BHP Billiton: Strategic Human Resource Management

Subject: Strategic Management
Pages: 11
Words: 3190
Reading time:
11 min
Study level: PhD

Introduction

Strategic Human resource management (SHRM) is a concept that had been advanced more recently by human resource specialist that recognize employee as key factor to the success of the organization (Pinnington and Edwards, 2000). SHRM is different from traditional personnel management in that it recognizes the need to incorporate and align employee work procedures with the organization’s long term business operations strategic objectives. Thus, SHRM is concerned with attainment of two main objectives, that is best utilization of the human personnel which is achievement of the organizations strategic business and operational objectives as outlined in the organization’s mission statement, and secondly ensuring that the human resource achieves job satisfaction in the process (Stone, 2006).

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Unlike ordinary personnel management strategies, SHRM goes beyond the routine activities of human resource such as recruitment, training, personnel development, and salary processing. The key concept of a SHRM is to achieve an efficient human resource that complements the organizational business goals and visions which also build on a framework that integrates the external factors of the organization as well (Fernado, 2005). Because the focus of this paper is aimed at discussing and analyzing the SHRM principles in context of the case study, let us take a brief overview of what SHRM concept entails and how it evolved.

Background to SHRM

For many years most organizations globally were traditionally managed through bureaucratic methods which were thought at the time to be more effective and reliable approaches of managing employees. However, we now know this is not the case because new findings in the field of organization management indicates that bureaucracy methods tends to negatively affect the output of the organization and limit it productivity because of the increased red tape that are found at all levels. More specifically bureaucratic organizations were seen to be greatly hampered in two key areas that were central to growth of any organization. One, it reduced employee motivation thereby reducing the quality of work output; in addition bureaucratic organizations were observed to suffocate innovation in work place which was a factor that greatly limited their growth (McKenna, Garcia-Lorenzo and Bridgeman, 2010).

It is probably out of these limitations that instigated the need of a more efficient and effective organizational management approach of employees that needed to be entrenched in organizational work places. This is what McKenna et al describes as post-bureaucracy that organizations must embrace and continue to contend with given that the elements of bureaucracy per se is an inherent feature of any modern organization (2010). Indeed the current organizational work environment found in most Companies exhibit the classical characteristics of post-bureaucracy system that McKenna et al describes as stressful to employees, which reduces job security and has high job responsibilities (2010). These are the common characteristics of modern day organizations all over the world which is the reason that makes the integration of SHRM in organizations paramount.

SHRM Concept

The SHRM model is based on seven groups of characteristics that have been designed to highlight the core values of a framework which should be incorporated in any form of employee management that is designed to be effective. There are four models of SHRM which have so far been advanced: Harvard, Soft or Hard, Unitarist or Pluralist and Relationship to IR (Butod, 2009). The Harvard model concept is build around employee efficiency that it identifies to be of crucial value that an organization must invest in order to achieve organization desired goals effectively. Hard or Soft HRM model is a two part approach to employee management where the Hard element of the model focuses on strategic employee management to achieve personnel efficiency, and Soft engages employee in workplace through consultation, communication and cultivates personnel commitment (Stone, 2006).

Unitarist or Pluralist is also a two part model where Unitarist strives for commitment through development of mutual objectives between the organization and employee that are aligned together, Pluralist anticipate conflict with employee and therefore develops contingencies. Finally the HRM and Industrial Relationship model argues that organization leaders must factor in complications in personnel management due to interference from employee union organizations (Butod, 2009). The core SHRM characteristics can be summarized in seven groups of practises that defines the way that organizational should ideally interact with their employees.

A core feature of HRM involves personnel management duties as well as management of systems within the work systems. Thus, because HRM is a process that involves personnel and systems management there are two possible approaches that HRM can adopt which include instrumental (hard) and humanistic (soft) (Stone, 2006). Under Instrumental approach the HRM recognizes the need to strategic and qualitative management of human resource under a framework that is oriented towards improving employee performance and increasing the competitive advantage. In humanistic approach the HRM strives towards integrating the organizations policies in employee job responsibilities without compromising on employee (HRM Guide, 2009) development, trust, collaboration, informed choice and active participation.

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It is from this background that the roles of a human resource manager can be comprehensively understood because they are based on these two approaches that we have so far discussed

Issues on the Case Study

BHP Biliton major weakness in it HR section is largely because of the limited skills and lack of speciality in management of personnel by the head of the HR department Mr. Marcus Randolph. Because Randolph is not trained in human resource management the implications is that he is not capable of managing the HR department using the most effective HR management approaches such as the SHRM. At a time when many research studies indicate evidence of causal association between HRM practises that exist in an organization and employee performance, it is important to ensure that BHP Biliton head of HR is conversant with such best HR practises. Nevertheless, as pointed out by Wright there is also a level of advantage that exist in having the HR professional reinvented as both “business partner and internal consultants” as is currently the case in this case study since Randolph is strictly not a HR specialist (Wright, 2000).

The major issues that come out in this case study indicates that most Companies are facing challenges in management of HR personnel; for Randolph the challenge is to provide good leadership to the HR department despite his skill limitation on HR issues. In the case of Andrea Grant at Telstra, the challenge is even more difficult since she is expected to spearhead the retrenchment of employee and achieve a cultural change for the organization. Both of these initiatives are unpopular among employees unless handled carefully by a skilled HR specialist; in fact an integral feature of SHRM that differentiates it with other HR practises is employee championship as we shall see later in this paper.

This means HR professionals should trend carefully in tackling personnel matters such as retrenchments that could potentially pit employees against their management. Indeed, as articulately stated in the case study which cites a survey done on 350 different HR departments of many organizations wrangles exist between employees and the organizations management. The reason for this as we shall see shortly rest in the HR management practises that the organization decides to apply in management of its personnel’s. In fact, the traditional HR management practises is what has led to these scenario being witnessed in many organizations world over; it is also because of these limitations of the traditional HR practises that led to invention of SHRM.

In summary the inherent weaknesses of traditional HR practises are best exemplified through SHRM concepts that highlight the shortcomings of the current HR practises. Thus, traditional HR practises has the following major characteristics; HR directors applies short term measures to address employee concerns that eventually fail and result in regular crash between employees and the management (Simmonds, Porter and Bingham, 2007). HR departments also implements policies concerning its employees in unorthodox manner that usually sidelines and completely disregards employee input during the whole process leading to conflict. Overall, many organizations that rely on traditional HR management have failed to appreciate fully the value of its employees or align employee work output with the organizational strategic business operations (Simminds et al, 2007).

This approach results in organization dysfunction because employee work responsibilities are not integrated with strategic business objectives of the organization (Kor, and Leblebici, 2005). This also results in management enforcing compliance rather than winning employee commitment because the level of motivation is also not adequate. Another characteristic of traditional HR management is what is described by Butod as pluralist theory in SHRM; this implies the presence of low trust between the organization and the employees because of the antagonizing atmosphere (2009). Also under traditional HR practises the organizational culture of the Company can be said to be bureaucratic with defined job descriptions which kills creativity and reduces motivational levels because of high work burnout (Alma, Whiteley and Jervis Whiteley. 2003). Finally, traditional HR practises evaluates personnel value and achievements based on cost minimizations thereby missing on their potential. In the following section we shall see how the SHRM principles address these shortcomings of the traditional HR approaches that are still commonly used in many organizations. These are some of the issues that are evident in the case study and which we shall use as the basis to endorse use of SHRM management approach that is more effective than traditional HR methods.

SHRM Plan Recommendations

As mentioned earlier the SHRM model is based on seven groups of characteristics that have been designed to highlight the core values of a framework which should be incorporated in any form of employee management that is expected to be effective. The following table summarizes the key recommendations that SHRM advocates in management of human resource in key areas of focus.

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Figure 1

SHRM areas of focus Strategic Human Resource Management Recommendations
Time and Planning Perspective
  1. An organization should apply long term measures towards solving employee problems.
  2. An organization should anticipate, design and implement policies that are to the best interest of both the company and employee welfare long before employee start agitating for them
  3. An organization develops employee policy reforms that are consistent with it future strategic goals and objectives of the Company
Psychological Contract
  1. An organization approach to human resource management aims to achieve commitment from personnel rather than enforce compliance through enforcement as is the case in traditional HR practises. This approach increases employee work output
Control System
  1. An organization should allow self control in personnel management.
Employee Relations Perspective (a) An organization should apply Unitarist theory towards employee management and cultivates a culture of trust with its human resource personnel
Proffered organizational theory
  1. An organization adopts a devolved structure with flexible employee roles
Roles
  1. Employee job responsibilities are integrated with organizational operational strategies
Evaluation Criteria
  1. A company engages with employee for purposes of maximum utilization

SHRM Models

Further to the recommendations outlined above let us also briefly review one model of SHRM that is central and most commonly used in HR management; that of Harvard model.

The Harvard Model Southdown Co
Source: Adopted from University of South Pacific 2010

Employee Motivation

Because employee motivation is a central factor in human resource management, let us briefly discuss the concept of motivation under SHRM approach. Motivation refers to the desired positive mental attitude in an employee that emanates from activities done by the employer or that which comes from within the employee that serves to promote job satisfaction and over achievement (Reeves, 2008). Therefore motivation is in two parts, that which an organization undertakes through such activities as motivational talks, salary increase and improved work environment, or through personal motivation that comes from within the employee. Motivation of employees in work environment has several benefits; it benefits the employee through job satisfaction which usually results to the employee being more creative and productive at work place (Kouzes and Bulker, 2007). This is besides the direct benefit that motivation has to the organization (Erez, Earley and Hulin, 2004). An innovative employee is more proactive in tackling job related issues with little if no guidance from the management. In addition they are creative in developing and providing solutions for job related problems since they have increased interest in their job and therefore are well versed with their job procedure thoroughly (Kouzes and Bulker, 2007). An employee is able to achieve personal motivation if the job description matches with their skill which makes it easier to do and enjoyable, other reasons are personal happiness, financial security and perceived value (Marlock, 2007). The perception of an internal management system that rewards productivity and which detects nonperformance is both deterrence and a motivator to employees (Pearce and Robinson, 2008): that prevents employees from lapsing and at the same time serves as a motivation to work hard and perform in order to progress rapidly through the organization defined career path.

Pfeffer has identified seven key areas in organization that build on employee efficiency and directly contribute to the company performance. The key areas are: employment security, self-managed teamwork, pay rise pegged to personnel performance, selective recruitment process, regular personnel training, communication facilitation in organization and reduction employee differentials (cited in McCourt and Edridge, 2004). All these issues are incorporated in a SHRM framework that advocates for an effective motivation plan for HR department. Indeed, current research study indicates that a good motivation system should be integrated in any effective personnel management plan (Michie, and Sheehan-Quinn, 2001). Its benefits to employees include suitable job environment, health and job satisfaction all of which contributes to the success of an organization and advertently the reason why an organization should strive to ensure employees are always motivated at work place.

Other theories that relate to employee motivation are what are referred as the McGregor decision making theories, commonly referred as theory X and theory Y; they were both developed from the world renowned Hierarchy of Need, the work of Abraham Maslow (McGregor, 1960). Theory X is focus is on the lower human needs as described in the hierarchy of needs while theory Y is based on the higher end of the human needs. The McGregor theories are used to guide the organization to arrive at a decision that enable the management to choose the best set of employee motivation that would enable an organization achieve the required level of motivation.

The premise on which the McGregor theories are advanced are based on the fact that organization always strives to achieve profit through utilization of various resources that are at its disposal such as human resource and finance which are its major ones.

Culture in HRM

Culture in HRM can be seen in the concept of normative perspective which encompasses human needs as indicated by the Maslow hierarchy of needs. Such as the need to observe hygiene most often and not because unhygienic conditions attract diseases, normative perspective is also what dictates the existence of human beings (Foss, 2006). It is what for example the society, culture or ones community views as sacred notwithstanding the absence of scientific evidence. Thus, what an individual or organization values is steered by the institution in which they are part and parcel (Foss, 2006). For example an individual from a certain community may value wealth in the form of cars, land or houses while another from a different community may value social institutions such as marriage and family. In both cases their values are a function of the community norms in which they have been brought up. The society may also influence ones values through indicating what is good and what is bad. As such this theory has great implications on the impact of culture on issues that relate to employee attitude towards job as well as HR management approaches.

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Conclusion

As far as employee welfare is concerned, HR manager should go beyond the mere improvement of employee welfare at work place to include assisting employees to strike a balance between work and rest and therefore promote favourable work conditions that does not involve working under pressure (Boxall and Purcell, 2008). HR specialists should also adopt measures that do not exploit employee labour force and which are consistent with labour laws of the country in which the organizational is based. As such, HR manager plays an important role in driving employee reforms within the organization which means they positions themselves as partners to employee unions rather than their antagonists. As a result HR manager get to appreciates and respect the role of employees unions when they start by respecting their own human resource within the organization. This results in improved working conditions for employees and the working relationship between employees and organizational managers which facilitates achievement of business objectives. Thus, an effective SHRM management system must address all these areas and every other component that strengthens employee work output and contributes to achievement of goals by the organizational.

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