SHRM: A STUDY OF HRM PRACTICES AND INFLUENCING ORGANISATIONAL FACTORS S. POORNA VENKATA SUBRAMANI, M.B.

A ASSISTANT PROFESSOR THIRUTHANGAL NADAR COLLEGE CHENNAI-51 gpoorna.venkat@gmail.com 09840220439

Abstract :Human resource is the most important asset of any organization and it is also the source of achieving competitive advantage. Managing human resource is challenging when compared to managing technology, capital and for its effective management an organization requires an effective Human Resource Management system. It should be supported by sound Human Resource Management practices. HRM practices refers to the activities directed towards managing the pool of human resources and ensuring that resources are employed to fulfill the organizational goals. The changes in the market scenario has convinced the industry to facilitate the development of human resources. Employees develop themselves in a globalized scenario along with necessities that arise in developing new competencies to meet changing requirements, aspirations etc. Organi zations use mechanisms to have competent and motivated employees to ensure managerial effectiveness and growth of the organization. Nowadays organizations looks at its human resource as an asset that can provide them a sustained competitive advantage. The changes in business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes and never ending changes that organizations are undergoing have led to increased importance of managing human resource. The purpose of this paper is i) to develop an understanding about the human resource management practices and examine them how they are implemented across the companies. ii) study the positive relationship between human resource practices and the influencing organizational factors in terms of self-realization, status enhancement and soci-economic support. iii) A three stage model has been put forth in this pap er to study the key role played by the HR professionals in strategy formulation, implementation and evaluation. Keywords : Human resource management, HRM practices, innovative practices, employees performances, demographics of workforce.

INTRODUCTION Human resources are the sources of achieving competitive advantage because it manages to convert the resources (money, machine, material) to output (product/service). In global scenario there is growing importance of Human Resources Management in both business and public life. The turbulent changes in the business environment brought in the wake of liberalization, globalization, changing technologies, advances in information technology is presenting managers with a complex and challenging situation. The eff ective management of human resources requires a distinctive approach to employment management which seeks to obtain competitive advantage through engaging a highly committed and skilled workforce with the help of available techniques (Storey, 1995). The Indian business scenario is characterized by historical rigidities arising due to centralized planning. The practice of protecting Indian industries through protective tariffs and quotas for decades has led to global competitiveness in terms of quality of products, service and prices. Indian organizations are asserting themselves to be competitive to meet the international standards. This has led to focus in terms of long -term strategies, consumer focus, initiative for internal and external communication. The human resource management has emerged as one of the important areas of organizational practice in the context of industrial and economic development. The uniqueness of HR requires a different type of attention from managers. It provides both challenge and opportunity. The firms that have learnt to manage their human resources will have an edge over others because of acquiring and deploying human resources takes much longer (Barney 1991, Lado and Wilson 1994, Wright 1994). People bring to their jobs diversity of skills, needs, goals and expectations. They are socialized into organizations through their hiring and functioning in the organization. One should ensure that the human resource requirements are identified and those requirements are satisfied throu gh effective methods. The interface between the employees and the organization is critical to the optimal utilization of human resources. Employees make certain contributions and expect rewards in return and the organization also expect contributions from the person for the reward. It is at this juncture issues such as HR planning, work analysis, career development, leadership , job motivation, organizational culture become important (Bulla and Scott 1994, Conway, Briner and Dickman 1996) . To develop an effective HRM system, the organization should have a sound human resource management practices. It refers to the activities directed at managing the human resources and ensuring that resources are deployed towards the fulfillment of the organizational goals. It may differ from one organization to another and country to another . In general, SHRM is described as broad, involving all personnel; regarding employees as one of the important asset of the organization being proactive in its responsibilities and has the objective of improving the Jackson 1987, Poole 1990, Wright & Snell 1991). performance and needs of the employees (Schuler &

The next section will discuss the types of HRM practices, factors affecting HRM practices and the relationship between HRM practices and other important organizational factors is then presented. ORGANIZATIONAL CULTURE Organizational culture refers to shared meaning held by members that distinguishes an organization from another. It provides the employees with a clear understanding of the way the things are done in the organization. It is the perce ived, subjective influence of the formal system, informal style of managers and other significant factors attitudes, beliefs, values and motivation of people in particular organization. Culture performs a number of functions within the organization, it c onveys a sense of identity for the incumbents, facilitates the commitment, enhances the system stability. It provides th e control mechanism that guides and shapes the attitude and behaviour of employees. Companies with a strong culture are highly successful. The superior performance is achieved if the firm moves from pure technical, rationalistic approach towards more adoptive and humanistic approach (Litwin and Stringer 1968, Peters and Waterman 1981, Schien 1985, Hitt and Ireland 1987, Kotter and Heskett 1992). By considering the performance and managerial leadership along with the HRM practices, it was discovered that a significant relationship exists between culture and performance (Wilderom and Van den Berg, 1998). The finding illustrates that the more effective HRM practices which simulantaneously exploit the potential for complimentaries with organizational culture lead to better performance and enhanced effectiveness. Organizations appreciate the corporate core values self -realization, inventive values, encourage and recognize innovation creativity and achievement. TYPES OF HRM PRACTICES Most of the researches on HRM practices have been conducted in the past and researchers have identified different practices by different names. Theories on best practices suggests that certain HRM practices either separately or in combination are associated with improved organizational performance. Researchers have found that those who are well paid, well motivated workers, working in atmosphere of mutual trust ge nerates high productivity gains and lower cost units ( Lowe and Oliver 1991, Pfeffer 1994, Boxall 1996). Pfeffer (1994) identified 16 practices which denotes best practices which was later refined to the following list: 1. 2. 3. 4. 5. 6. 7. Employment security Selective hiring Self-managed teams team working High compensation on organizational performance Extensive training Reduction in status difference Sharing information

FACTORS AFFECTING HRM PRACTICES As quoted by Ozutku Ozturkler (2009), the factors affecting the HRM pract ices include external and internal factors and it differs from one country to another. Some of the potential factors are as follows: EXTERNAL FACTORS The external factors affecting HR practices are those, pressures on the companies that cannot be controlle d or changed in favorable condition in the short term period. It includes some of the following factors: Economic changes: As a result of the global economic development, the focus of HR practices has shifted from traditional topics such as internal selection and rewards to the concept such as globalization and international competition. Technological changes: Technology affects HRM to a greater extent because of greater interaction between the technology and HR. It changes the way we work, the role we undertake, interactions through which work gets done. Technology provides a series of advantages and alters the context of HR practices and the way they are implemented. Demographic shifts: The demographic shift that is, a well educated group with high expectations about careers and job satisfaction has put enormous pressure on effective utilization of human reso urces. The workforce is becoming over educated for the jobs available: college graduates are doing the jobs that a people with basic education performed decades ago, M.B.As are filling the jobs that college graduates once filled. This coupled with prospec tive employees expectation for meaningful job, is presenting organizations with complex human resources problem. Increasing complexity and difficulties of management: Factors that pressure human resources are, in part responsible for making large organizations general management increasingly complex and difficult. Despite the need for critical attention very little progress has been made. Most of the corporations are finding it difficult to deal with human resource problems bu t only few have created the strong proactive human resources functions. National culture: Culture has an profound impact on organizational preferences in developing appropriate structure and methods for HR practices affectivity. Legislations and Regulations: Legislations or regulations have a direct impact on HR practices. Every country has developed a set of regulations for the management of human resources, hence the HRM practices have to be modified according to these regulations. Action of competitors: There are many ways in which companies can gain a competitive edge and sustained advantage over their competitors among them being the development of comprehensive human resource practices. INTERNAL FACTORS The internal environment of an organization strongly affect the HR practices. Some of the internal practices are as follows: Organizational structure: A companys structure is important in determining HR practices flexibility and integration. Structural differences among firms affect the way in whic h HR practices are designed and implemented.

Business strategy: To gain competitive advantage, firms use different competitive strategies. These strategies are more useful when they are systematically linked with human resource management practices. Compan ies can improve their internal environment by making efficient choices regarding human resource practices that support the organizations chosen strategy. History, tradition and past practices: A number of relative factors such as history, tradition, past practices will generate resistance to change in most organizations. Employee-Employer Relationship: Employer-employee relations can be improved if the organization implements effective HRM practices. The consequence of effective human resource management policies will be such that it will play an important role in empowerment, employees trust in their managers, increase mutual understanding between the employees and the employer and act as a channel between them. Employees productivity : Certain HRM practices such as working in team, discretion, autonomy in the workplace, pay schemes motivate employees and generate productivity. Their involvement in terms of delegation of responsibility, getting proposals from employees shall have a positive impact on their productivity. Some of the human resource management activities such as formal and informal training, job rotation, integration of functions will also have an impact on employees productivity. REVIEW OF LITERATURE Schuler (1992) suggest that Strategic Human Resource Management has different elements including policies, culture, practices. Business needs of an organization are influenced by its internal factors such as organizational culture, nature of business etc. and external characteristics-nature and state of economy in which the organization is existing, opportunities and threats presented In the industry can be influenced by HR activities. An organization can change its structure with the help of recruitment st rategy downsizing the workforce, training programmes, new reward strategies, performance management to change the employee behaviour or reinforce the needed one. After the economic liberalization organizations were forced to change from less efficient an d outdated technology to modern technology and prepare people to use it. This was done to develop and maintain competitive edge in the business environment ( Khan 1999). The potential value of employees can be increased by collectively enhancing and linkin g their skills and capabilities in tune with the contemporary requirement of the market and stay ahead of the competitors. The success of HRM will depend on its ability to harness the intelligence and spirit of people by creating learning climate. organizations generally focus on directing their HRM efforts towards developing the competencies, culture, effectiveness among employees either individually or in groups (Singh 2003). Firms shall use different mechanisms according to their requirements as without a competent and committed workforce to achieve their human resource management goals. Even if an organization has excellent technology at its disposal it can achieve very little without an effective HR policies. The emphasis has been on identifying and imp roving the existing strategies. However this would require complete reversal of values in the existing selection and training methods.

Only then it would be possible to link with the values of socio -cultural context . In order to make an organization effective, the values of society and cultural settings should be synthesized with the organization and its functioning. Fombrun, Tichy and Devanna (1984) developed SHRM with emphasis on strong linkage between the organizat ional strategy, organizational structure and HR system. Political, economic and cultural forces are responsible for an organization mission and strategy. On the basis of mission and strategy, organization is structured (i.e) employees are organized to carr y out different tasks to achieve organizations mission. Hendry and Pettigrew (1992) discuss that a number of internal factors such as organizational culture, positioning of HR, leadership, level of technology employed, business output directly contribute to the contents of HRM. SHRM can be seen as guide which provides strategic choices to be made by human resource executives in order to promote the most effective behaviours that are consistent and aligned with the organizations strategy . It helps to focus on how firms can position themselves to compete with the help of strategy analysis in a way that executives can quickly gravitated toward. PRESENT STUDY The present study is to examine the relationship between HRM practices and the influential organizat ional factors and how the human resource management practices are developed and implemented across the companies. The HRM practices are viewed in terms of planning, recruitment, selection, training and development, performance evaluation and rewards. The organizational culture can be seen in terms of self -realization, status enhancement and socio-economic support. Selfrealization is comprised of achievement, advancement, personal development and peace of mind. Similarly status enhancement comprises values of altruism, authority, prestige, creativity, lifestyles, risk taking and variety. And socioeconomic support comprises work values of social relationship and interaction, comforts, good working condition and economic gains. With reference to the India, society is ridden with insecurities and lack of resources. Fear of failure leads to giving importance to socio-economic support and status enhancement (Sinha 1990). For an organization to be effective, workers are important a nd their commitment is necessary. This conviction can be translated into realty through a variety of programs which facilitate the individual development and lead to better adjustmen t with the environment. In the developing economy the shift in the HRM par adigm have necessitated the review of skills, roles, responsibilities and competencies of HR managers (Ulrich 1997). The globalized economic environment represents continuous change on society and work, hence HRM should be evolved I this context. It will b enefit if the employees are inculcated with the necessary skills, competencies and motivation (DyerJr 1999). The understanding of HRM practices will require a comprehensive study of the practices in the organizations. In addition, HRM practices and organiz ational culture among private sector organization is studied. This paper also presented in terms of strategy formulation, implementation and evaluation.

CONCEPTUAL HRM PRACTICES FRAMEWORK External factors economic changes, technological changes, national culture, industry/sector characteristics, legislations, action of competitors. Internal factors Organization size, Organizational characteristics, Business strategy, HR strategy, Power/politics, Academic/professional influence on HR Practices.

Human Resource Management Practices Competitive advantage, Employee-employer relation, optimum utilization of human resources, service quality, employee commitment, employee productivity, effective management of human resources, growth and innovation, other benefits.

Overall Corporate Performance The conceptual framework will indicate how external and internal factors affect HRM practices and how the HRM practices generate certain benefits for the organization and result in overall corporate performa nce. OBJECTIVES OF THE STUDY i) to develop an understanding about the human resource management practices and examine them how they are implemented across the companies. ii) study the positive relationship between human resource practices and the influencing orga nizational factors in terms of self-realization, status enhancement and soci o-economic support. iii) A three stage model has been put forth in this paper to study the key role played by the HR professionals in strategy formulation, implementation and evaluation . METHODOLOGY The study is based on a sample of managers from two organizations. The data was collected through mail by using convenient sampling with an assurance that data obtained would be kept confidential. The sample was obtained from middle level management with the assumption that they would possess an accurate and comprehensive perception of HRM practices being implemented. The purpose of this sampling was to obtain an honest picture of HRM practices of the organization. DESCRIPTION OF THE QUESTIONNAIRE The questionnaire was divided into two parts personal profile of the respondent comes in first part, while questions regarding HRM practices and culture of the organization falls under second part.

ORGANIZATIONS UNDER STUDY Organization A Organization A is one of the largest dealer in South India for electrical products. The dealer has been dealing with household appliances and lighting systems for more 25 years. In its journey for excellence for its products and service the focus on customers remains unwavering. The journey that the dealer has embarked continues on improving performance and competitiveness at all levels. In the future the dealers efforts will be focused on taking up HRM practices to improve functional skills and strengthen emotional ties between the organization and its employees. Organization B Organization B has a personnel department with no nomenclature. It has progressive welfare practices for employees and their families. Trust and confidence are built through personalize d relationship. The way of life has created culture which leads to effective utilization of human resources. The functions of performance evaluation, rewards, planning, recruitment and selection are performed by the personnel department. There is no formal career management scheme. PROCESS The proposed model divides the SHRM process into three stages. The first stage is that of formulating business strategy and translating it into HRM strategic objectives. The second stage is that of implementing HRM system based on HRM strategy. The final stage is that of evaluating and reviewing the effectiveness and strategic integration of the HRM systems. The three stages are closely inter-linked. FIRST STAGE (FORMULATION) Formulation stage provides the foundation for an effective SHRM. The organization recognizes HR department as a business partner and facilitate it with avenues to be an proactive partner. In this stage, the composition of team formulating the business strategy is important. The presence of HR head in the team formulating the organizational strategy will boost the proactive strategic linkage of the HRM systems. The external and organizational context influence the strategy formulation. The external context i s characterized by factors like nature and extent of competition, demography of the available workforce, government policies and laws, economic situation and forecasts, external stakeholders like suppliers, competitors, etc. The organizational context denotes the situation that is represented through various departments or functions. The HR head plays an key role in representing the organization in key HR related issues. Here organizational context refers to the competencies, structural features with their advantages and limitations, policies and practices that is followed and people management issues. The availability of required competencies plays an important role in success of strategy formulation. Strategy formulation is affected by the factors like whether there are any competencies exists, possibility of developing t hem and training the

employees, the existing gap in terms of human resources. Formulation of HR strategy requires an understanding of the required organizational skills to implement the business stra tegy. Elements like acquiring, managing and developing the skills are important for the success of strategy implementation. The organization structure may set limitations or constraints in the changes required for strategy implementation. During the formulation stage, the head of the HR department should be able to appraise the management about various policies and practices that are being practiced and the necessary changes required for successful implementation of business strategy. In the organizational context it shall be related to a set of unwritten rules that drives the work culture and workforce. He should also be able to convey in terms of certain changes in the external environment. He/she should be able to convey the changes that are occurring in the labour market and their implications on the strategy formulation. The business strategy may be based on cost reduction, innovation or quality enhancement. SECOND STAGE (IMPLEMENTATION) In the second stage of the process various HRM systems based on HR strategy are implemented. HRM systems like recruitment and selection, performance management, training and development etc. needed to be aligned with HR strategy. Policies and practices of various HRM systems are s et or modified according to strategy implementation needs. The stage also includes initiating the required interventions for the organizational development and managing the change during process like restructuring or merger. Automation of the HR practices also enables the departments capability to collect and provide the information required for strategy formulation. THIRD STAGE (EVALUATION) The extent of alignment of HRM systems with the business strategy and its contributi on in achieving the strategic objectives needed to be evaluated in order to determine the strategic integration. It involved various surveys and evaluation process. The evaluation standards need to be carefully constructed. However the evaluation is diffic ult because the management may not be clear on what they want to evaluate the efficiency of the HR department, financial returns in terms of productivity, improved performance of the employees of the organization. The goal achievement and outcome of HR p ractices and activities should be defined. Performance reviews and associated actions are part of this stage. The gaps in the integration of HRM systems are identified. The information collected and reviewed provide feedback for making necessary changes in the implementation process. This information is important in business strategy formulation. The process indicates how external and internal factors affect HRM practices and how those practices will generate benefits for the organization leading to overall corporate performance. The following things in particular should be kept in mind and the HR managers should carefully analyze them while designing the HRM practices.

1.

Linkage between the HRM practices with the long term objectives and strategies of the org anization should be given its due importance.

2.

The human resource management practices should be examined from time to time by conducting surveys among the employees and facilitate the implementation of the proposed changes from time to time.

3. 4. 5.

While designin g and implementing the HR policies the organizations existing practices should be kept in mind. HR managers should update themselves with the current HR M practices. The HRM practices differ from one country to another hence due consideration should be giv en to the organizations and countrys environment.

6.

The actions of the competitors should be critically examined because it directly or indirectly affects the organization.

7.

The line managers should be involved in the process of designing the HR practices b ecause they have direct contact with the employees and they can provide valuable insights.

CONCLUSION This paper shows the positive relationship between HR practices and organizational culture and how effectively the human resources can be managed. The companies which implements such practices with dedication maintains sustained advantage over other players in the market. Other variables such as competitive advantage, job satisfaction, financial performance, service quality, employee commitment in a positive manner leads to overall corporate performance. HRM practices should be analysed from time to time and updated accordingly. Planning, recruitment, selection, training and development, performance evaluation, career management, rewards are signific antly related to the organizational culture. Surveys should be conducted among employees to know their opinion about HRM practices. This will help the organization to take corrective actions at the right time. REFERENCES Abeysekera Ruwan (2007), The Impac t of Human Resource Management Practices on Marketing Executives Turnover of Leasing Companies in Sri Lanka Contemporary Management Research,Vol.3.No.3. ASHFORD, S. J.; CUMMINGS, L. L. 1983. Feedback as an individual resource: Personal strategies of creating information. Organizational Behavior and Human Relations. 32. Becker, B., & Gerhart, B. 1996. The impact of human resource management on organizational performance: progress and prospects. Academy of Management Journal, 39 (4): 779-802. Brewster, C., & Smith, C. 1990. Corporate strategy: A no -go area for personnel? Personnel Management, 22 (7): 36-40 Chand M.and Katou A.(2007) The Impact of HRM practices on organizational performance in the Indian hotel Industry,

Employee Relations,Vol.29, No.6, pp 576-594. Chandler, G. N., and G. M. McEvoy, 2000, Human Resource Management, TQM, and Firm Performance in Small and Medium- Size Enterprises, Entrepreneurship: Theory and Practice,Vol.25,No.1,pp.43 -58. Devanna, M.A., Fombrun, C. & Tichy, N. 1984. A framework for strategic human resource management. In C.J. Fomburn, N.M. Tichy, & M.A. Devanna, (Eds.), Strategic Human Resource Management : 33-51. New York: John Wiley and Sons. Freeman, R.E. 1985. Managing in turbulent times, In M. Beer & B. Spector (Eds), Readings in Human Resource Management: 36-65. New York: Free Press. Gordon, M.E. 1972. Three ways to effectively evaluate personnel programs. Personnel Journal, 51 (7): 498-510. Guzzo, R. A., & Noonan, K. A. (1994). Human resource practices as communications and the psychological contract. Human Resource Management, Vol.33,No.3,pp.447 -462. Hassan A., Hashim J. and Ismail A. Z (2006) Human resource development practices as determinant of HRD climate and quality orientation,Journal of European Industrial Training,Vol.30,No.1,pp 4 -18. Hendry, C. and Pettigrew, A. (1990), Human resource management: an agenda for 1990s. International Journal of Human Resource Management,1,1,17 -44. Hudson, M ., Smart,A. and Bourne,M.(2001), Theory and Practice in SME Performance Management System, International Journal of Production and Operations Management, 21:pp. 1096 -1115. Jackson,S.E.,Schuler,R.S.and Rivero,J.C. (1989), Organizational Characteristics As Predictors of Personnel Practices, Personnel Psychology,Vol.42,No.4,pp.727 -786. Kazmi, A. & Ahmad, F. 2001. Differing approaches to strategic human resource management. Journal of Management Research, 1 (3): 133-140. Lado .Augustine A. and Mary C.Wilson, (1994), Human Resource Systems and Sustained Competitive Advantages: A Competency Based Perspective, Academy of Management Review,Vol.19,pp 699 -727. Lawler, E. E. & Mohrman, S. A. (2003). HR as a strategic partner: What does it take to make it happen? Human Resource Planning, 26, 15-29. Narsimha, S.(2000), Organizational Knowledge, Human Resource Management and Sustained Competitive Advantage: Towards A Framework, Competitiveness Review,Vol.10, No.1,pp.123 -136. NEWMAN, W. 1972. Cultural assumptions underlying U.S. Man agement concepts. In MASSIE, J. L.; LUYTZES, J. (eds.). Management in International context, New York : Harper & Row, 1972. PRAKASH, A. 1994. Organizational functioning and values in the Indian context. In HENERY, S. R.; SINHA, D.; HONG, N. S. (eds.). Effective organizations and social values. New Delhi : Sage, 1994.

Osman I., Ho T.C.F. and Galang M. C. The relationship between human resource practices and firm performance: an empirical assessment of firms in Malaysia, Business Strategy Series, Vol.12 No. 1, pp. 41 -48 Pfeffer,J.(1994), Competitive Advantage through People ,Harvard Business School Press, Boston,MA Pfeffer ,J.(1998), The Human Equation : Building Profits by Putting People First, Harvard Business School Press,Boston,MA. Rawal Priyanka (2009),Engaged Employees: Carrying high degree ofOrganisational Pride HRM Review, ICFAI University Press, Hyderabad, Vol.IX ,Issue VII,pp.41 -45 Schuler, R.S. 1992. Strategic human resource management: Linking the people with the strategic needs of the business. Organizational Dynamics, 21 (1): 18-33. Wright, P.M. & McMahan, G.C. 1992. Theoretica l perspectives for strategic human resource management. Journal of Management, 18 (2): 295-320. Wright,P.M., MacMahan, G.C., and MacWilliams, A (1994), Human Resource and Sustained Competitive advantage : a resource based perspective,The International Journal of Human Resource Management ,Vol.5,No.2,pp.302 -26.