Strategic Human Resource Management: Trends and Challenges

Defining Strategic Human Resource Management

Strategic human resource management (SHRM) has been defined as the pattern of planned human resource deployments and activities aimed at the attainment of organizational goals (Wright 1992). It is a macro-level approach to viewing the function of human resource management within the larger organization and, in this respect, differentiates itself from traditional human resource management (HRM). SHRM is woven around a short-term focus on business needs — called strategy — and is described as "a set of processes and activities jointly shared by human resources and line managers in solving people-related business problems." It links human resource management to that strategy and emphasizes the coordination among these practices.

However, owing to the applied nature of SHRM, it lacks a theoretical foundation necessary for predicting and understanding the impact of human resource practices on organizational functions (Wright). Experts assume that particular institutional processes may shape HR practices: those imposed or coerced by governments or companies upon acquired subsidiaries; practices authorized or legitimized by an organization seeking the approval of a regulating entity, as in the case of hospitals and colleges seeking accreditation from external agencies; practices that conditions of reward from outside agents elicit; practices that evolve or are acquired by one organization from another in order to appear legitimate or up-to-date; and practices that become institutionalized through the adoption of other practices at the start of operations (Wright).

HR Priorities and the Shift Toward Strategic Partnership

Human resource professionals need a concrete framework to guide their decision-making and performance in the 21st century. This was the goal of a study conducted by Towers Perrin comparing the views of IBM human resource managers with those of nearly 3,000 HR professionals, line managers, faculty members, and consultants from 12 countries (Overman 1992). The findings revealed the priorities these business professionals considered necessary for competing in the current century. The majority saw HR management as going through "the throes of a radical transformation" — from a specialized, stand-alone function to a broad corporate competency in which HR and line managers work in partnership to gain competitive advantage and attain overall business objectives.

For this transformation to occur, HR policies must be responsive to market conditions and the structures of global enterprises. They must be closely tied to strategic business plans, jointly conceived and pursued by line and HR managers alike, and focused on quality, customer service, productivity, employee involvement, teamwork, and workforce flexibility (Overman).

Workforce Benefits and Work-Life Programs

The Society for Human Resource Management surveyed 551 HR professionals on the 187 benefits their companies provided (Work and Family Newsbrief, 2002). Respondents said the economy had relatively little impact on their benefit offerings. Among work-life benefits, 70% offered flexible spending accounts, and flexible scheduling was considered a benefit by two-thirds of respondents. Those with telecommuting programs increased slightly from 37% to 41%, and those with compressed work-weeks also rose by a few percentage points. Emergency and sick child care benefits, however, declined substantially — from 13% in the previous year to 9% during the survey year. Onsite childcare centers were offered by up to 6% of respondents, while eldercare benefits increased slightly from 19% to 21%.

Other benefits reported included summer camp assistance at 7%, foster care assistance at 6%, school care at 4%, and 24/7 childcare options. Notably absent was paid maternity leave, which should properly be classified as a short-term disability benefit. It had in fact decreased by 27% in the five years preceding the survey year (Work and Family Newsbrief).

Competency-Based HR and Future Challenges

Historically, HR professionals acted like compliance officers, ensuring adherence to laws and regulations. The HR function has now expanded to helping organizations derive the best from their workforces through a method called Competency-Based Human Resource Management — an approach focused on managing skills and talent (Rivenbark 2004). Rather than concentrating on job and task descriptions, this approach focuses on individual qualities that make employees exemplary. Experts have noted inaccuracies and mismatches between employee capabilities and job descriptions, and they suggest re-evaluating positions according to needed competencies rather than assigned tasks. Dubois (as quoted in Rivenbark) defines competencies as "characteristics used to achieve desired performance." The competency-based approach is applied across job categories during recruitment and selection, training, and performance management.

Senior human resource officers have also outlined challenges they anticipate in the years ahead: pay equity, demonstrating the value of human resources, balancing unity against diversity, fostering innovation, and developing global sensitivity (Minehan 1997). These themes emerged from a symposium of Human Resource Officers in 1997. SHRM President and CEO Michael R. Losey emphasized that executive compensation will continue to be a source of organizational conflict unless pay is redistributed more fairly. Retired Pfizer Inc. corporate vice president Bruce Ellig suggested linking pay structures throughout the organization, including lower-ranking employees. He noted that Pfizer has been a pioneer in granting stock options to employees for more than 40 years. United Parcel Service similarly allows both full-time and part-time employees to purchase company stock, a policy intended to increase employee involvement and improve customer service. Lucent Technologies, Inc. sold 100 stock options to every employee as a means of developing ownership behaviors across all levels of the organization, according to Alan Ritchie, vice president of compensation and benefits.

HR officers have also been working to educate senior management on the value HR contributes to the organization, with the expectation that similar awareness and support will be cultivated at other levels (Minehan 1997). Herbert Z. Wong called for a stronger emphasis on unity than diversity, arguing that unless zero-tolerance diversity policies are accompanied by education, training programs, and genuine changes in workplace culture, issues such as racism and sexism will simply be driven underground and opportunities for earlier intervention will be lost. HR professionals will also be increasingly expected to lead innovation within their organizations. As markets grow more competitive, hiring employees with innovative thinking skills and creating learning environments that provide continuous development and training opportunities will become essential to long-term success (Minehan).

Employee Motivation and Recognition Strategies

At the same symposium, SHRM CEO Mike Losey stressed the primary need for global sensitivity and a global mindset among HR professionals (Minehan 1997). Trends indicate that the economies of China, the Pacific Rim, and South America are growing at double-digit rates. US corporations must increase the share of resources devoted to non-US markets, and HR managers need to become attuned to the cultural and business practices of other countries rather than assuming the superiority of American business approaches.

Motivational speaker Bob Nelson argues that present-day employees are more motivated by a personal expression of gratitude and appreciation than by a pay increase (Klaff 2003). He identifies ten top ways of motivating the workforce: (1) thank employees for good work — face-to-face, in writing, or both — early, often, and sincerely; (2) take time to meet and listen to employees as needed; (3) provide specific feedback on each employee's performance to the employee, the department, and the organization; (4) develop an open, trusting, and enjoyable work environment; (5) share information about how the company earns and loses money, who the competitors are, what the company's strategies are, and how each employee fits into the larger plan; (6) involve employees in decision-making, since decisions affect them directly; (7) create a sense of ownership over their work and the work environment; (8) recognize, reward, and promote strong performers while addressing poor performance through improvement plans or termination; (9) give employees opportunities to grow, learn new skills, and receive assistance in meeting organization-related goals; and (10) build individual and team morale through meetings and activities, and acknowledge and celebrate successes at the individual, departmental, and organizational levels (Klaff).

Nelson maintains that the best motivation must come from within, since most jobs are not inherently motivating. Retail and customer service roles, for instance, tend to be routine, mechanical, or high-pressure due to their repetitive nature (Klaff 2003). Managers and HR professionals must ensure that an employee's duties support or contribute to his or her career goals. Meaningful rewards tied to career advancement will motivate employees in these types of roles. Nelson notes that some managers fail to offer rewards because they feel they lack the time, believe employees did not appreciate past rewards, or worry that employees will take advantage of recognition. He shared financial records showing increased turnover at organizations that did not reward employees for good performance. His conclusion is that rewarding employees is easy, inexpensive, and has a lasting impact — a sincere, prompt, and personal expression of appreciation directed at the right person will motivate more effectively than a pay increase or formal award. As Nelson observes, motivation grows from the awareness that someone took the time and effort to notice one's achievement (Klaff).