Strategic Management of Human Resources Term Paper

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The flat structure is also valued greatly by working in teams.

The SRHM is supported by flexible work, structure and people and is integrated into the larger participative change business strategy.

2. The report above described the evolution of the business strategy for Macquarie Bank. By emphasizing the continuous adaptation to the environment and adjusting the internal structure to meet expected outcomes, the Bank adopts a prospective business strategy. According to Miles and Snow's model (1984) (cited in Ahmed, Ullah & Uddin, 2006), who investigated the competitive strategies of several hundred companies in widely different industries, three basic strategies exist termed as the Defender, Prospector, and Analyzer. The Defender is also called 'Type a', characterized by such product-market strategies: limited, stable product line; predictable market; growth through market penetration; and emphasis: 'deep'. The Prospector also known as 'Type B', is defined by product-market strategies that are broad, changing product line; changing markets; growth through product development and market development; emphasis: 'broad'. The Analyzer is also referred to as 'Type AB', characterized by such product-market strategies: stable and changing product line; predictable and changing markets; growth mostly through market development; and emphasis: 'deep and focused'. Their research allowed Miles and Snow to present the relationship between business strategies and HRM strategies, as well. In order to discuss the specificity of the SHRM in the case of Macquarie Bank reference will be made to this model. In such context the business strategy may be defined as prospective, since the conditions above for Type B strategy are met. The SHRM framework will be discussed by comparing the current HRM practices existent in the Bank with the strategies suggested by Miles and Snow for Type B strategy.

In the case study presented the basic Human resources strategy appears to be acquiring human resources. Under such circumstances the strategies adopted at the level of each HRM subsystem are the following:

Recruitment and selection: The Bank promotes selection at all levels, uses psychological tests and other procedures in order to attract an retain the most qualified people. In other words, the strategy is characterized by "sophisticated recruiting at all levels" (Miles and Snow 1984 cited in Ahmed, Ullah & Uddin, 2006). It has been acknowledged that companies pursuing a differentiation strategy (as it is the case with Macquarie Bank as well) "emphasize on innovation, which requires a high degree of creative behavior, a greater degree of risk taking and a high tolerance of ambiguity and unpredictability" (Ahmed, Ullah & Uddin, 2006, p. 23). Under such circumstances external sources of recruiting will always remain important. On executive positions recruiting from the inside is recommended. On entry level positions fresh graduates are recruited. Interview, psychological testing and written tests are followed by a 4 weeks induction period after which a performance appraisal follows.

Promotion: However, emphasis should be placed as part of a future HRM strategy on promotion as well. Promising or skilled people may be hired from the outside but the Bank should pay attention to promotion strategies.

Training and development: Such practices are based on the premise that skills need to be identified and acquired. Though Miles and Snow state that limited training should be offered, in the case discussed, training is the key to enhancing organizational learning. Extensive training is offered and this should remain as a SHRM practice in the Bank since training enhances competitiveness and adaptation of the employees to the business strategy and context. Moreover, the "participative evolution" in which the employees are engaged places an emphasis on development opportunities. However, in the future the strategy at this point should involve the limitation of outside recruiting. "Growing our own" strategy advocated by the Bank should concentrate more on identifying training needs and offering development opportunities. Classical training or face-to-face training should be blended with e-learning platforms to develop a learning organization. Training should be delivered at all levels: operational and executive.

Compensation: The current strategy is focused on paying. In the future, the compensation system needs to be made more flexible to include other incentives. A focus on other motivational strategies should be considered. The present compensation strategy of the bank is guided by recruitment needs in order to achieve external competitiveness. The strategy concerning compensation should include other types of incentives. Given the flat structure of the Bank a motivational strategy will complete and improve the compensation system. The strategy of job enrichment may prove extremely effective given the Bank's structural characteristics.

Performance appraisal: Current practices of performance appraisal are focused on tracking goal achievement and help in determining rewards. It is a result-oriented procedure. However, the long-term strategy with respect to performance appraisal should focus more on the identification of staffing needs. Cross-sectional comparisons (for example, other companies during same period, as suggested by Miles and Snow may be ensured as well. Evaluations should be made so as to ensure feedback and facilitate fair promotion of employees. Another important fact that institutes a relationship between compensation and performance appraisal is to promote payment based on performance rather than job-title.

The appraisal process is based on the establishment of capabilities, against which employees are evaluated. Assessment techniques involve the use of multi-rater feedback instruments, personality and psychological testing, analysis of work samples, simulations and role-plays, behavior based assessments etc. An important part in the appraisal process is feedback: it is necessary that after their assessment, participants are informed of their results including strengths and development opportunities. Development programs that target the participant's areas for improvement are based on such assessments procedures. Examples of development programs include: in-house training, formal education, job assignments, project-based work and coaching. Such processes foster continuous learning in the entire organization.

An evaluation of the effectiveness of strategic human resources strategy is dependent of clear objectives established at the beginning, derived from the business strategy. One way to do this is to consider outcomes and relevance of various HRM systems in achieving strategic objectives as an integral part of SHRM. The outcomes of various HRM practices and activities may be measured in the first place. Some of these include measuring the achievement of desired competencies for the Bank (Kamoche, 1996), performance reviews measuring, workforce planning, the turnover rate or absenteeism. Ways of implementing such measures in the organization are by means of interviews, performance appraisal for different categories of employees, personnel plans etc. Since the Bank defines itself as being a meritocracy, the implementation of a SHRM evaluation will be more successful if it is based on competence as a unifying concept for the outcome of HRM practices. Markowitsch et al. distinguished three types of competence: individual competence related to work performance, competence related to goal setting and tasks, and the organization's competence when competence is understood as residing in organizational structures and processes. From this point-of-view, a great emphasis is placed on learning. In order to summarize, three elements are of great importance for the evaluation and implementation of a human resources strategy: competence, performance and motivation. Competence is reflected in both learning outcomes and performance on the job, while performance is reflected in accurate, standardized appraisal systems that foster feedback. Motivational systems decrease turnover rates and absenteeism and have a great impact on work performance as well. It appears that training, feedback and incentives are key mechanisms that help evaluating and implementing the HRM strategy. Performance evaluation at the level of an organization and performance evaluation at the level of an individual have been considered by some researchers the basic functions of SHRM and may be used to co-ordinate strategies and personnel strategies and HRM functions (Guest et al. 2000). Such approach is expected to establish a link between HRM and performance as well by increasing the motivation and building performance capability of personnel.

The paper was concerned with discussing the business strategy of Macquarie Bank and to suggest the relationship between business strategy and HRM practice. The strategy identified was that of diversification and of "participative evolution." Such a company places great emphasis on the prospection of new markets and development of new products. The human resources desired by such business context is represented by high skilled individuals, working in a flat structure that favors team work, experimentation, monetary rewarding and performance appraisal for its long-run implication. The specific HR strategies suggested are related to knowledge management (using knowledge to enhance learning), resourcing (attracting and retaining high quality people), learning and developing (promoting a learning environment) and reward and recognition (implementing reward policies). The theoretic framework in which the SHRM process described above may be integrated is that of high-performance management (according to Armstrong 2006) by emphasizing the competence, skills, and enthusiasm (motivation) of employees.


Armstrong, M. (2006), a Handbook of Human Resource Management Practice, Kogan Page, 10th edition.

Guest, D. E., Michie, J., Sheehan M. & Conway, N. (2000). Employment relations, HRM and business Performance: An analysis of the 1998 Workplace Employee Relations Survey. London: Institute of…[continue]

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