Matching human resource management strategy with competitive strategy to enhance firm performance.docx

Matching human resource management strategy with competitive strategy to enhance firm performance.docx

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Matchinghumanresourcemanagementstrategywithcompetitivestrategytoenhancefirmperformance

Matchinghumanresourcemanagementstrategywithcompetitivestrategytoenhancefirmperformancebetter

Itisstatethat‘Thefundamentalpremiseisthatbusinessperformancewillbebetterwhenthereisanalignmentbetweencompetitivestrategyandthemanagementofcoreoperatingworkersinsidethebusiness.’thehypothesisthatfirmswhichaligntheirHRMpracticeswiththeirbusinesscompetitivestrategywillachievesuperioroutcomes.（BeckerandHuselid,1998;DyerandReeves,1995;andGuest,1997）Nomatterhow,accordingtoMartell&Carroll（1995）pointoutthatnowadays,itisacommonbeliefinthebusinessthatthehumanresourcesofanorganizationcanbeasourceofcompetitiveadvantage,providedthatthepoliciesformanagingpeoplewereintegratedwithstrategicbusinessplanningandorganizationalculture.Infact,Employeecreatesanimportantsourceofcompetitiveadvantageforfirms（Barney&Elmes,1997）.Therefore,itisimportantthatfirmadoptshumanresourcemanagement（HRM）practicesthatmakebestuseofitsemployees.Incontextofthisessaygaveclearpracticalexamplesofsuchalinkthe‘does’partofquestionwhichincludesupportingorrejectingthepositiveand/orthenegatives.Andalso,thengotstuckintothe‘should’partofthequestionsoftennotingthecriticaldifferencebetweencompetitivestrategyandbusinessstrategyandtheirimplications.

TheHRManagementsystemmightaffectfirmperformanceaswellasthenecessaryconditionsfortheresystemstohaveastrategicimpact.Thebehavioralperspective（Johnson,1987）suggeststhataneffectiveHRmanagementsystemwillacquire,developandmotivatethebehaviorsnecessarytoenhancefirmperformance（Bailey,1993;Johnson,1987;Purcell,1999;Schuler&Jackson,2000）.ComplementaryworkarguesthatHRmanagementsystemsprovideadditionalvaluewhentheyarepurposivelydesignedtobeinternallyconsistentandarethereafterlinkedwithfirmcompetitivestrategy（Mueller,1996）.Inessence,priortheoreticalworkinthisareaconcludesthatcompetitiveadvantageisinpartaproduceofHRmanagementsystemsthatelicitemployeebehaviorsconsistentwiththefirm’sbroaderstrategicandenvironmentalcontingencies（Schuler&Jackson,2000）.

ToreviewoftheliteratureindicatesthatanalignmentbetweenHRMandcompetitivestrategyhavepositivedifferenteffectsontheperformanceofbusiness.AsaccordingtoSchulerandJackson（1987）wereabletorenewthattherehasdifferentcompetitivestrategiesimplytheneedfordifferentkindsofemployeebehavior,anddifferentkindsofemployeebehaviorreflectdifferenttypesofHRMdemand,especiallybetween‘differentiators’and‘costleaders’.However,SchulerandJackson’smodelstatethatifmanagementchoosesacompetitivestrategyofdifferentiationthroughproductinnovation;thiswouldcallforhighlevelsofcreative,risk-orientatedandcooperativebehavior.Thecompany’sHRpracticeswouldthereforeneedtoemphasisselectinghighlyskilledindividuals,givingemployeesmorediscretion,usingminimalcontrols,makinggreaterinvestmentinhumanresources,providingmoreresourceforexperimentation,allowingandevenrewardingfailureandappraisingperformanceforitslongrunimplications.Forexample,theimpactofdifferentapproachestoHRMontheproductivityinsteelminimillsinUSA.Thisshowedthatthemillswithcommitmentsystemshadhigherproductivity,lowscraprates,andloweremployeeturnoverthanthosewithcontrolsystems.Inaddition,humanresourcesystemshavemoderatedtherelationshipbetweenturnoverandmanufacturingperformance.Ontheotherhandifmanagementwantstopursuecostleadership,SchulerandJackson’smodelsuggestsdesigningjobswhicharefairlyrepetitive,trainingworkersaslittleasispractical,cuttingstaffnumberstotheminimumandrewardinghighoutputandpredictablebehavior.（BoxallandPurcell2003:

53-4）

ManagementchooseswhateverabusinessperformancemodelisaveryseeminglycleardividebetweencompetitivestrategiesandtheirimplicationsforHRM,andforethics.ItisreallyonlythroughsectorlevelresearchthatwecangettogripswithcompetitivestrategyandHRM.Forexample,intheclothingindustry,thedistinctionisbetweentheprogressivebundlesystem,essentiallyatraditionalTayloristicassemblylinetypeofproductionsystem,andthemodularsystem,atypeofcellularmanufacturing,TQMandworktransformation.Thelatterproduceshigherquality,fasterturnaroundandinsomecaseslowerscost.（Bailey,1999:

31-32）Whydosofewmanufacturersadoptit?

AccordingtoAppelbaum,BaileyandBerg（2000）pointoutthat“…withoutgettingdistractedbythediffusiondebatethefocushereisoncompetitivestrategy.”（pp.23）theyalsomentionsthatinessence,earlyimplementersofthemodularsystemwereoftenunsuccessful.Later,strategiccoalitionsbetweenHRM,operationsmanagement,informationsystemsandsupplychainmanagementcametogethertolinkmodularproductionto‘leanretailing’pushedbymajorcustomers,likeWal-Mart.Theessentialrequirementwasforathreedayturnaround,comparedwitharoundthreeweeksundertheprogressivebundlesystem.

Thecriticalpoint,however,iswhatparticularmarketsarebeingservedbytheclothingmanufacturers?

ThehighlysuccessfulSpanishladiesfashionretailer,Zara,isagoodexample.Hererapidchangesinfashion,oftenwithunpredictabledemand（thusrulingoutwarehousingandextendedshelflife）requiresfastresponsefrommanufacturerslocatednearretailers’distributiondepots,withintegratedItsystems（theEPOSsystemofbarcodes）providingrapidresponseondataondemandlinkedtosupply.Meanwhile,theclosureofclothingplantsinEuropeandNorthAmericaisindicativeofanothertrend.Incommodity,nonfashionclothing,thereislittleneedforafastturnaround.Costpressuresareparamountandlowwagecountriesinthedevelopingworldbecomeincreasinglyattractive.（Wright,GardnerandMoynihan,2003）Furthermore,Clothingisalaborintensiveindustry.Theprogressivebundlesystemismoreappropriatewherecostminimizationisessentialforviabilityandsurvival,letaloneachievingcompetitiveadvantage.However,thereisanoideaofstudiesofHRMintheclothingindustryindevelopingcountriesbutworkbyWilkinsonandhiscolleagues（2001）intheJapanandMalaysiaelectronicsindustryisinstructive,notingthestreetTayloristic,shortjobcycletime,workinthelattercountrywithitsconcomitantcontrolbasedHRsystems.IfitisseriousaboutstudyingthelinksbetweenstrategyandHRMitreallyoughttobedoingmuchmorecomparativeresearchacrosstherangeofcompetitiveconditionsinasectorglobally.Thiswouldalsohavetoincludestudiesalongthesupplychainaswellasendmarket.（KinnieandSwart,2003:

14）

AnotherexampleofthelinkbetweenHRMandcompetitivestrategy,itiscanbeusefullytakenfromcallcenterswhichcontinuetogrowrapidlyindevelopingcountrieslikeIndiawithareadysupplyofwelleducatedandcheaplabor.However,thegrowthcontinuesindevelopednationstoo,astechnology,consumerpreferencesandtheopportunitytoreducecostscoincide.Oneoftheinterestingfeaturesofcallcentre,forourpurposes,ishowearlystudiestendedtolumpallsuchcentretogetherundertherubricof‘thedarksatanicmillsofthelate20thcentury’andPanopticancontrols（FernieandMetcalf1998;BainandTaylor2000）.Here,marketsseenintherelationshipwithcustomers（fromtransactionaltorelation）ismatchedwithHRMpracticesfromcostminimizationtohighcommitmentmanagement.Wecouldusethesameterms‘transactional’and‘relational’inHRtoo,sincetheyarecommonlyreferredtoinstudiesofthepsychologicalcontract.

CompetitivestrategycanneverbetakenasthedominantforcedeterminingHRM（‘shouldpart’）.Theserelate,firstly,tothestaticnatureofthemodelsused.ThepointmadebyWrightandSnell（1998）onanintegrationof‘fit’and‘flexibility’iswellmade.Markets,technologyandsupplylineschangeasMarksandSpencerhavefoundtotheircost.Thenistheproblemthatfirmsrarelyfaceasingle‘pure’marketwithvariousdegreesofdiversification,asmeansofriskreduction,expected.Whichcompetitivemarketshoulddominateandhowshouldmarketvariety,anddifferencesinmarketconditionsandmarketshare,bereflectedinHRM?

CanafirmhavedifferentHRsystemseachlinkedtocompetitivestrategy?

Howmuchflexibilityandknowledgesharingacrossmarketsisoptimum?

Thisisespeciallyimportantforlargemulti-divisionalcompanies.Toprominentapositiongiventocompetitivestrategyalsorelegates‘labor’toasubservientpositionaftermarket,technology,operationalanddistributionchoiceshavebeenmade.Underthislogicafailuretotakeaccountofemployeeinterests,reflectedperhapsincollectiveandindividualconflictexpressionswouldcausecompetitivedisadvantagebutgettingafitbetweenHRandcompetitivestrategyisataken-for-grantedrequirementofgoodmanagementbutwhichwouldnotleadtocompetitiveadvantage.（Poter1996:

74）

Competitivestrategy,infact,inthewholestrategyworld,astaughtandresearched,hasopenedupinrecentyearswithcompetitivestrategyseenasjustonepartofabiggerpicture.Quitehowbigthispictureis,underthegenerictitle‘businessstrategy’isshownbyGrant（2002）statethat“thetaskofbusinessstrategy…istodeterminehowthefirmwilldeployitsresourceswithinitsenvironmentandsosatisfyitslong-termgoals,andhowtoorganizeitselftoimplementthatstrategy”.（p.13）inthelateranalysisintheGrant’sbook