INTRODUCTION

Nowadays Human Resource Management (HRM) plays a big role in organization. Company realizes that only by putting the right person in the right position on a right time can bring significant positive benefits to the entire organization. Thus, the methods on developing human capital and to use it became a profound problem, as it will immediately influences many aspects of company’s performance and how the particular company is going to survive in such a highly competitive environment today (Budhwar, 2004). In this article, how the various HRM function can support leaders or managers in driving a culture of employee engagement, improve organizational performance as well as to achieve organizational missions or vision are discussed. From time to time, whenever necessary, the HRM of successful organization such as British Airways will be used as the example to compared between the theories and practices of HRM in real life.

THEORIES AND LITERATURE REVIEW

Strategic Human Resources Management (SHRM) Defined

Introduction to Human Resources Management (HRM). Human resource management (HRM) refers to the activities a firm carries out to manage its human resources effectively. Generally, it is argued that HRM activities and context include determining human resource strategy, staffing, performance evaluation, management development, compensation, training and development, change management, labor relations and management of international expatriates in the global context (Schuler & Jackson, 1987).

Introduction to Strategic Human Resource Management (SHRM). Generally speaking, HRM contribute to the strategic orientation of business, i.e., the elements of mission and strategy, formal structure and HRM are interrelated and thus HRM experts are arguing that HRM is an important part of determining organizational strategy (Boxall & Purcell, 2000). This means that we cannot ignore HR in determining or planning our corporate strategy. However, sadly speaking; today, many organizations still view HRM in the context of housekeeping, hiring and paying and retiring staff. The HR is isolated from the long-term planning of the business (HR activities undertaken isolated from one another) HRM models. The successful 21st-century organization will not take the loyalty of talented people for granted. It will constantly try to recruit and keep them. The mutual commitment of an employer and an employee will be one of the most important factors for a 21st-century organization. People are the common element in all social organizations. They create the objectives, the innovations, and the accomplishments for which organizations are praised (Budhwar, 2004). Looked at from the perspective of the organization, people are resources. They are not inanimate resources, such as land and capital; instead, they are human resources. Without them, organizations would not exist. In strategic HRM – HRM activities matches the demands of the changing environment. Among the important functions for this include: (1) HR planning and implementation of recruitment, retention, training and development program (2) Performance management: such as performance appraisal, (3) Reward management: value of excellent, performance, teamwork and quality, (4) developing a structure, culture (Dyer & Holder, 1988).

Importance of HRM

The importance of HRM in an organization cannot be denied. The success of implementation of strategies and tactics for a firm is highly dependent on the HRM of that particular company. Logically, people are the most basic element to the firm’s organization architecture and human capital is the sources of all types of competitive advantages. Thus, to attain success for any organization requires that HRM policies be congruent and consistent with the firm’s strategy across all workforce and time period (Schuler & Jackson, 1987). Specifically, it is not uncommon to found that researchers have found strong fit between HRM practices or procedures with the desired or planned strategy is required for high profitability and enduring performance of a firm. In the long run, this is very critical because the relevancy and proper implementation of HRM policies is the source of sustainable and high productivity & competitive advantage in the global economy. Besides, in the later part, it will also be discussed on the factors determining the integration of HRM into the corporate strategy.

HRM and Line Managers

Today, line managers have a great role to play in determining the effectiveness or success of HRM in an organization. In fact, there is a trend on devolvement of HRM responsibilities to line managers(Budhwar, 2004). This means that the line managers are now required to cooperate in managing human resources for the success of an organization. There are various benefits a company can enjoy by engaging line managers in HRM: (a) allowing HRD decisions to be customized to the real demands and situations at the operational level; (b) improving relationships with workforce and the work environment; and (c) enabling more effective decision making because of the shorter lines of communication.

Organizational Culture Defined

Organization culture can be defined as a pattern of basic assumptions – invented, discovered or developed by a given group as it learns to cope with its problems of external adaptation and internal integration – that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems (Schuler & Jackson, 1987).

Performance Management

Effective Performance Management has become the core of SHRM and is renewing, reinventing and redefining HR concepts. The issues faced by the companies today can be broadly related to the effectiveness of its performance management systems, which are in turns highly influential to the particular company’s employee engagements and their effective performance. The important of performance is very real and become more and more strikingly urgent matter to a company these few days. There has been a perceptions shift in the focus of HR from the early days where people organized instruction using unity to improve working conditions. Nowadays however, companies focus on the capabilities and performance of employees which in turn determine the organization’s performance. No doubt we can observe that effective performance management has become a key issue in HR. As stated in the quotation below, we can see how important performance is today: Performance is your reality, forget everything else. It is an immutable law in business that words is words, explanations are explanations, promises are promises—but only performance is reality. Thus, and many cannot denied the importance and critical roles of an effective performance management system to an organization success and financial performance (Dyer & Holder, 1988).

THE ROLES OF HRM IN AN ORGANIZATION

HRM and its Role to Change Organizational Culture

Both organizational culture and HRM in an organization are important elements that can make or break an organization. Specifically, HRM is critical in shaping and enhancing organizational culture which will in turn affect the performance of the organization. Thus, it is important to aware that HRM plays a role in shaping or changing the culture in any organization. The many aspects of HRM are crucial and inter-related to shaping or changing organizational culture (Dyer & Holder, 1988). An illustration on how the various elements of HRM are used to change a particular organizational culture is presented as follow.

First of all, the leader must have a right mindset – culture is hard to change. They must get ready for a fight and expect that persistency and commitment is very important. The most important determining factor is the leadership factor. Transformational and charismatic leadership style is useful for organizational cultural change. The leaders need to identify the desired new corporate identity and communicate it to the employees. Not only that, the leaders should also develop the desired values for the organization. Leaders should set example with actions to demonstrate that they embrace these values (Dyer & Holder, 1988). Values of excellence and human consideration develop only by demonstrating these values in action. The leader then must design consistent management practices which can shape the new organizational culture. It is important that the systems and procedures are mutually supportive and internally consistent to shape the new culture. When that is done, the recruitment and selection practices must be design for the change. Recruit only those people that fit and agree to the new culture. Apart from that, performance evaluation system must be designed to reward those desired behaviors and promote the new desired organization culture. Employees who demonstrate willingness and proactive actions to embrace the new culture should be rewarded, while those who resist the change should be warned, advised, and if necessary, asked to leave the organization. All of these are important tasks to be planned and executed by the HRM department of an organization (Boxall & Purcell, 2000).

HRM to Improve Organizational Performance & to Achieve Organization Goals

There are researchers argued that the relationship between HRM and company performance must be analyzed in the context of three different HRM roles, as shown in the table below. The respective roles of HRM are then discussed in the following paragraphs.

Table 1: HRM to Improve Organizational Performance & to Achieve Organization Goals

Source: (Budhwar, 2004)

Role #1: Builder. According to the three-role model, the first role of HRM is as the builder who builds up basic HRM foundations. The main objective of HRM under this role is to get the fundamentals of human resource management into place and ensuring the respective internal coherence between HRM, strategies, operations and general management in a company.

Role #2: Change Partner. Besides, under the fast changing business environment, another role of HRM in a company is to act as the change partner. In the dynamic business landscape in the information era nowadays, markets, technologies, and competitive conditions all vary from time to time and thus the strategy of the firm must be designed to follow suit. In this context, the HRM function can serve to facilitate organizational realignment so as to respond to changes in strategic directions of the company and the corresponding external environment. The second stage is about realigning HRM so that it able to meet the requirements of the changing external environment. For example, when there are any changes in the marketplace, the structure of competition or emergence of new technologies, a strategic realignment between HRM and new strategies within the firm should be performed. Proper attention on reconfiguring and changing the approach of HRM so as to implement new strategies effectively is necessary. Typically this requires collaborations between line management and the HR professionals in the organization.

Role #3: Navigator. There are also suggestions urging the firm to be more proactive in handling the fast changing business environment by anticipating and responding to these changes. With an understanding on these dynamics allows management to “build the future into the present.” In such a situation, the role of HRM is as the navigator for a particular firm, to steer the company through dualities and paradoxes of management. The third face may be described as steering via HRM. Here strategic and HR factors cannot be separated; as both of these elements are completely inter-related. Management should place focus in developing the capabilities of the organization and its people to thrive in a world of constant changes.

CASE STUDY – HRM IN BRITISH AIRWAYS

British Airways is a dynamic company facing many changes in the past few decades. This makes the company an excellent example for our discussion. There are two main phases in the development history of British Airways in which we can discuss in the context of HRM.

The first periods in which HRM played a huge role in guiding the company to survive and thrive in the era of turbulence is the period after the year of 1987. In the year 1987, there was a sudden need for cultural change in the company due to major changes in the macroeconomic environment (Salama & Easterby-Smith, 1994). As a result of privatization, the entire airline industry in UK had become highly competitive. In the past, this was not the case, as the airline related companies were actually operating under a highly regulated market. In fact, prior to 1987, the key objective of the organization is just to ensure that aircraft can fly safely (Harvey & Turnbull, 2006). At that period, competitions between airline companies were low, and profitability for these companies are pretty secure. The British Airways organizational culture at that particular time is actually technically biased, authoritarian, formal and even bureaucratic. The human resource management strategies, policies and process in the company were in fact weak and suffer from various limitations. For example, the main criterion for promoting or selecting a manager was based on the technical competency of a particular employee. Not only that, the reward system in the organization was also improper. Instead of deciding promotion based on a person’s broad management experiences, the company promoted people that ad the longer length of service in the company. As a result, an employee’s career in the company can only develop slowly, in a very narrow job scope. All these also indicates that the rewards system is not tailored to reward performances or achievement in the company – causing the many mangers in the company to lost their desire to implement changes or simply to continuously improve its performance (Lauermann, 1992).

However, since 1984, British Airways had been undergoing tremendous changes. Many of the existing company’s values, beliefs and missions are being changed. Change management and various HRM policies were introduced to promote cultural change in the organization. For this, HRM related programs, such as new training program, new appraisal systems have been introduced in various functional department in the organization to stimulate performance among the employees (Harvey & Turnbull, 2006). Not only that, there were also new measures that ensure the HR department to consider a particular person’s management skills in the selection or promotion of a manager. The reward system of the firm was also being changed. Apart from that, managers are also currently rewarded according to their personal performance. All these ensure that the company is being more and more competitive in the marketplace. The entire culture of the organization eventually being changed to one that places a much higher importance and focus on the employee’s performance rather than other irrelevant factors (Lauermann, 1992).

This is a revealing case study, in which we witnessed how the HRM function can support leaders and managers in driving a culture of employee engagement, improve organization performance, manage cultural changes in the organization as well as to achieve organizational goals. After a series of new HRM policies, programs and measures being implemented, the company’s culture had been changed (Salama & Easterby-Smith, 1994). As a result, the company’s performance had improved. The various organizational goals were also achieved. This clearly indicates that HRM policies and measures can affect various organization characteristics that may ultimately affect a particular company’s performance.

CONCLUSION

HRM is perhaps the most important function in a firm. This is not hard to understand, as in any business, human capital is the most basis requirement for the firm to achieve its mission and success. It is human talents that bring together all other resources and market it to the marketplace, in return for profits in any organization. It is the key organization’s elements that contribute to the success or failure of an organization.

There are various roles played by HRM department in any organization. Various researchers or academicians may offer different perspectives on the roles of HRM to a firm. However, generally, it is widely agreed that HRM at least play these roles in an organization: planning and implementation of recruitment, retention, training and development program; performance management, performance appraisal, reward management; planning and execution of various organization development activities and projects, and also to developing a basic structure and culture for any businesses. In fact, there are also arguments asserting that HRM in fact play a strategic role in assisting the organization to achieve its mission and vision. Thus, these give rise to the concept of Strategic Human Resources Management (SHRM).

In this article, it is also discussed how HRM can contribute to shaping an organizational culture, improving organizational performance and lastly, to assist in achieving organizational goals. The many aspects of HRM are crucial and inter-related to shaping or changing organizational culture. Not only is that, there researchers argued that the relationship between HRM and company performance must be analyzed in the context of three different HRM roles, namely: HRM as a builder, HRM as a change partner and HRM as the navigator.

Last but not least, we had also outlined a real life case study to understand how HRM function contributes to solving organization problem. British Airways is selected as the company can offer much insights and evidences on the importance and usefulness or HRM function in an organization. In the discussion, we had witnessed how the HRM function can support leaders and managers in driving a culture of employee engagement, improve organization performance, and manage cultural changes in the organization as well as to achieve organizational goals. After a series of new HRM policies, programs and measures being implemented, the company’s culture had been changed. As a result, the company’s performance had improved. The various organizational goals were also achieved. This clearly indicates that HRM policies and measures can affect various organization characteristics that may ultimately affect a particular company’s performance.

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