Gratton argued that most corporate strategies – built around a combination of technology and capital – were dead because they failed to incorporate a human element. HRM, as well as technology, research & development, infrastructure, and finance etc. , has been viewed as the core competence, by which the firms build up their competitive advantages. Advantage can be powerfully derived from within the workforce, the adaptability of employees which permits the organisation strategic flexibility, and the commitment of employees to the organisation' business plans and goals.
It can be found that the largest slice of many companies' market capitalisation is held in intangibles – primarily, the talent, knowledge and teamwork of their staff. In high-tech companies like Nokia, the percentage was as high as 95 per cent; but even 'old economy' stalwarts like BP, despite its huge investments in oil platforms and exploration equipment, notched up a significant 74 per cent. In a matured successful company, Human Resources, as the unparallel advantage in relation to the newly developed companies, constitutes its sustainable competitive advantage.
However, due to the following problems, HR strategy may be underestimated for its importance in achieving corporate goals. 1. Human resource competencies are highly context-specific. The competencies and commitment shown by people in one context may be completely worthless in another. 2. Despite continued efforts to link strategic HR management with bottom line profitability, no real connection has yet been proved. 3. HR should be seen much more in terms of creating a cultural climate and organisational framework in which success occurs, rather than as a direct cause of goals achievement.
It's hard to get the immediate return on investment of HR strategy. 4. Those acting strategically tend to be individuals rather than teams. There is no solid track record of loads of people, doing loads of good things – and until there is, there will always be a sense of mystique attached to strategic HR. 3. Recruitment and Selection Continued success is dependent on attracting and retaining high-quality individuals who can respond effectively to this dynamic environment. There can be 'wrong' people, individuals who are not going to contribute to organizational success and who may even harm the organization.
Hiring the 'right' people is of paramount importance and this is dependent on effective recruitment and selection procedures as shown below, which aim to select the 'right' individuals and reject the 'wrong' ones. Illustration 2. 1 The key stages of a systematic approach to recruitment and selection However, there are many difficulties that we will face in the procedure of recruitment and selection. None of the techniques, irrespective of how well they are designed and administered, is capable of producing perfect selection decisions that predict with certainty who is or who is not bound to be a good performer in a particular role.
(Marchington and Wilkinson, 1996: 119). Due to the rooted feature of human subjectivity of HRM, these difficulties are hard to overcome and therefore HRM sometime contribute little to the achievement of corporate goals. > Recruitment and selection are mainly based on the assessment of the appraisee and judgement of the appraiser, both of which are heavily affected by their knowledge, selection skills, experience, bias, education background and personal preference etc.
This to some extend results in subjectivity and uncertainty, which may work conversely to the achievement of corporate goals. > Because candidates can improve performance levels by practicing, the assessment is more likely to evaluate the ability of being tested rather than to evaluate the true competence. Therefore, appraiser may have a great chance to select an appraisee with better performance in selection but with lower competence in actual work circumstance.
> No clear link demonstrated between behaviour and performance, no satisfactory method of arriving at the overall assessment rating and no good methods for assessing multiple personal skills or attributes show that currently the firms will very likely fail to find the suitable person to match to the specific jobs. > Almost all selection techniques have their inherent limitations. Interviews are viewed to be overly subjective, prone to interviewer bias, and therefore unreliable predictors of future performance. Using assessment centre method may lead to a result with low validity.
Cognitive tests may not differentiate much between the various candidates and may be biased against certain groups. > The current state of recruitment and selection is complex because a variety of internal and external factors continue to influence the process. Thus, one will find differences in approaches not only between organisations but also within organisations depending on the level of vacancies and organizational requirements. Take an example from my real life. My company majors in overseas building construction.
A project manager for a residential housing project in Ethiopia was chosen through the procedure of recruitment and selection. His performance in this procedure proved quite good by using the method of interview, expertise test, and inspection on his past experience and references. However, three months later after his arrival, the project had to be suspended due to the poor quality, deferred program and tense relationship between the contractor and the client. And later on my company was severely criticized by the Minister of Construction for this project. Company reputation was heavily destroyed.
The reasons we concluded are: a. This person was recommended by one of the deputy general managers, therefore the appraisers tended, intentionally or unconsciously, to give a high rating for his performance. b. With quite a lot of experience in selection, he had techniques to show his virtues and conceal his drawbacks, therefore to perform better. c. Some necessary attributes which are crucial to the success of the project, such as the awareness of quality, inter-personal communication skills and commitment to the job, are hard to be weighed in the selection.
Unfortunately, just his lack of these attributes, which were not explicitly assessed in the selection, gave the project a vital blow. From this example, a conclusion can be drawn that recruitment and selection sometimes, like a double-edged sword, may hurt yourself if the process is not carefully organised and its drawbacks are not sufficiently estimated. 4. Performance management Even on the assumption that we can find the suitable person to execute our business strategy, the uncertainty of achieving corporate goals still exists, if the employee doesn't effectively utilize his knowledge and abilities.
Performance management is to appraise employee's performance and seek to motivate the employee accordingly. It's a necessary approach to maintain the form's productivity, although it's not always working efficiently. Appraisal systems have the capability to influence employee behaviour, thereby leading directly to improved organisational performance and to achieve corporate goals. In actual practice, formal performance appraisal programs sometimes yield disappointing results, for a number of reasons.