What is strategic human resource management?
This free course is about the interplay between decision making about people management and the environments within which such decisions are made. The underlying premise is that, normally, better choices are made when they are informed by an understanding of the multiple contexts which are relevant to those choices (Storey, Wright and Ulrich 2009).
The underlying contention is that the management of human resources (HR) is normally (and needs to be) different depending on an organisation’s business strategy; that it is rather different in small compared with large businesses; that it varies depending on the national context, which is likely to involve different employment law and different cultures and practices; it varies depending on the nature of the workforce and the employment sector (Storey 1992; 2007). So, fitting HR decisions to business objectives and to other aspects of context represent two core elements. Another is that strategic HRM involves taking a long-term perspective rather than simply making HR decisions in an ad hoc and short-term manner.
All of that said, there is a counter-argument, which asserts that there is, despite these variations, some common base of ‘good practice’ irrespective of context. This proposition rests on the idea that there are certain fundamentals when managing people. These include fair play, involving the workforce, investing in the workforce so as to increase the value of its contribution and a number of other approaches. This suggests the idea of a basic universal formula based on good professional and ethical practice. It is sometimes labelled the ‘one best way’. There has been some research which suggests a link between such a generic best practice approach and a set of performance outcomes.
So that sets the scene for a debate which has persisted in the HR field for some time. Nonetheless, even if the idea of a basic set of good practices were to be accepted, few people would argue with the additional idea that different contexts are also likely to be important and that the basic approach may need to be adapted to cope with, for example, an economic recession, a shift in market conditions, new technology and so on.
Additionally, whatever the ‘prescriptive’ approach might be, there can be little doubt that in practice there are notable variations in the way human resources are managed and that these variations are often patterned and can be shown to relate to context.
Turbulence and volatility
Numerous practitioners and analysts increasingly refer to the unusual levels of volatility, uncertainty, complexity and ambiguity in the wider environment. Turbulence is found, for example, in shifts in:
- economic fortunes across the globe
- severe weather events which interfere with air traffic and trade
- uncertainties arising from the threats and opportunities introduced to industry by the internet
- domestic political difficulties
- geopolitics in areas of regional unrest.
These points of turbulence and disruption have been so frequently remarked upon that an acronym (VUCA) has been coined to refer to the levels of volatility, uncertainty, complexity and ambiguity in contemporary environments.
Daunting and exciting as these forces might be, the essence of strategy is to seek a measured understanding of the multiple environments and to work out a way forward while bearing in mind the relevant factors. This applies to all aspects of business strategy. In this free course we attend in particular to HR strategy – in other words the implications of these environmental forces for the way human capital is accumulated, deployed and harnessed.
Tactical or strategic responses to contexts?
Managers may respond to different contexts in different ways. They may make ad hoc, tactical responses which ‘react’ to events as they occur. Or they may take a wider reading of contexts and construct a more strategic approach. This latter may offer a more coherent set of policies and practices.
So, one step in a strategic approach is to learn to assess the environment (the context) in a systematic manner.
The wider environment is normally analysed in terms of economic, political, legal, technological and social dimensions. To understand HR strategy in context requires attending to the different meanings of strategy, the ways in which HR can be strategic and the ways in which it can stem from, and contribute to, corporate and organisational strategy. It also means understanding how environmental forces impact on strategic decision making and how, in turn, strategies help shape environments (for example, government policy as one such contextual factor is itself subject to lobbying and shaping by business interests and in some instances by labour interests).
This OpenLearn course is an adapted extract from the Open University course.