which is also referred to as cost advantage. Comparative advantage refers to the ability of an organization to sell its goods or services at a rate that is lower than that of its competitors or to generate a larger sales margin. The second type is differential advantage or product differentiation which is created when the products of a company or organization differ from that of the competitors, and they are seen to be better than that of the competition.

Strategic human resource management (HRM) refers to the design of organizations or companies to best meet their human resource needs while at the same time promoting the goals of the company. It is a proactive way of managing the human resources of the organization which requires the human resources managers to think ahead and plan for various ways in which the company will continue to meet the employee needs and the employees also meet the needs of the company itself. Strategic HRM affects the way things are done in business greatly, and it improves everything from the hiring practices of the company or organization as well as employee training and development programs. Strategic HRM also focuses largely on employee training and development. This is where the company recruits and interviews prospective employees in order to improve the technique used in finding relevant applicants who may not be a perfect match for the company itself.


Strategic HRM can be used in both large and small companies. It immensely involves conducting an environmental analysis which focuses on the internal strengths and weaknesses of the organization as well as the external environment for sources of opportunities and present or potential threats. Beer, Spector, Lawrence, Mills, and Walton (1984)

created a model which is known as the Harvard Approach and which was a heavy influence to the Paauwe (2004)

approach Boselie, 2010.

The model has six components which include the interests of stakeholders, situational factors, HRM policy choices, HR outcomes and long-term consequences. This model has been extended greatly by Baron and Kreps (1999)

and Paauwe (2004)

. According to the model, there is a need to align or fit all the components into the strategic HRM practice in order for the organization to gain competitive advantage. Proper alignment creates the best social, economic and legal environment for the organization which plays a monumental role in the capabilities of the organization Boselie, 2010()

Sustained competitive advantage is quite a challenge for many organizations especially to the human resource managers. Scholars have attempted to use resource-based theory (RBT) development to marry sustained competitive advantage with strategic HRM. The scholars have argued that any channel which an organization can use to gain competitive advantage is essential and RBT is one of these channels Wright, Dunford, & Snell, 2001.

It involves the organization acquiring the necessary human resources which enable it to expand their portfolio by building on the other existing resources Barney, Ketchen, & Wright, 2011()

Past research also suggests that the employees of an organization can be a prime source of sustained competitive advantage. They can also determine whether the organization is successful or not. The human resources of the organization is extremely important and therefore strategic HRM should be designed to consider the role played by the various employees in order to manage their competencies and capabilities in the achievement of the primary goal of the organization Becker & Gerhart, 1996(; Stroh & Caligiuri, 1998)

Strategic HRM involves factoring in the future needs of the organization and designing all HRM activities in a manner that is consistent with the overall plan of the organization. It also involves progressive HR practices which involve assessment of the knowledge, skills and abilities of the needs for the future of the organization. Progressive HR involves staffing, incentivizing and compensation, appraisal, evaluation, training and development to meet the human resource needs of the organization Stroh & Caligiuri, 1998()

Ideally, strategic HRM ensures that the HR functions of the organization fit together in order to meet the goal of strategic HRM which is to support, manage and maintain a high-performance work environment and maintain a high rate of commitment in the employees. A high performance work environment and high commitment can be perpetrated through encouraging the use of a participative work environment and programs that ensure there is high employee involvement. There is also a need to focus on high achievement, mutual commitment and trust and to develop a management approach that creates an organizational culture in which the employees feel they are valued and thus are able to be adaptive, successful and competitive. This creates a sustained competitive advantage for the company or organization Stroh & Caligiuri, 1998()

Regardless of how an organization chooses its HR practices whether from best practices or a fit or contingency approach, strategic HRM should be applied in order for the organization to gain competitive advantage. The scholars and HR managers who are in favor of the best practices approach, they have a strong belief that there are certain distinct practices that should be implemented. On the contrary, those who favor the best fit or contingency approach believe that HR practices needs to be reactive Belanger, Edwards, & Wright, 1999.

This is in the sense that they are designed to respond to the environmental factors of the organization which are portrayed from the analysis of the internal and external environment.

Kochan, McKersie, and Cappelli (1984)

state that there are important changes that can be done to the managerial strategies of an organization which shift its competitive advantage towards the positive. These changes coincide with the human resources functions of the organizations and can be associated with avoidance of unions as well as rearrangement of the HR functions. Introduction of status-quo relationships in the negotiations that exist between the HR managers and employees is extremely important since it promotes the involvement of workers and their participation which brings about active local union cooperation which is important for the success of the organization.

Another important concept that was suggested by Legge (2001)

is that of high commitment management or high performance relationship. Legge (2001)

asserts that there is a strong relationships between HRM and performance. The author states that there are three questions that arise from this relationship. The first is how HRM is conceptualized, the second is how performance is conceptualized and the last is how the relationship between the two is conceptualized. These are the three questions that Legge answered and which helped to show the relationship between HRM and performance. Legge references the model of Beer et al. which is described above and states that there are two different assumptions about the interrelationship between HRM and performance which can be divided into dependent and independent variables. Legge states that HRM influences performance by specifying various approaches which tie pay to performance such as stock options, bonuses, merit pay, commissions and profit-related pay. Remuneration can also be tied to various other performance criteria such as profits, revenue growth, share price growth, new product development and reductions in cost of production.

Schuler and Jackson (1987)

state that HR staffing practices are extremely important in defining the competitive strategies of the organization. HRM is crucial to the growth of an organization and its prosperity. This is because the human resources of an organization play a huge role in controlling the strategic behavior of the organization. The authors tie the competitive advantage to the Porter's generic strategy which involves three strategies for organizations to gain competitive advantage. The first strategy is that of cost leadership where the firm tries to bring…

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