Human Resource Management
Introduction
Organisation’s success in achieving sustainable competitive advantages is anchored on its effectiveness in formulating and implementing strategies (Johnson et al. 2013). The main categories of strategies include corporate, business, and operational level strategies (Ehnert 2009). Business level strategies are concerned with how the various business units compete in their respective markets. Thus, business level strategy is concerned with development of an effective competitive strategy (Johnson, Scholes & Whittington 2008). Irrespective of the type of strategies developed, the efficacy with which the strategies are implemented is influence by an organisation’s resources capability (Ahlstrand, Lampel & Mintzberg 2014).
Human resource constitutes one of the most valuable categories of tangible resources that influence an organisations ability to achieve competitive advantage (Johnson, Scholes & Whittington 2008). In order to enhance the contribution of an organisation’s human resource in achieving competitive advantage, it is critical for firms’ management team to entrench effective human resource management practices. One of the fundamental issues that organisation’s management teams should focus on entails strategic human resource management. Thus, it is essential for organisations management to enhance integration between human resource management and business strategy.
Establishing integration between business strategy and human resource management is critical in establishing effective organisational management, and enhance organisational performance and success (Carbery 2013). There are different perspectives on strategic human resources management that have been designed in an effort to assist organisations achieve organisational success and competitive advantage. Amongst the notable perspectives include the contingency approach and Universalist approaches. This paper entails a critical examination of the strengths and limitations of the Universalists and contingency approaches to human resources strategy. The analysis examines the conditions under which HR strategy may help a firm secure competitive advantage.
Analysis
Universalist approach
According to Holbeche (2009), the Universalist approach is concerned with promoting best practices in HRM in order to create and enhance organisational performance. The Universalist approach is based on the resource-based view and considers employees as one of the fundamental components of strategic human resource management practices (). The approach emphasises that organisations HR managers should focus on exploiting the employees in achieving the desired organisational outcomes (McCabe 2010).
The Universalist approach emphasises on the importance of nurturing employee commitment to the assigned job roles and responsibilities. One of the major strengths of the Universalist approach is that it enables an organisation to transform itself into a high performance organisation. According to Karatepe and Vatankhah (2014), high work performance system refers to the human resource management activities that are focused on enhancing organisational performance. Therefore, the Universalist approach encourages organisations to incorporate best human resource management practices. The rationale of the Universalist approach is to enhance employee commitment (McCabe 2010).
Amongst the best practices emphasised under the Universalist approach entails ensuring that the right job candidates are selected. Thus, the Universalist approach contributes to development of a workforce that is valuable to the organisation (Ehnert 2009). As a result of effective employee recruitment and selection, an organisation is able to develop a workforce that is aligned with its human capital needs. In addition to ensuring optimal employee selection, the Universalist approach accentuates on the importance of ensuring that employees are equipped with the right knowledge and skills necessary to undertake the assigned roles and responsibilities (Carbery 2013).
The Universalist approach stipulates that organisations should entrench activities and practices that contribute to improvement of employees’ productivity. One of the ways through which the Universalist approach achieves this outcome entails integration of employees training and development (Holbeche 2009). Karetepe and Vatnkhah (2014) assert that ‘integrating high work performance work system boosts employees’ skills, knowledge, and capabilities’ (p. 103). Subsequently, the Universalist approach is very essential in improving employees’ capabilities. According to McCabe (2010), nurturing employees’ skills and knowledge is essential enhancing employees’ productivity, which is a critical element in stimulating organisational performance. The overall effect is that an organisation’s competitive advantage is enhanced. Entrenching the Universalist approach to human resource management enables an organisation to become employee-centric.
In addition to the above issues, the Universalist approach enhances an organisation competitive advantage by ensuring that employees identify with their respective workplace or organisation. This aspect arises from the fact that the Universalist approach supports the view that organisations should incorporate equitable and fair employee compensation and reward strategies. The aspect of equity and fairness in rewarding employees fosters development of a positive perceived organisational support (Carbery 2013). Entrenching employee reward and compensation system culminates in improvement in the level of employee motivation (Karatepe & Vatankhah 2014). Therefore, in executing their job roles and responsibilities, employees are focused on achieving the overall organisational goal because of the fact that they feel valued by the organisation. In summary, the Universalist approach supports integration of human resource management practices that foster an organisation’s competitive advantage by promoting employee performance, organisational identification, and motivation, which contributes to improvement an organisation’s competitive advantage.
Limitations of the Universalist approach
In spite of the fact that the Universalist approach to management is valuable in enhancing an organisation’s competitive advantage, the approach is limited in that it is very simplistic. The approach is based on the assumption that all organisations can achieve competitive advantage through application of similar human resource management practices (Ehnert 2009). The approach assumes that all organisations, irrespective of their size or sector or operation, viz. private or public can achieve competitive advantage by adopting a similar rational process. On the basis of this assumption, the Universalist approach argues that the management function is interchangeable (Kreitner 2008). Thus, the approach accentuates that it is possible for organisational managers to move across organisations characterised by varying features such as size and area of operation and easily enhance the organisation’s attainment of competitive advantage. However, the type of human resource management strategy that an organisation adopts is influenced by its purpose, size and nature. The approach further emphasises that organisations should integrate the concepts of division of labour and specialisation in order to achieve competitive advantage. However, specialisation and division of labour might reduce the level of motivation amongst the employees because of task boredom and alienation of employees (Carbery 2013). In summary, entrenching the Universalist approach might limit the efficacy with which the HR 9strategy enables an organisation to achieve sustainable competitive advantage.
Contingency approach
Unlike the Universalist approach to management which assumes that it is possible for organisations to adopt similar management practices irrespective of their nature and size, the contingency approach accentuates that there is no single best way through which an organisation can manage people or work. On the contrary, managers encounter diverse managerial situations that require varying approach (Smit2007). According to Cole (2004), the contingency approach to management can be defined as a situational management approach. Dubrin (2009) emphasises that ‘a method that leads to high productivity or morale under one set of circumstances may not achieve same results under another’ (p. 27). This assertion is based on the fact that not all people respond to identical situations in an identical manner. With reference to this assertion, the contingency approach therefore appreciates the uniqueness inherent across different organisations or business units within the same organisation.
According to the contingency approach, different management problems require varying approaches in achieving the intended solutions (Montana & Chamov 2008). This means that the contingency approach to management provides managers discretion in making managerial decisions on the most appropriate approach to adopt in the pursuit for competitive advantage. Therefore, contingency approach to management provides managers flexibility in making managerial decisions and does not restrict them to follow predetermined procedures in making managerial decisions. On the basis of this aspect, the contingency approach provides managers an opportunity for growth and development. By acting on their discretion, managers undertake a comprehensive evaluation of the situation before making decision on the best course of action (Dubrin 2009). Thus, the contingency approach does not limit managers on the course of action.
The contingency approach is based on a humanistic dimension. The approach takes into account the employees needs. As a result, the contingency approach values employees as one of the internal organisational resources. Additionally, the approach emphasises on the importance of managers adopting a multifaceted approach in dealing with emergent HR issues at the workplace (Montana & Chamov 2008). This means that the model appreciates the complexities associated with management in the contemporary environment.
The fact that the contingency approach does not limit managers to follow a predetermined managerial procedure in resolving managerial issues is a critical managerial aspect in organisation’s quest to achieve sustainable competitive advantage. On the basis of this assertion, managers can adopt a combination of behavioural, scientific, quantitative, bureaucratic, or quantitative management approaches (Smit 2007). The managerial discretion accorded to managers under the contingency approach means that managers can adjust their firm’s human resource management strategy in order to suit the prevailing situation. Thus, contingency managerial approach increases a firm’s capacity to cope with the prevailing market situations.
Limitations of contingency approach
Despite the benefit associated with contingency management approach, critics argue that this approach may encourage managers not to seek formal managerial training. For example, managers may argue that application of managerial skills varies from situation to situation and hence there is no need to study management theory (Dubrin 2009). Amongst the fundamental benefits associated with the contingency management approach entails flexibility. However, critics argue that employing the contingency management approach is complex. Montana and Chomva (2008) emphasise that ‘the contingency approach requires managers to have the requisite managerial abilities in order to successfully cope with the emergent managerial issues’ (p.33). The complexities associated with this managerial approach may make some managers feel insecure in undertaking their managerial function. This arises from the fact that managers do not have a set of stipulated procedures that they need to follow in order to resolve managerial problems. Therefore, the managerial task to ensure that managerial problems are optimally resolved specifically rests with the manager.
The fact that the contingency approach does not appreciate the importance of managers gaining skills on management theory might hinder managers’ effectiveness in determining aspects that should be treated as contingencies, which presents a major limitation in managers’ quest to undertake the managerial function. On the basis of this aspect, it is imperative for managers to be trained on managerial aspect. Some of the areas that managers should take into gain knowledge on in order to effectively apply the contingency management approach include responding to external environment, managing organisational capabilities, and undertaking technological adjustments in the organisation. By taking into account these aspects, HR managers will succeed in formulating HR strategy that enhances attainment of competitive advantage.
Conclusion
Evaluation of the contingency and Universalist approaches to management shows that the two approaches differ significantly. The Universalist approach argues that organisations can achieve competitive advantage by incorporating best HR practices. The Universalist approach is therefore based on the assumption that organisations can achieve competitive advantage by adopting a specific management practices. One of the major strengths of the universalist approach is essential in enhancing competitive advantage by entrenching best HR practices such as employee training and development, equitable and fair remuneration, effective employees selection and employee appraisal. Integration of the practices in the HR practices enhances attainment of competitive advantage. However, this represents a simplistic management concept because the management aspects encountered vary from one situation to another. Contrary to the universalistic approach, the contingency approach appreciates the fact that managerial issues vary from situation to situation. As a result of the uniqueness associated with the issues encountered, the contingency management approach provides managers discretion in making decisions on how to deal with the issue faced. Subsequently, the contingency approach is very effective is very effective in ensuring that organisations respond to the prevailing market environment. However, one of the major drawbacks of the contingency approach is that it does not appreciate the importance of managers acquiring knowledge on management theory. This might hinder the managers’ skills and knowledge in dealing with the emergent contingencies. Therefore, it is essential for managers employing the contingency approach to appreciate the importance of gaining new managerial skills and knowledge. Taking into consideration this aspect will enable managers to be efficient in dealing with emergent managerial complexities. In summary, the evaluation shows that the type of management approach is positively correlated with an organisations acquisition of competitive strategy.
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