How Does SHRM Influence Organizational Outcomes?
How Does SHRM Influence Organizational Outcomes?
In modern business environment, ”Strategy” is always applied in each business area. As strategic management discipline originated in the 1950s and 1960s, strategic human resource management emerged as following. At the beginning, HR department is not viewed as an important division and in many multinational companies (Vymys.P 2014), only marketing, R&D and finance which are direct associated with the competition and revenue could get enough attention from general manager, stockholders and professors in management area. However, nowadays, strategic human resource management (SHRM) is considered to be a source of competitive advantage for a firm (Wright, Dunford, & Snell, 2001). An increasing number of senior managers or professors have begun to focus on human capital. Actually, the core competition ability of an enterprise is accumulated value of employees.
During the process of promoting and implementing all the business in an enterprise, the initiative of the people, the guaranteed skills and the team cooperation is the key factor for it to work effectively; SHRM is, in fact, the management of power development and the core of management behavior includes the acquisition, motivation, organization and development of human resource management. These four parts form a unified whole and none is dispensable. The circulation of the “unified whole” promotes human resources management and enterprise management constantly, thus enhances the enterprise’s core competitiveness and profitability. In Google, the Human Resource department is called People Operations. They emphasize on the process which employees create value for the company and presents strategic modes in HR management.
For example,each employee in Google has material packages in HR department with at least dozens of pages, on which record their abundant personal information,like SAT scores,rankings,GPA,resume, papers published,referees and even message in BBS and blog (Wei,J. 2013). In terms of recruitment,the questions candidates received are various and strange. Google devotes into seeking the smart to compete rivals and indeed, this strategic recruitment method does work and provides countless value for the enterprise (Poundstone,W. 2012). In total, SHRM plays a crucial role in enterprise management and affects the success and failure in an organization.
Strategic Human Resource Management and 8P Model
Strategic human resource management (SHRM) is different from the concept “human resources management”. Put it in detail,SHRM refers that the essence of SHRM is to adopt a flexible but strategic perspective that accurately analyses both the internal and external environments of organizations to assure ’fit’ between HR strategies and practices, and between these and business strategies（Redman,T. and Wilkinson, A. 2013,p.50). The main characteristic of SHRM is to emphasize matching up between human resource management and enterprise strategies, to establish relevant human resource management activities and deployment according to organizational strategic objectives and to provide services and support for the implementation of enterprise strategy(Strategic Human Resource Management And 8P Model 2012) .
Therefore, if an organization wants to achieve the goals, the first thing is to successfully manage human capital. However, how to motivate human talent to create a network and make the company successful? According to Adam Smith（1776）, economic activity was fulled not by workers as a collective mass but by ”the acquired and useful ability of all the inhabitants and members of the society”. With the development of strategic human resource management, there is an increasing number of people focusing on capitalize the intangible asset. Many practices and strategies are applied in promoting the ”best fit” and encouraging the network. Theodore Schultz(1960), American economist and the creator of human capital theory, in his report ”Human Capital Investment and Urban Competitiveness” said, the source of economic growth can not increase only depending on the material input of the Labor force, but the more important is to rely on improved people’s ability.
According to the American economists estimates, from 1900 to 1957, the material capital investment increased by 4.5 times, profits increased by 3.55 times,while human capital investment increased by 3.5 times, profits increased by 17.55 times. During the 38 years from 1919 to 1957, 49% of gross national product is the result of human capital(What Is Strategic Human Resource Management In An Organization 2008). Obviously, the contribution rate of human capital in the era of knowledge economy is far greater than that of material capital.
Therefore, paying attention to the importance of human capital on economic growth is particularly urgent. Under the background of modern social economy, the enterprise must carry out strategic management of human capital and strengthen the competition and development of the enterprise. As I mentioned, SHRM is power management and its core function and soul is acquisition,motivation,organization and development. In terms of behavior and responsibilities of strategic human resource management, to conclude, there are eight essential abilities: Table1.Strategic Human Resource Management and 8P model (MBA Lib,2012)
These eight abilities are specified：
——HRM project system based on strategy(Project)
Understanding organizational strategic decision and management environment is the precondition of human resource planning. According to the enterprise development strategy, combining with the enterprise human resource current situation and making enterprise human resources plans enable the enterprise’s human resources to support enterprise strategic development needs and to contribute to the realization of enterprise strategy.
The main activities of enterprise human resources planning encompass the analysis of supply and demand of human resources, the planning of amount of human resource planning, human resources structure optimization planning and human resource qualification promotion planning, and the concrete measures to realize the objective of human resource planning, namely, the various business plans.
——Job analysis system based on strategy(position)
Job analysis is a basic work in an enterprise’s SHRM. Enterprises select the appropriate organization mode according to their own strategic and on the basis of this, set up departments including management processes and business processes and clear the responsibility and authority of the various functional departments. HR department should clear the responsibilities and content of each department and analyze the necessary knowledge, skills, experience and personal quality as an employee.
——Employee’s qualification analysis system based on strategy and position (personnel) Enterprises should proceed based on strategic objectives and customer demand, on the basis of job analysis, analyze and conclude the staff with high performance and then set up “Staff Quality Model” in order to optimize human resource and motivate the staff’s potentials.
——recruitment system based on strategy and competence(provide) Recruitment based on strategy is no longer to simply hire people to fill the vacancies and what they acquire is the resource with which an enterprise can survive and win the competition. A company not only care about if the candidate is qualified in the position, but also care about if the candidate could provide support for the company to achieve the enterprise strategic objectives. Therefore, an enterprise should take human resource planning and “Staff Quality Model” into account, when recruiting.
——training system based on strategy and employee’s career(plant) The training system based on strategy and staff’s career development should encompass training demands assessment, drawing up a training plan and training results transformation. Training needs assessment should consider about strategic requirements, staff qualities and training needs by which employees want to achieve professional development in their career.
——career management based on strategy(profession)
Career management based on strategy requires an enterprise to set up job positions and job classification based on the organizational strategies. Enterprises should establish different levels of qualification standards according to different employee’s classification, drive the employees to study and improve professional skills. In addition to this, HR division should set up promotion system by which employees have more motivation to do the work and improve themselves. Besides, an enterprise should build a good environment for employees to grow up and positively provide consultancy for employees about promotion and skill improvement. By that, realize that the enterprise leads employees to grow up and employees promote the enterprise to develop.
——appraisal performance system based on strategy and key performance indicator (performance) Performance is an effective output in order to achieve strategic objectives including organizational performance, department(team) performance and personal performance. SHRM focuses on organizational overall performance whose goal is to survive and develop in the competition. Appraisal performance system based on strategy and key performance indicator requires an enterprise to develop relying on organizational strategic objectives and to determine the enterprise key results areas and key performance indicators through the analysis of the value chain of enterprises.
Organizational performance is based on individual performance and team performance. When the organization performance targets are allocated to every employee and every job, and as long as each employee meets the organizational requirements, the realization of organizational performance is guaranteed. Standard procedure of performance appraisal comprises five links, namely, planing assessment, performance management(e,g, performance coaching, counseling and performance tracking), performance appraisal, performance feedback such as performance interview, and the use of performance appraisal(e.g. reward, promotion, elimination and improving the performance appraisal mode).
——payment management based on ability and achievement(payment) There are three ways measuring the value that employees create for the enterprise. So on the basis of it, there are emerging three compensation modes. The first mode is based on job duties which is determined by the importance of job and relative value of job in the enterprise. The second is based on performance evaluation. In this way, an employee’s salary is related to his performance. Evaluating the salary level by employee personal performance or team performance is a result oriented value distribution way. The third is to pay the employees according to employee’s ability, capacity, professional skills, experience internal quality and so on.
Under the framework of strategic human resource management, the enterprise’s salary incentive system should focus on the short-term performance improvement and long-term development of the enterprise. Therefore, compensation management must link to performance and ability appraisal by which each employee’s income and performance is related to the realization of organizational strategies. Payroll management based on performance and ability not only emphasize the value created by individuals and teamwork but also emphasize potential value that individuals and teams could bring about for the enterprise.
To conclude, SHRM to a large extent influences the organizational outcome. I have explained each function separately and each one is closely associated to the organizational strategy. Actually, the core management of an enterprise is human management and each department in the enterprise is operated by people. Therefore, what extent to capitalize the human resource and how to match the human resources with the organizational strategies is critical issue.
More importantly,this also requires the HR division to understand the organizational strategies on which manage employees effectively and plan and execute SHRM strategies to help the enterprise to survive and win the global competition. To sum up, SHRM is to explore and motivate the value of people. A good HR division knows exactly which division need which talents and understand how to motivate the employee potential. However, to what extent to motive and explore these potentials to be the “Best Fit” and how to manage the talents from motivating personalities to forming a standard is another important issue. This would be discussed more deeply.
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6. Redman,T. and Wilkinson,A. 2013, Contemporary Human Resource Management,Pearson,UK
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8.Wei,J. 2013,demystify the recruitment of Google:lengthy and picky five rounds of interviews,Sina ChuangShiJi, viewed 17 September 2014,
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