By: M. Felisa Latorre
Department of Administration
ITAM
In 2013, the Organization for Economic Cooperation and Development (OECD) projects that growth in Mexico’s gross domestic product in 2013 will accelerate to 3.8%. This pace of growth implies a challenge and an opportunity for Mexican companies. In this context of expansion, organizations can grow their business and increase their revenues; but they must compete in a changing, turbulence and globalized market.
By aligning all of its resources (including human resources), a company can better pursue the strategic objectives that will lead to expansion and growth of the business. To this end, there are two key words: mission and vision. First, management must establish strategic objectives for the company to reach in the short, medium and long term, taking into account the restrictions, needs and opportunities of its market. On this basis, its mission must be to align all of its resources (both tangible and intangible) behind meeting these objectives (Peiró, 1999). Second, it must describe a vision (Boswell, 2006) by which the organization’s mission is known and shared by all employees, who know what their duties are and what their contribution is to the company’s strategic objectives. In this context, the human resources management department should not just administer payrolls and contracts, but create human resource practices aligned with these objectives, in order to have a team of workers who contribute value and are committed to the organization’s mission and culture.
For this reason, all of the company’s workers should know the procedures and practices of the human resources area. It is best to have a strong human resources system that clarifies what the situation is and what is expected of the worker (Ostroff and Bowen, 2000) at all times. The company avoid the kind of uncertainty that paralyzes, fosters false rumors, and is therefore unproductive; this is even more true for knowledge workers, whose tasks are cognitive.
There are two major theoretical approaches to the types of human resource practices needed to achieve organizational objectives. First, there is the “hard” approach (Fombrum, Tichy y Devanna, 1984), which sees the employee as just another tool for the company, over which it must exercise absolute control at the lowest cost possible. Under this approach, the company establishes a transactional relationship with the worker, and human resource practices of these companies follow what is called a “market system.” These practices are based on selecting personnel for their technical skills and according to the company’s specific needs. The employee’s goals, not his or her processes, are evaluated, and the duties the employee must carry out according to contract are constantly controlled. The need for training is avoided by selecting skilled personnel. The supervisor’s duty is to constantly control his or her subordinates. This vision and style of management implies that employees are not committed to the company and merely carry out the tasks assigned to their job. But this is not a very prudent approach, and much less with workers that are strategic to the organization.
The second approach can be termed the “soft” approach (Beer, Spector, Lawrence, Quinn, Mills and Walton, 1984) to human resource management. The basic premise of this approach is that workers respond better when their organization recognizes their individual needs and directs them, while they meet the company’s objectives. Under this perspective, human resources practices like “high commitment” have been developed, the primary pillars of which are: career development, selection of personnel according to technical skills and adaptation to the company culture, compensation for skills, encouragement of participation and egalitarian policies. Intermediate executives become coordinators that facilitate the dissemination of the company’s vision.
Note that under this approach, personnel selection is based on the skills of the worker and on the extent to which the worker shares the company values. If workers share the company’s values and culture, it will be easier for them to make sense of the mission and work toward the company’s objectives.
Furthermore, by empowering the chain of command (supervisors, managers and intermediate executives), the company improves the line of vision and organizational communication and the workers’ specific needs are met through commitment to the organizational objectives. This avoids procedural inequality, because it is been proven that the “one-size-fits-all” method does not work. In other words, an egalitarian treatment to all workers, without rewarding or involving the best, tends to reduce yield and leads to the loss of more efficient workers and, therefore, the competitive advantage they provide (for example, offering overseas training to first-time parents or giving scholarships and educational discounts for children to a professional collective in exchange for high levels of productivity leaves out employees who have no children).
The way to retain high-performance workers that provide the company a competitive advantage in its industry is to have them commit to the business project and treat them differently according to the needs of each. Employees want to feel unique and special; by treating them as individuals, we attain what Hawthorne’s experiments have shown: an increase in productivity with no apparent change other than making them feel they are unique and recognized employees. Employees who feel recognized and supported try to rebalance the labor relationship, because they feel the need to repay the company and “return to support,” by increasing their productivity. We therefore have committed employees that share the organizational values and also know and pursue the strategic objectives laid out by the company. These employees are, all in all, highly motivated and dedicated workers that contribute added value to the organization and help distinguish it from other companies.
If a company’s human resource management adopts high commitment practices, if it empowers its chain of management, if it offers a fairly differentiated treatment to employees, and if it is aligned with the company’s strategic vision, it will increase the company’s competitive advantage against its peers in the market.?
References
Beer, M., Spector, B., Lawrence, P.R, Quinn Mills, D., y Walton, R. E. (1984), Managing Human Assets, Nueva York: Free Press.
Boswell, W.R. (2006), “Aligning employees with the organization’s strategic objectives: Out of ‘line of sight,’ ‘out of mind’”. International Journal of Human Resource Management, 17, 1489-1511.
Fombrum, C.J., Tichy, N. M y Devanna, M. A. (1984), Strategic Human Resource Management, Nueva York: John Wiley.
Ostroff, C., y Bowen, D. E. (2000), “Moving HR to a higher level: HR practices and organizational effectiveness”. En Klein, K. J. S., y Kozlowski, S. W. J. (comps.), Multilevel theory, research, and methods in organizations: Foundations, extensions, and new directions (pp. 211-265). San Francisco: Jossey-Bass.
Peiró, J. M. (1999), “El Modelo AMIGO: Marco contextualizador del desarrollo y la gestión de recursos humanos en las organizaciones”, Papeles del Psicólogo, 72, 3-15.
Creating Value Through Strategic Human Resource Management
By: M. Felisa Latorre
Department of Administration
ITAM
In 2013, the Organization for Economic Cooperation and Development (OECD) projects that growth in Mexico’s gross domestic product in 2013 will accelerate to 3.8%. This pace of growth implies a challenge and an opportunity for Mexican companies. In this context of expansion, organizations can grow their business and increase their revenues; but they must compete in a changing, turbulence and globalized market.
By aligning all of its resources (including human resources), a company can better pursue the strategic objectives that will lead to expansion and growth of the business. To this end, there are two key words: mission and vision. First, management must establish strategic objectives for the company to reach in the short, medium and long term, taking into account the restrictions, needs and opportunities of its market. On this basis, its mission must be to align all of its resources (both tangible and intangible) behind meeting these objectives (Peiró, 1999). Second, it must describe a vision (Boswell, 2006) by which the organization’s mission is known and shared by all employees, who know what their duties are and what their contribution is to the company’s strategic objectives. In this context, the human resources management department should not just administer payrolls and contracts, but create human resource practices aligned with these objectives, in order to have a team of workers who contribute value and are committed to the organization’s mission and culture.
For this reason, all of the company’s workers should know the procedures and practices of the human resources area. It is best to have a strong human resources system that clarifies what the situation is and what is expected of the worker (Ostroff and Bowen, 2000) at all times. The company avoid the kind of uncertainty that paralyzes, fosters false rumors, and is therefore unproductive; this is even more true for knowledge workers, whose tasks are cognitive.
There are two major theoretical approaches to the types of human resource practices needed to achieve organizational objectives. First, there is the “hard” approach (Fombrum, Tichy y Devanna, 1984), which sees the employee as just another tool for the company, over which it must exercise absolute control at the lowest cost possible. Under this approach, the company establishes a transactional relationship with the worker, and human resource practices of these companies follow what is called a “market system.” These practices are based on selecting personnel for their technical skills and according to the company’s specific needs. The employee’s goals, not his or her processes, are evaluated, and the duties the employee must carry out according to contract are constantly controlled. The need for training is avoided by selecting skilled personnel. The supervisor’s duty is to constantly control his or her subordinates. This vision and style of management implies that employees are not committed to the company and merely carry out the tasks assigned to their job. But this is not a very prudent approach, and much less with workers that are strategic to the organization.
The second approach can be termed the “soft” approach (Beer, Spector, Lawrence, Quinn, Mills and Walton, 1984) to human resource management. The basic premise of this approach is that workers respond better when their organization recognizes their individual needs and directs them, while they meet the company’s objectives. Under this perspective, human resources practices like “high commitment” have been developed, the primary pillars of which are: career development, selection of personnel according to technical skills and adaptation to the company culture, compensation for skills, encouragement of participation and egalitarian policies. Intermediate executives become coordinators that facilitate the dissemination of the company’s vision.
Note that under this approach, personnel selection is based on the skills of the worker and on the extent to which the worker shares the company values. If workers share the company’s values and culture, it will be easier for them to make sense of the mission and work toward the company’s objectives.
Furthermore, by empowering the chain of command (supervisors, managers and intermediate executives), the company improves the line of vision and organizational communication and the workers’ specific needs are met through commitment to the organizational objectives. This avoids procedural inequality, because it is been proven that the “one-size-fits-all” method does not work. In other words, an egalitarian treatment to all workers, without rewarding or involving the best, tends to reduce yield and leads to the loss of more efficient workers and, therefore, the competitive advantage they provide (for example, offering overseas training to first-time parents or giving scholarships and educational discounts for children to a professional collective in exchange for high levels of productivity leaves out employees who have no children).
The way to retain high-performance workers that provide the company a competitive advantage in its industry is to have them commit to the business project and treat them differently according to the needs of each. Employees want to feel unique and special; by treating them as individuals, we attain what Hawthorne’s experiments have shown: an increase in productivity with no apparent change other than making them feel they are unique and recognized employees. Employees who feel recognized and supported try to rebalance the labor relationship, because they feel the need to repay the company and “return to support,” by increasing their productivity. We therefore have committed employees that share the organizational values and also know and pursue the strategic objectives laid out by the company. These employees are, all in all, highly motivated and dedicated workers that contribute added value to the organization and help distinguish it from other companies.
If a company’s human resource management adopts high commitment practices, if it empowers its chain of management, if it offers a fairly differentiated treatment to employees, and if it is aligned with the company’s strategic vision, it will increase the company’s competitive advantage against its peers in the market.?
References
Beer, M., Spector, B., Lawrence, P.R, Quinn Mills, D., y Walton, R. E. (1984), Managing Human Assets, Nueva York: Free Press.
Boswell, W.R. (2006), “Aligning employees with the organization’s strategic objectives: Out of ‘line of sight,’ ‘out of mind’”. International Journal of Human Resource Management, 17, 1489-1511.
Fombrum, C.J., Tichy, N. M y Devanna, M. A. (1984), Strategic Human Resource Management, Nueva York: John Wiley.
Ostroff, C., y Bowen, D. E. (2000), “Moving HR to a higher level: HR practices and organizational effectiveness”. En Klein, K. J. S., y Kozlowski, S. W. J. (comps.), Multilevel theory, research, and methods in organizations: Foundations, extensions, and new directions (pp. 211-265). San Francisco: Jossey-Bass.
Peiró, J. M. (1999), “El Modelo AMIGO: Marco contextualizador del desarrollo y la gestión de recursos humanos en las organizaciones”, Papeles del Psicólogo, 72, 3-15.