strategic approach to human resource management and development

University Degree Business and Administrative studies

Student number: 7389565

Question 1

What issues will be involved when we try to take a strategic approach to human resource management and development, as this is defined in the module, in a particular organisation?

With reference to your own organisation or one with which you are familiar, discuss this question.

Introduction

In this essay I will evaluate the issues involved when Strategic Human Resource Management is applied to Zenith Bank Plc’s objectives and goals. But first we must establish the meaning of Human Resource Management, Strategy and Strategic Human Resource Management.

Human resource management and development (HRM/D) involves how an organisation oversees its employees effectively and helps them develop, and how the organisation is able to achieve success through its employees. It deals with recruiting people, compensation, monitoring employee’s performance, motivation, organisation growth and training. A HRM approach seeks to ensure a fit between the management of an organisation's employees, and the overall strategic direction of the company (Miller, 1989). According to Michael Armstrong, Human resource management is the and approach to the of an organisation’s most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business. Beer et al (1984) believed that pressures have created a need for a long term perspective in managing people and consideration of people as potential assets rather than merely a variable cost. They stated that Human resource management involves all management decisions and actions that affect the nature of the relationship between an organisation and its employees – its human resources.

Michael Armstrong (1989) argued that for the purpose of having an effect on the bottom line, the Human Resource function should take a strategic view of their contribution, aiming to shape the culture and values of the organisation. These goals involves reassuring a performance-oriented environment; arousing intellectual inventiveness; promoting a unified vision of the organisation; formulating the agenda for transformation; knowing that people add value; and should make steps to promote flexible working environment, this will add value to the organisation and lead to competitive advantage. Human resource prospects does not depend on improving initiatives not joined to organisational objectives and social or cultural background factors, neither in best practices production. Rather it depends on ensuring that when making decisions in managing people, strategic intentions are considered. There are controversies that the functions of Human Resource is still under pressure in demonstrating its value added features to an organisation.

Strategy according to Michael Armstrong has two fundamental meanings - it is forward looking and it is also a declaration of intent - what we want to do, and how we intend to do it."Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations (Johnson and Scholes). In order words strategy is about where the organisation is trying to get to in the long run and how the organisation intends to achieve the goals.

Pearce and Robinson (1988) defined strategic management as the set of decisions and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of an organisation. After an organisation identifies its mission and vision and the strategies it will put in place to achieve this, the organisation must pay attention to the resource based required in making it succeed, that is, the human factor. If the staff of Zenith bank are not in line with the strategy of the bank, then it will not work. The superior performance of the bank was achieved as a result of the efforts of the bank’s committed workforce (Human Resource) through the rendering of exceptional customer service delivery.

Strategic Human Resource Management is a method through strategic management that establishes how organisational targets are accomplished through employees with the aid of Human Resource strategies and integrated HR procedures and customs. SHRM’s intention is at creating strategic ability by ensuring that the organisation has the talented and well-inspired employees it needs to attain sustained competitive advantage.

Strategic human resource management is when an organisation links its human resources with its strategic goals and objectives in order to enhance business fulfilment and improve organisational culture that foster innovation, flexibility and competitive advantage. In an organisation, SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding personnel (Rana Sinha).

The Organisation – an introduction

Zenith Bank Plc is one of the biggest and most profitable banks in Nigeria with over four hundred (400) branches and business ...

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The Organisation – an introduction

Zenith Bank Plc is one of the biggest and most profitable banks in Nigeria with over four hundred (400) branches and business offices nationwide. Excellent customer service delivery and development of superior asset quality, strong capital base, professionalism and corporate governance are the bank’s abiding principles. Zenith is an organisation where staff comes from varied educational and cultural backgrounds bringing with them a wealth of experience and this encourages a continuous social learning from mixing and inter-cultural interaction.

Looking at the concept of strategy according to Michael Armstrong, Zenith Bank focuses on exceptional customer service delivery in order to exceed customer expectations and also its consistent investment in information technology; this has given the bank competitive advantage.

The bank’s strategic intent (vision) is for its “brand” to be known for innovation and superior customer service. In order to achieve this vision, With reference to the bank’s 2008 annual report, the bank came up with some strategies:

(1) To deliver superior and tailor-made service experience to all customers at all times (5 minutes maximum waiting time for customers that come into the bank premises).

(2) Develop deeper and broader relationship with all clients; get to know their individual and industry peculiarities.

(3) The bank intends to maintain its position as a leading service provider in Nigeria and also expand its operations internationally.

(4) Strive to be a leading service provider in Nigeria by continuing to build on the long standing relationships, capabilities and the strength of its brand and reputation.

(5) Continually enhance its processes and systems platforms to deliver new capabilities and improve operational efficiencies and achieve economies of scale.

A Strategic approach to Zenith Bank Plc’ Human Resource Management

The strategy explains the function of the HR department as one in assisting to carry out the long-term transformation that Zenith Bank will face. Accomplishment of this strategy is subject to the joint efforts of the Top management and entire staff.

Guest David (1989) provided a 'criteria of eligibility' for the success of an HRM model in an organisation. If Zenith Bank does not meet the criteria then it will be difficult to apply the strategic approach to the bank’s human resources and would advise the bank to consider other alternatives to SHRM: the Resource-based view and the Good Practice approach.

The criteria are:

Corporate leadership: There must be the willingness and support of the top management.
Strategic vision: There must be a strategic view shared by the executives in the bank, they must be in agreement that HRM is a key component of the bank’s overall strategy.
Technological/Production feasibility: HRM is difficult to introduce if large numbers of the organisation’s employees are engaged on short- cycle, repetitive production-line tasks.
Employee/industrial relations feasibility: If workers have been selected to minimum specifications and display a strong instrumental orientation, they are unlikely to fit comfortably into the kind of environment necessary for HRM. Trade Unionism does not sit comfortably with the goals of commitment and flexibility.
Ability to get HRM policies in place: The ability of managers to get necessary policies in place and to ensure successful implementation.

According to Devanna et al, strategic management involves the consideration of the bank’s mission and strategy, to accomplish the mission; the bank must decide what optimal structure is needed to carry out its objectives. The next step is to select and recruit people to carry out the tasks needed to ensure that the bank’s strategies are effectively executed. Hence, Strategic management is an essential tool that managers can use in the strategic platform of their organisation; Top management should therefore include human resource management as significant part of organisational strategy .This is important as the bank needs its human assets to achieve their goals. In banking industry, all banks have the same products and services, what distinguishes a bank is its “brand” and “quality of human resources”, the competitive advantage the bank will gain through capital and technological advancement can be easily replicated by other competitors in the industry but a well skilled and motivated workforce with the right organisational culture is very difficult to replicate. Alfred Chandler (1962) argued about the link between Strategy, Structure and HRM- that firms will be faced with challenges of implementing new strategies with outdated structures, they will also have problems when they try to impact new strategies with unfit human resource systems, so it’s important for managers to align the structure and the human resource systems in order to drive the strategic objectives of the organisation.

Strategic Human Resource Management will help the bank focus, match its resources with available opportunities, build its competencies; hence lead to growth. Therefore SHRM’s main objective is to enhance employee productivity by concentrating on business restrictions that exists outside of human resources. The main action of a strategic human resource manager is to recognize essential HR areas where strategies can be executed in the long run to enhance the overall employee motivation and productivity. Without active participation and communication between Human resources and top executives cooperation is impossible.

The main theory of the HRM strategy is that the way people are managed and how it is turned into personnel procedures and practices such as recruitment, compensation, motivation and training, should be adjusted and integrated with business strategy as the basis of superior performance.

The concepts of Strategic HRM:

Strategic HRM according to Michael Armstrong is supported by three concepts, the resource-based view, strategic fit (strategic integration) and strategic flexibility.

The resource-based view: this states that it is the range of resources (including human resources) in an organisation and the way they manage and develop them that produces the organisation’s unique character and creates competitive advantage (Hamel and Prahalad, 1989). This resource includes all the experience, knowledge, judgement, risk taking and wisdom of individuals associated with the organisation. In order to sustain competitive advantage, an organisation’s resource must be valuable, rare, imperfectly imitable and non-substitutable.

Wright et al (1992) listed four criteria that govern the ability of human resources to exist as a sustained competitive advantage:

1. They must add positive value to the organisation.

2. The human resource must be rare or unique among current and potential competitors: they argued that an organisation could theoretically obtain employees of superior ability through a combination of valid selection programs and attractive reward systems.

3. Human resource must be imperfectly imitable.

4. Finally, human resource must be non-substitutable.

Strategic fit: The central concept of SHRM as provided by Devanna et al., is that of strategic integration which has two aspects: vertical integration and horizontal integration.

Vertical integration: This refers to the linking of human resource management activities/practices such as selection, performance management, appraisal, rewards and development (the human resource cycle) with the strategic overall management processes of the organisation. Zenith Bank’s HR strategy should vertically integrate into its business strategy, plans and goals. Each member of staff should have work plan that they will work towards achieving, this should be monitored and reviewed throughout the year by their line manager or supervisor. These work plans are goals/targets that employee work towards which are directed towards their growth but also back up the bank’s overall goals and objectives.

The Human resource activities:

Strategic Selection: the strategic selection process involves matching the right people with the right jobs in the organisation. In Zenith bank, employees are sometimes forced to work in departments against their wish, for example, the marketing department, it’s not everybody that has a flare for marketing or have good marketing skills so people shouldn’t be forced, often times these employees don’t usually meet their set target. The bank needs to identify individual’s area of competence before assigning to various departments.
Strategic Appraisal: the performance appraisal is the key to an effective human resource system, future human resource projections depend upon assessment of the performance of the existing employees so that plans can be made for future shortages or surpluses. The bank presently conducts a quarterly appraisal for all staff.
Strategic Rewards: this is a form of motivation. the reward system is a managerial tool for driving organisational performance, after the bank has done a good job of evaluating performance, reward should be allocated based on how well people performed. This will make employees go beyond their normal job function (going extra mile).
Strategic Development: this is to ensure that employees are properly equipped in terms of knowledge and skills in order to carry out their job effectively. This can be through on the job training and formal training.

Horizontal integration

This refers to links between the HR activities. The conduct of one HR task may influence the conduct of another. Horizontal integration is fulfilled by creating a consistent and linked range of interlinked and jointly strengthening HR policies and practices. This is attained by shared procedures, for example through performance supervision, development of employees and motivation. The policies and practises are enforced by HR to assist managers in rendering effective and efficient people management services; this will facilitate the bank’s overall goals and objectives.

Strategic flexibility: This is the ability of an organisation to react and adjust to changes in its competitive environment.

Participation of Human Resources towards Organizational Goals

The main purpose of Zenith Bank’s HR function is to provide professional advice and support to management and entire employees. This will be achieved through the implementation of Human Resource strategies:

High performance management: this is making an impact on the performance of the bank through its employees in such areas as productivity, exceptional customer service, growth, profits and the delivery of increased shareholder’s fund.

High involvement management (Participation): According to Lawler (1986), the underlying hypothesis of high involvement is that employees will increase their participation (involvement) with the organisation if they are given the opportunity to control and understand their work; this involves treating employees as partners whose interests are respected and who have a voice on matters that concerns them. Guest (1997) suggested that the commitment and flexibility provided by highly involving action lead to behaviour changes among employees.

High commitment management: An organisation’s business strategy attainment depends a great deal on its employees’ commitment level. If employees connect with organisational goals and culture they are less likely to leave their organisation to work for another. According to Malhotra et al., 2007, people who have jobs that meet their expectations, jobs that give them responsibility and allow them to express themselves, have higher effective commitment. David Guest (1989) stated that commitment is concerned with the goals of binding employees to the organisation and obtaining behavioural commitment to high performance.

Wood (1996) described high commitment management as a form of management which is aimed at obtaining commitment so that behaviour is primarily self regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organisation are based on high levels of trust.

Porter et al suggested that commitment has three components:

A strong belief in and acceptance of the organisation’s goals and values.
A willingness to exert considerable effort on behalf of the organisation.
A strong desire to maintain membership of the organisation.

In other words, commitment can be either affective or continuance. Affective commitment is the kind of commitment that makes you go extra mile for the organisation while Continuance commitment is one that makes you want to stay with the organisation.

The traditional or control-oriented approach to work force management prevails in Zenith Bank Plc. Management organisation structure is layered with top-down controls, employee input is allowed on relatively narrow agenda, Business information is distributed on a need to know basis. The bank operates Unitarist participation- at management’s discretion, employee’s opinion or views are rarely sought.

What are the ways by which Zenith Bank can increase employee’s performance, participation and commitment?

The development of career ladders and emphasis on training of employees at all levels (Beer et al 1984 and Walton 1985), if commitment is to be retained an organisation needs to train and develop its employees. Organisational performance can be improved through training of staff, that is, when an employee is trained, it will improve the person’s knowledge and skills and this will reflect on his job functions which will in turn reflect on the performance or service rendered by the organisation. Training is a catalyst to positive attitudinal change and an essential motivator.
The reduction of hierarchies.
Emphasis should be placed on teamwork.
New forms of assessment and payment system and more specifically, merit pay and profit sharing (Wood and Albanese 1995).
Two way communication and high involvement of staff. Flow of information is important as employees need to be aware of new developments (policies and practices).The bank needs to improve the quantity and quality of communication and feedback; presently the flow of information is downwards.
Motivation: highly motivated staff will achieve superior levels of performance that will lead to superior company performance.

Barriers to taking a Strategic Approach to Human Resource Management and Development in Zenith Bank Plc

Strategic human resource management and development needs to be looked at in a context. We have to take account of the environment in which the model is to be applied, we have to consider the culture of the bank, does it make HR practice easier or harder? Also, the commitment and participation of the organisation’s employees. The economic and political environment of the country (Nigeria) can affect the development of HRM.

Gratton et al identified factors that can create barriers to the successful implementation of strategic HRM.

The tendency of long serving employees to cling to status- quo.
Complex or ambiguous initiatives may not be understood by employees or will be perceived differently by them.
If the initiative is seen as a threat.
Inconsistencies between corporate strategies and values.
A bureaucratic culture.
Failure to understand the strategic needs of the organisation.
Inadequate assessment of the environmental and cultural factors that affect the content of the strategies.

Other factors according to Kane, Crawford and Grant, (1999) include:

Lack of top management support: top management don’t often give high priority to HR issues, they are more interested in making profits i.e. finishing well.
Training deficiency of HR managers: lack of proven knowledge.
Government Policies and National Culture.

Conclusion

In conclusion, employees are the most dynamic and important assets of an organisation, however, some organisations don’t pay priority attention to the recruitment and development of their employees. In carrying out a well structured business strategy that will combat the challenges, organizations must ensure that they have capable and skilled people that can assist in the achievement of the organisational goals and objectives.

Looking at the work of Michael Armstrong and others, it is obvious that in order to achieve or sustain competitive advantage, customer satisfaction and business excellence and growth, Zenith Bank Plc should integrate its HR activities with the overall strategic management of the organisation. Strategic Human Resource Management ensures high quality of staff and this will in turn lead to exceptional customer service delivery. For the bank to survive and succeed, it must have an interest in ensuring it attracts skilled people and must encourage the involvement and commitment of all employees, from top management to the least staff in the organisation.

The underlying reason any company plans a strategy is to have a competitive advantage over its competitor. Zenith Bank must realise that they could achieve a competitive advantage by investing in its employees.

The key to good business is good staff. Your competitors can copy your product or service, your location, or business strategies, but they can't copy your people. I strongly agree with Huselid (1995)’s research, he was able to establish that there is a positive correlation between the way an organisation manages their staff and their overall effectiveness, he found that organisations that managed their staff well tend to be more successful than organisations that do otherwise.

Bibliography

Brain E. Becker and Mark A. Huselid, Strategic Human Resources Management: Where Do We Go From Here?

Core Issues in HRM/D unit 1-8 handouts

Kane, Crawford and Grant, (1999) - Barriers to Effective HRM

Michael Armstrong, Strategic Human Resource Management- A Guide to Action

Rana Sinha, Ezine Articles

Randall S. Schuler and Susan E Jackson, Strategic Human Resource Management