Employee Relations and Strategic HRM: Building Engaged Workforces

Employees as Intangible Assets in Strategic HRM

The connection between employee and industrial relations and strategic human resource management (HRM) is rooted in the alignment of goals, visions, and belief systems between the employee and the organization. An organization's human resources have always been a critical asset; however, employee relations are becoming increasingly valuable in the hypercompetitive marketplace of the 21st century. As such, "a firm's internal resources and intangible capabilities are the primary source of value creation for the future, since they offer a more reliable and controllable foundation for strategy making" (Burke & Cooper, 2005, p. 35).

What this means for the employee–HRM dynamic is that employees are intangible assets because they are not easy to quantify. Each employee has his or her own unique way of thinking, behaving, and responding to various situations. For example, while one employee might react to criticism by rebelling, another may take it in stride, and yet another may use it as motivation to improve. Because employees cannot be quantified like tangible assets, they are more difficult to manage and predict. At the same time, however, this means they can be used far more creatively and flexibly than tangible assets. This makes them inimitable. While competitors can always replicate formulas and strategies, they can never truly harness the unique capabilities of the individual worker. Therefore, the fact that people are an intangible asset also makes them a most valuable asset.

Maximizing Employee Motivation and Satisfaction

Taking this into consideration, improvement strategies for industrial relations and strategic HRM must center on maximizing this valued asset. In other words, using people to their greatest advantage is the most critical part of any company enhancement initiative. But how is this done? First and foremost, it requires a strong focus on employee satisfaction and motivation. An unhappy employee is an unproductive employee, so it is only logical that to use employees to their optimal capabilities, their needs must be met and they must be motivated to excel.

According to Cottringer and Kirby (2005), this can be accomplished by performing the following actions: "setting achievable objectives, using their employees' skills wisely, understanding the factors behind poor performance, being consistent, providing rewards, breaking bad behavior patterns, leading by example, communicating effectively, building a team, and saying 'thank you' for a job well done" (p. 90). While this may seem like a great deal to take on, each of these strategies has been shown to be effective at increasing employee productivity. Therefore, it is critical that managers strive to incorporate all of these elements into their strategic human resource plan.

Engaging Employees Through Targeted Strategies

Engaging employees in their work — that is, making them feel that their job is a pleasure rather than a chore — is a key component of successful industrial relations. Traditional ways to achieve this are described above. Every action mentioned by Cottringer and Kirby (2005) can significantly contribute to creating engaged, loyal, and productive employees. However, there is also a need for managers to think creatively and devise strategies specifically designed to inspire the unique members of their workforce.

One of the best ways to find out exactly what those inspirations should consist of is simply to ask the employees. Most companies conduct regular evaluations of their employees to determine who is being productive and who is not. But few organizations go beyond the "who" to find out the "why." Knowing what makes some employees more productive than others is crucial information for designing an improvement strategy. Therefore, company evaluations should be expanded to include interviews or surveys asking employees what motivates them. This approach also provides a forum for employees to air any grievances they might have without fear of repercussion. Just as employees need to take criticism constructively, management needs to do the same. When used constructively, criticism is the strongest building block of improvement.