HRP and strategic HRM HR Management

The concept of strategic human resource management (SHRM) has many different interpretations (as discussed in Chapter ) and ‘different definitions carry different assumptions, assert different causal relationships, even seek different goals’ (Mabey et al., 1998: 58). Nevertheless, there are two key assumptions that are particularly relevant to the role of HRP: firstly, human resources are the key source of competitive advantage; and secondly, the importance of vertical and horizontal integration.

The need for planning is therefore a key component of SHRM in that it can help organisations determine the best use of human resources to meet organisational goals and can facilitate the integration of HR policies and practices with each other and with the business strategy. Planning is such a key component of SHRM that the terms planning and strategy are sometimes used interchangeably, for example: ‘the key message of the HRM literature is the need to establish a close, two-way relationship between business strategy or planning and strategic HRM strategy or planning’ (Beaumont, 1992: 40). However, it is useful to differentiate between the HRP process and the long-term HR strategy of the organisation.

Brews and Hunt (1999) highlight the difference between ends and means; ends relate to what an organisation desires to achieve while means relate to how it intends to achieve them. Thus, the HRP process produces action plans (means) to help the organisation achieve its key objectives or strategy (ends). Many of the SHRM models are particularly concerned with the notion of ‘fit’, i.e. the matching of HR policies and practices with the business or product strategy (see, for example, Kochan and Barrocci, 1985: Fombrun et al., 1984; Schuler and Jackson, 1987).

The models have been subject to criticism on a number of grounds (see Chapter for a more detailed discussion of the key criticisms). Criticisms relate principally to the over-simplification of the concepts of strategy and ‘fit’; for example, ‘both these elements are much more complex and uncertain in reality than they are in many SHRM models’ (Mabey et al., 1998: 81).

This complexity and ambiguity challenges a number of assumptions underpinning SHRM models, for example: the assumption that a preferred business strategy can be identified; that consistency in HR practices can be achieved; and that these practices can be implemented with no resistance from the human resources involved. While these logistical problems are recognised, the process of HRP can help to identify the preferred approach (or approaches, if scenario planning is used) and attempt to predict any potential barriers to implementation.

At the very least, HRP ‘allows managers to consider a range of solutions rather than feeling pressurised into adopting the only realistic option which remains open to them as a last-ditch attempt to avoid a crisis’ (Marchington and Wilkinson, 1996: 105). Lam and Schaubroeck (1998: 5) go further and argue that: This emphasises the need for a two-way relationship between business strategy and HR strategy. However, in the UK it appears that ‘the dominant model of the link between business plans and HR plans sees HR as the “dependent variable” – fleshing out the personnel implications of pre-determined business plans, implementing appropriate policies to fulfil the requirements identified’ (Liff, 2000: 98).

Lam and Schaubroeck (1998) found that, in the majority of firms in their study, the approach to planning was operational rather than strategic. This reflects findings from another study into HRP in large UK organisations (Hercus, 1992) which noted that the priority given to HRP was largely determined by a mismatch between demand and supply. Four of the eight firms had made significant staff reductions in response to difficult economic conditions and ‘as they emerged from this period, HR planning has been given priority . . . because of the shortages of professionals and skilled employees, and corporate goals emphasizing productivity improvement and quality’ (Hercus, 1992: 422).

Thus, even if HR is the ‘dependent variable’, HRP can contribute to the achievement of organisational goals. HRP has a role to play even in the absence of a clear-cut strategy. Sisson and Storey (2000) suggest that:

Planning is critical to strategy because it identifies gaps in capabilities which would prevent successful implementation; surpluses in capabilities that suggest opportunities for enhancing efficiencies and responsiveness; and poor utilisation of highly valued organizational resources because of inappropriate HR practices.

The would-be HR planner will never have the neat and tidy business plans that so much of the prescriptive literature takes for granted. Even so, pressure has to be applied to secure operational plans, however rudimentary, if there is to be any sensible attempt to forecast the number of employees and their skills. (Sisson and Storey, 2000: 59) However Boxall and Purcell (2003: 235) argue that ‘it is not a question of choosing between short-term or long-run planning systems.

Both forms of planning are important and HR planning needs to play an appropriate role in both.’ They also cite research (Koch and McGrath, 1996) that shows that labour productivity is better in firms that formally plan for their future human resource needs. The study by Brews and Hunt (1999) also identifies a link between improvements in organisational performance and the HRP process but the findings indicate that this only becomes apparent after at least four years of formal planning.

Thus, firms who prioritise HRP only on a ‘needs-must’ basis may miss out on the potential advantages. Hercus (1992: 425) found that ‘the role of senior management and the board, and that of the HR director, appears to be particularly important to the success of the HR planning process’. Findings from the Workplace Industrial Relations Survey series show an overall decline in HR representation at board level, thus suggesting that HR issues are not given priority by senior management in many UK workplaces, particularly smaller, non-union workplaces (Millward et al., 2000).

The most recent survey, WERS (Cully et al., 1999) found that over two-thirds (68 per cent) of workplaces had a strategic plan which included employee development issues and in more than half of workplaces (57 per cent) the strategic plan was drawn up with some input from the person with responsibility for employment relations. This strategic approach was most likely to be found in larger workplaces and in the public sector.

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