tomew123 2 | - Freelance Writer
Oct 10, 2019 | #1
The role of Human Resources should not be merely to hire employees, reduce turnover, and built employee loyalty. Instead, the Human Resource department in any company, and the Human Resource Manager, should be a strategic partner with top management. When human resources is allowed to transition into strategic human resource management, an ability exists to connect the role of the employees in the organization and the way in which employees are recruited and trained to the larger goals and objectives established by executive leaders (Wright, Snell & Dyer, 2005, p. 875). The ultimate outcome in moving human resources to strategic human resource management is that it can positively impact a company's financial performance and its overall reputation among customers and the general public. For a company that is growing with six divisions and 500 employees, it is necessary to connect the management of the vital resource of employees to the larger goals and strategies of the organization.
The purpose of this report is to both explain what is meant by the term "strategic human resource management" and how it has been used successfully in other organizations, as well as to provide a comprehensive plan for how the human resource function within this organization will be addressed in order to achieve true strategic human resource management. First, using information from other organizations, the meaning of strategic human resource management will be explained and demonstrated with regards to the positive benefits that can be achieved. Then, the comprehensive plan will examine a variety of HR issues that will be addressed within the organization in order to truly allow the human resource function to become a strategic part of the organization so that a connection can occur between the human resources and the larger strategic goals and objectives of the company.
The idea that strategic human resource management is the process of aligning the human resource functions within an organization with the larger goals and strategies of the company has already been noted (Wright, Snell & Dyer, 2005, p. 875). The question that arises is what does this definition of strategic human resource management actually mean in real-world terms when it is implemented in real-world organizations. One of the ways in which the meaning of strategic human resource management can be understood is to examine the internal actions of the Hilton Group Plc, the company that operates 500 Hilton Hotel properties around the world in 50 countries with 60,000 employees (Maxwell & Lyle, 2002, p. 251).
Hospitality Industry. In 1999, Hilton launched a large-scale plan to determine the needs and desires of its guests, and then to connect the actions and motivations of employees to those needs and desires. The overall strategy was for Hilton Hotels to be customer-driven and customer-focused. From a human resource standpoint, the company implemented policies that were designed to recognize them for their hard work, demonstrate respect for the knowledge and skills that employees possessed, and to reward them for the positive outcomes of the company in relation to the strategies that were being pursued. The policies included training employees so that they understood how to recognize the needs and desires of guests. At the same time, employees were actually empowered to be able to respond to customer needs or complaints and address them so that customers felt that their needs and desires were important to the organization. The overall result was that the reputation of Hilton Hotels improved, as well as the company's financial performance.
The actions of Hilton Hotels demonstrate the benefit of connecting human resource management with the strategies of the organization. For example, rather than simply hiring employees and training them to perform a task, such as cleaning hotel rooms or providing room service to guests, the company trained employees to meet the full range of needs of the guests, as well as provided them the freedom to take actions to provide the highest quality service possible. This demonstrates that there was a connection between human resource functions and the strategies of the company. There was a connection between training and desired outcomes. Even more, in order to motivate employees, they were recognized and rewarded with financial and non-financial incentives based on their performance toward the larger goals and strategies of the organization. Overall, all of the issues that were addressed as part of the human resources of the organization were directly related and dictated by the outcomes that were desired.
Hilton is far from the only company in the hospitality industry that has successfully used strategic human resource management to improve their operations and performance. The Portman Ritz-Carlton hotel in Shanghai is another organization that has used strategic human resource management to move beyond simply performing in line with industry standards. In 1998, the Ritz-Carlton organization took over management of the hotel. At that time, the hotel was generally performing at industry standards for a high-end luxury hotel. The company had employee and guest satisfaction that ranked between 70% and 80% (Yeung, 2006, p. 267). However, with management performed by the Ritz Carlton, a change in human resource management occurred. First, new employees are not simply interviewed by their direct supervisors. Instead, the hiring process consists of several interviews with unit-level managers, division managers, and even the general manager of the entire hotel. The reason for this process is that it allows for the ability of different managers to ask a potential employee about his attitude toward customers and toward the products and services being offered by the organization.
Furthermore, once an employee is hired, he or she is given two days of training before ever actually interacting with guests. The training is not just about how to perform the job for which the employee was hired, but instead about helping that person learn about the internal culture and the larger goals and strategies of the organization. The goal of the initial two-days of training is about acclimating the new employee to the environment of the organization as opposed to simply how to do the job. Then, each new employee receives 30 days of training in which they work with another employee to learn the job, but also how to perform the job in relation to the larger culture and strategies of the organization.
For all employees, the internal culture of the Portman Ritz Carlton is one in which the credo "we are ladies and gentlemen taking care of ladies and gentlemen" is taken vary seriously (Yeung, 2006, p. 270). What is meant by the company's credo is that the employees are not simply housekeepers or restaurant servers, but instead are truly highly competent professionals who are serving other respected, professional individuals. When problems arise, members of departments and managers actually talk about those problems. In fact, departments have regular meetings in which all employees are expected to voice concerns and issues, both in terms of internal operations and issues involving guests. All of this is possible because employees are brought into the organization who are concerned about quality service during the hiring process, and the values of the organization are instilled during the training process and in everyday interactions with managers.
Finally, retaining employees occurs through a process of promoting from within. The Portman Ritz-Carlton has 70% to 80% of leadership positions filled by people who started within the organization in front-line positions. The overall result has been that not only has the external reputation and financial performance of the hotel improved, but employee turnover has declined to 15% as compared to the industry average in China of 29%. Even more, the hotel has had the highest employee satisfaction rating of all of the 59 Ritz-Carlton hotels around the world (Yeung, 2006, 267).
What is once again demonstrated is the way in which connecting human resource management to the strategies of the organization can result in positive outcomes. For the Portman Ritz-Carlton, strategic human resource management is at all aspects of operations. From the moment that a potential employee is interviewed, the leaders of the hotel are focused on hiring people will fit in with the internal culture of the organization. Then, training is carried out with a focus on showing employees how to fulfill the strategy of the hotel to behave like professionals who are serving other professionals. In addition, motivating employees is about giving them leadership abilities and promoting them to leadership positions.
Large Multinational Firms. Outside of the hospitality industry, there are other companies that have successfully used strategic human resource management to improve their operations and performance. One of these companies is Coca-Cola. In 2004, the company began a process of conducting internal focus groups in order to understand why it was experiencing negative rates of return on investment. Through the data obtained from the employee focus groups, it was discovered that there was a lack of a clear mission and clear functionality within the organization (Friedman, 2009, p. 234). Employees felt as though they were performing specific jobs and duties, but with no clear understanding of how those jobs and duties connected with the larger goals and strategies of the organization.
The result for Coca-Cola was the creation of a new corporate mission and new strategies that were communicated to all employees. What is important is that the new mission was not only about serving customers or achieving global growth. Instead, the new mission came with an internal plan that was focused on employee engagement. Employees were allowed to take part in leadership activities and encouraged to act as leaders in their jobs. Rather than simply performing duties, they were given the ability to take actions and think about the needs of the larger organization. The overall result was that employee engagement increased from 74% in 2004 to 79% in 2006. In addition, the volume of units of product sold increased from 2% to 4%, and 13 of the 16 markets in which Coca-Cola products were sold outperformed the performance goals that had been established (Friedman, 2009, p. 234).
The improvements in performance occurred because the company took the effort to inspire employees and make them feel as though they were respected for the skills and knowledge that they possessed. Employees were also given rewards and incentives for improvements in performance (Friedman, 2009, 234). With the use of non-financial and financial incentives, employees felt that they could be engaged with their jobs. The leaders of the company were part of this process as they wanted to see a change in internal culture, so they modeled the type of culture that they desired for the lower level employees.
General Electric is another company that has used strategic human resource management to improve its operations. In 2005, the company implemented its ecomagination program that was designed with the strategy of offering environmentally friendly products to consumers. As part of this strategy, corporate leaders empowered employees to take actions and even risks to design new products that were environmentally friendly (Friedman, 2009, p. 236). Rather than being afraid of taking risks, employees were trained and guided to take risks and to be willing to put forth ideas about new products, as well as improvements that could be made in existing products to reduce the amount of energy that they used. Even more, communication was increased to allow employees to express concerns and issues that arose in their jobs so that employees and managers could work together (Friedman, 2009, p. 236).
In much the same way, Google has become one of the most profitable companies in the world by creating a corporate culture in which employees are hired to be empowered in their jobs. The hiring process at Google involves finding people who are not simply smart at programming or application development, but who also have the characteristics needed to manage their own time and to create new ideas from scratch (Friedman, 2009, p. 237). By hiring people who are personally dedicated to technology and the development of new innovations, the company has been able to foster an internal culture in which employees and employee groups largely work independently. Employees are free to spend time developing new products and presenting them to the company for potential full-scale development. There is no need for employees to be micro-managed. Instead, employees have the freedom to work in different parts of the company's headquarters and even from other locations.
From the standpoint of human resource management, Google, General Electric, and Coca-Cola have been able to create an open work environment because the focus on strategies and the internal culture that will allow for those strategies to be carried out begins with the way in which employees are hired. Rather than hiring large numbers of employees and then hoping they will be motivated to carry out the strategies of the organization, the hiring process is about finding employees that match the needs of the company. Then, training involves more acclimation of the strategies that have been implemented. During these processes, executive leaders are also involved to model the actions and behaviors that they expect from employees, as well as the internal culture that is needed to achieve the objectives that have been established.
Healthcare Industry. One other industry in which strategic human resource management has been effective at improving performance is the healthcare industry. One of the organizations that has successfully utilized strategic human resource management is the Mayo Clinic, which is the largest not-for-profit medical practice in the world with 3,300 physicians and researchers and 46,000 health staff members that treat over 500,000 people per year. Because the focus of the Mayo Clinic is to provide the best service to its patients, the role of the human resource department within the organization is to find employees who are committed to serving patients and then fostering that belief and rewarding them for the work that is performed (Ramlall, Welch, Walter & Tomlinson, 2009, p. 17).
During the hiring process at the Mayo Clinic, potential employees are assessed to determine if they can work as part of multidisciplinary teams, which is a vital part of the system of care within the organization. Furthermore, they are evaluated to determine if they can work in an environment in which innovation and a commitment to patient outcomes is more important than simply treating a large number of patients on any given day. Even more, the organization is concerned about rewarding employees so that they feel appreciated for their work. This means that employees are given life insurance, health insurance, and paid time off. However, they are also given regular salary increases and continuing professional development opportunities (Ramlall, Welch, Walter & Tomlinson, 2009, p. 21).
By hiring employees that fit with the strategies and beliefs of the Mayo Clinic, and rewarding those employees for their efforts, the organization has truly become one of the most respected healthcare organizations in the world. The key to all of this has been connecting strategy with human resource processes. Rather than treating human resource activities as something that is different than the larger operations and strategies of the organization, human resources management is a vital part of those strategies. In fact, all of the case study examples that have been provided have shown that what is meant by the term "strategic human resource management" is the connection of human resource activities to the larger strategies of an organization. If an organization such as Google wants to grow based on a strategy of continual development of new products and technologies, then it needs employees who are not only smart, but also committed to working independently to develop new products. For the human resource manager, this means aligning recruitment and hiring practices to find those types of people who will fit the culture of the organization.
Types of HR Strategies. It is important to note that the examples that have been provided about strategic human resource management have focused on four different types of human resource strategies: Task focused, development, turnaround, and paternalistic strategy (Kandula, 2004, p. 42-43). The task focused human resource strategy is focused on job design and skills, while the development strategy is about developing individual employees and the use of rewards to motivate employees. The turnaround strategy, however, is about making structural changes to an organization, such as occurred with Coca-Cola or the Ritz-Carlton hotel in Shanghai. Finally, the paternalistic strategy is about the procedures that employees perform and the ways in which supervision occurs.
Understanding these four types of human resource strategies is important because each needs to be used based on different situations and conditions. The task focused strategy should be of concern when products or services are being changed, but the development strategy should be used when a company's market is growing or when expansion is occurring. The turnaround strategy, on the other hand, should be used when a business is undergoing a dramatic change because of not relating to the environment in which it exists. Finally, the paternalistic strategy should not be used very often and only when the organization has a monopoly in its industry that allows it to control processes in the external environment (Kandula, 2004, p. 42-43).
With an explanation of what is meant by strategic human resource management how it has been effectively used in other organizations, as well as the types of human resource strategies that can be used, it is possible to lay out a comprehensive plan for how core human resource functions will be addressed in this organization in a manner that is consistent with the concept of strategic human resource management. Each of the core human resource functions will be discussed separately from each other in order to allow for further review as necessary.
Work Design. From a strategic human resource management standpoint, the work design, or way in which employees perform their tasks and duties, must allow for the strategies of the organization to be carried out. The way in which employees perform their duties must be reviewed to determine if specific work groups should be created, as well as the positions that should be part of those work groups. The process of creating a work design that is consistent with the strategies of the organization is not a one-time event, but something that will be reviewed at least once a year in order to determine if the strategies and conditions facing the company warrant a change in work design.
Job Analysis. As the organization changes and evolves, it is necessary to ensure that the jobs that are being performed are relevant and necessary. In this regard, an analysis will be performed on the types of positions that exist within the organization so that a determination can be made if the resources of the company would be better used by adjusting and changing job duties, or even merging some duties into entirely new positions. The goal of performing job analyses is to ensure that waste is not occurring by having people perform duties that are not adding value to the organization. It must be understood that this type of analysis is not about finding ways to eliminate positions in order to save money. Instead, the goal of this analysis is to utilize the employees in the best way possible so that the tasks that they perform are based on a real mission or goal. If employees are not sure why they are performing certain tasks, then there is a chance that those tasks are not of value and only serve to waste time.
Recruitment. The recruitment process is perhaps one of the most important part of the strategic human resource management function because it is where the initial effort to connect employees to the strategies of the organization begins. In order to find the best employees, the recruitment process must be more than simply receiving resumes and making offers. Instead, the recruitment process should involve seeking out employees who are likely to have the skills and attitudes that are necessary based on the strategies of the organization. This means that recruitment can occur in a variety of ways, from seeking out people who are known within the industry to using word of mouth referrals and recommendations.
As potential employees are sought, they must be given information about the culture of the organization and the strategies that are in place. This information should not be treated as unimportant until a person is hired. Instead, the company must be upfront with the types of employees that it wants to have in the organization and the skills and attitudes that they must possess. In this way, the recruitment process should not only be about the company finding employees that are likely to fit into the culture, but also about allowing potential employees to determine if the organization can fit into their goals and objectives for the future.
Selection. The actual selection process should not involve hiring employees based on a single interview. Instead, the selection process should allow potential employees to move beyond the front office to actually view the inter-workings of the organization and meet with the mangers and other employees. Potential employees should be allowed to ask questions, and should be interviewed by their immediate supervisors, as well as executive level managers. Then, each manager and employee who talked with the potential new employee should provide feedback about their skills, knowledge, and personality. Based on all of this feedback, a final decision can be made as to whether a potential employee should be hired. While this selection process may seem time consuming, it allows time to interact with an individual and determine how they are likely to behave in the actual work environment. When time is taken to interview and select a potential employee, then a higher quality of employee can be found who will possess the qualities that are needed to be successful in the organization and to allow the organization to meet its goals and objectives.
Retention. Employee retention is about more than simply providing regular increases in pay or seeking to improve financial benefits. Instead, retention is a process that involves the full range of concerns and motivations to employees. In order to retain employees over the long-term, it is necessary to provide ways in which they can grow with the organization and be promoted to higher levels of management. In addition, employees must feel as though they are respected. Showing respect to employees requires that they be given the opportunity to develop new products and new ways of performing tasks that will improve the performance of the company. Even more, employees want to be part of the decision-making process. This requires that managers seek the advise of their subordinates and integrate that advise into the way in which functions are performed.
Separation. While strategic human resource management is often discussed in relation to recruiting, hiring, and retaining employees, it is also necessary to separate employees from the organization. The separation process should not be something that occurs lightly. Instead, for employees who are not performing well in the organization, a process should be carried out to provide specific and measurable goals that have to be reached to improve performance. At no time should an employee be removed from the organization with doubts about why they were terminated or what they could have done better in order to remain with the company. In addition, for employees who voluntarily leave the organization, the company's leaders should not develop a negative attitude toward those individuals. Instead, employees should be allowed to leave on good terms as they may wish to rejoin the company in the future, or company leaders may wish to attempt to encourage those people to rejoin the organization in the future.
Performance Management. The process of performance management requiring setting specific and measurable goals for employees so they know how they are being evaluated and what is expected of them. In this regard, each employee should be given specific goals each quarter or every six months by which their performance will be evaluated. Throughout the performance period, employees will be required to meet with their mangers to determine how they are progressing on meeting goals, as well as what they might do to improve their performance. It is vital that the goals that are established are based on the strategies of the organization as opposed to simply performing job tasks. For example a performance goal for a customer service representative would be to achieve 95% customer satisfaction if the strategy of the company is to have the highest levels of customer satisfaction in order to create customer loyalty. A performance measure of completing each service call within four minutes is not likely to allow the employee to perform his or her duties in relation to the larger strategy of the organization.
Training. Training is a process that should be on-going and continual in the organization. Training should begin upon the initial hire of an employee and never stop. Training should be about both job duties, as well as the larger trends and issues facing the industry in which the company operates. Training should allow employees to take on leadership roles and activities in the organization and not simply allow them to perform a specific task or duty. The goal will be to have employees develop an internal and external view, and to treat the training of employees with both an internal and external view (Ulrich, Brockbank, Johnson & Younger, 2009, p. 5).
Development. Development is more than simply providing training to employees. The process of development is mentoring employees to take on new roles. Development should indeed be a mentoring process in which managers and executive-level personnel work with employees to increase their knowledge of the company, as well as their knowledge of the larger industry. Employees should also be given the ability to demonstrate their knowledge by working independently in new roles and then receiving feedback on their actions and results from a mentor.
Compensation. Employees need to know exactly the type of compensation they will receive. In addition, employees generally want to share in the successes of the organization. In this regard, all employees should receive basic compensation such as life insurance, health insurance, and paid time off. However, they should also be able to take part in profit sharing so that when the company generates profits, they are able to share in some of those profits. On a larger scale, compensation should be about motivating employees to be as efficient as possible toward the strategies and goals that have been established. In this way, employees should be given the tools that they need to work, whether that is computer equipment to use at home or the ability to work remotely.
Legal Requirements. All legal requirements regarding employment laws will be followed not based on the minimum that is required by the law, but based on what is considered to be ethically required. By acting in an ethical manner, employees will have a greater respect for the organization and be motivated to act in accordance with the larger strategies and goals of the organization. If employees perceive that the company is constantly trying to find ways to minimally comply with laws, then they will not view the company with credibility and may even believe that this is acceptable in their own actions.
Employee Relations. The goal of the human resource manager should be to develop the strongest relationships with employees possible. Within the framework of strategic human resource management, employees relations is vital to create a workforce that is dedicated to the goals and strategies of the company. In this regard, employees will be encouraged to raise issues or concerns that they have about the organization. In addition, quarterly surveys will be taken to assess employee attitudes and attempt to discover problems or issues even before they may be raised by employees.
Diversity. In a company operating in an international environment, diversity is a vital issue because by having a diverse workforce, the organization has employees who have a range of backgrounds, experiences, and skills (Ramlall, Welch, Walter & Tomlinson, 2009, p. 22). Diversity will be encouraged within the organization by monitoring the level of diversity among employees, as well as by recruiting employees from different ethnic and cultural backgrounds. Furthermore, as part of the training for all employees, including executive-level employees, the importance of diversity will be stressed in all activities. Any concerns about discrimination on the part of employees will be immediately investigated and corrective action will be taken.
E-HRM. Electronic human resource management has growth in popularity in recent years as information technology has made it possible for many human resource management functions, particularly those related to benefits administration, to be handled online as opposed to in person (Ruel, 2004, p. 4-5). The concern, however, is that too much of the human element can be taken out of the human resource management process. For example, IBM focused too much attention on E-HRM to the point that employees felt as though they were being ignored because of the reliance on computerized systems to answer questions and receive personal benefits (Parry & Tyson, 2011, p. 350). While computerized systems can be used for some functions, employees should always be able to ask a real person questions about their benefits and other HR processes. The computer should not be a replacement for face-to-face interactions. Instead, for employees who are comfortable requesting time off or making changes to their insurance plans, this should be available. For other employees, someone from the human resource department should be available to help make the changes and to answer questions.
International Issues. As the company is an international organization, it is necessary to recognize that human resource management is carried out different across countries and cultures. The question that arises is whether a standardized process should be used for all human resources or whether differences should occur based on the country of origin of the employees. In order to achieve the best outcomes, some human resource functions will need to be adjusted, particularly those based on compensation and benefits. The only actual changes that will occur will be the types of compensation and benefits that are offered, as these will have to comply with local laws and customs. In this situation, advice will need to be sought from local experts in the local countries to ensure that local laws and customs are followed. However, in terms of strategic human resource management, the goals of bringing together corporate strategies with employees will not change. Recruitment, selection, and retention will be carried out in the same manner across all countries in which the company operates. Interactions between employees and managers will continue to be monitored to ensure the best employee relations possible. In foreign countries, this will become even more important to ensure that local employees are not being exploited or in some way disrespected because of cultural differences. This also demonstrates the need for strategic human resource management as international expansion requires a focus on connecting international employees with the international strategies of the company.
REFERENCES
Friedman, B. A., 2009. Human resource management role implications for corporate reputation. Corporate Reputation Review, 12(3), 229-244.
Kandula, S. R., 2004. Human Resource Management in Practice. New Delhi: PHI Learning Pvt. Ltd.
Maxwell, G. & Lyle, G., 2002. Strategic hrm and business performance in the Hilton group. International Journal of Contemporary Hospitality Management, 14(5), 251-252.
Parry, E. & Tyson, S., 2011. Desired goals and actual outcomes of e-hrm. Human Resource Management Journal, 21(3), 335-354.
Ramlall, S., Welch, T., Walter, J. & Tomlinson, D., 2009. Strategic hrm at the mayo clinic: A case study. Journal of Human Resources Education, 3(3), 13-35.
Ruel, H. J. M., 2004. E-hrm: Disaster or destiny?
Ulrich, D., Brockbank, W., Johnson, D. & Younger, J., 2009. Human Resource Comptencies. The RBL Group.
Wright, P. M., Snell, S. A. & Dyer, L., 2005. New models of strategic hrm in a global context. International Journal of Human Resource Management, 16(6), 875-881.
Yeung, A., 2006. Setting people up for success: How the portman ritz-carlton hotel gets the best from its people. Human Resource Management, 45(2), 267-275.
The purpose of this report is to both explain what is meant by the term "strategic human resource management" and how it has been used successfully in other organizations, as well as to provide a comprehensive plan for how the human resource function within this organization will be addressed in order to achieve true strategic human resource management. First, using information from other organizations, the meaning of strategic human resource management will be explained and demonstrated with regards to the positive benefits that can be achieved. Then, the comprehensive plan will examine a variety of HR issues that will be addressed within the organization in order to truly allow the human resource function to become a strategic part of the organization so that a connection can occur between the human resources and the larger strategic goals and objectives of the company.
Examination of Strategic Human Resource Management
The idea that strategic human resource management is the process of aligning the human resource functions within an organization with the larger goals and strategies of the company has already been noted (Wright, Snell & Dyer, 2005, p. 875). The question that arises is what does this definition of strategic human resource management actually mean in real-world terms when it is implemented in real-world organizations. One of the ways in which the meaning of strategic human resource management can be understood is to examine the internal actions of the Hilton Group Plc, the company that operates 500 Hilton Hotel properties around the world in 50 countries with 60,000 employees (Maxwell & Lyle, 2002, p. 251).Hospitality Industry. In 1999, Hilton launched a large-scale plan to determine the needs and desires of its guests, and then to connect the actions and motivations of employees to those needs and desires. The overall strategy was for Hilton Hotels to be customer-driven and customer-focused. From a human resource standpoint, the company implemented policies that were designed to recognize them for their hard work, demonstrate respect for the knowledge and skills that employees possessed, and to reward them for the positive outcomes of the company in relation to the strategies that were being pursued. The policies included training employees so that they understood how to recognize the needs and desires of guests. At the same time, employees were actually empowered to be able to respond to customer needs or complaints and address them so that customers felt that their needs and desires were important to the organization. The overall result was that the reputation of Hilton Hotels improved, as well as the company's financial performance.
The actions of Hilton Hotels demonstrate the benefit of connecting human resource management with the strategies of the organization. For example, rather than simply hiring employees and training them to perform a task, such as cleaning hotel rooms or providing room service to guests, the company trained employees to meet the full range of needs of the guests, as well as provided them the freedom to take actions to provide the highest quality service possible. This demonstrates that there was a connection between human resource functions and the strategies of the company. There was a connection between training and desired outcomes. Even more, in order to motivate employees, they were recognized and rewarded with financial and non-financial incentives based on their performance toward the larger goals and strategies of the organization. Overall, all of the issues that were addressed as part of the human resources of the organization were directly related and dictated by the outcomes that were desired.
Hilton is far from the only company in the hospitality industry that has successfully used strategic human resource management to improve their operations and performance. The Portman Ritz-Carlton hotel in Shanghai is another organization that has used strategic human resource management to move beyond simply performing in line with industry standards. In 1998, the Ritz-Carlton organization took over management of the hotel. At that time, the hotel was generally performing at industry standards for a high-end luxury hotel. The company had employee and guest satisfaction that ranked between 70% and 80% (Yeung, 2006, p. 267). However, with management performed by the Ritz Carlton, a change in human resource management occurred. First, new employees are not simply interviewed by their direct supervisors. Instead, the hiring process consists of several interviews with unit-level managers, division managers, and even the general manager of the entire hotel. The reason for this process is that it allows for the ability of different managers to ask a potential employee about his attitude toward customers and toward the products and services being offered by the organization.
Furthermore, once an employee is hired, he or she is given two days of training before ever actually interacting with guests. The training is not just about how to perform the job for which the employee was hired, but instead about helping that person learn about the internal culture and the larger goals and strategies of the organization. The goal of the initial two-days of training is about acclimating the new employee to the environment of the organization as opposed to simply how to do the job. Then, each new employee receives 30 days of training in which they work with another employee to learn the job, but also how to perform the job in relation to the larger culture and strategies of the organization.
For all employees, the internal culture of the Portman Ritz Carlton is one in which the credo "we are ladies and gentlemen taking care of ladies and gentlemen" is taken vary seriously (Yeung, 2006, p. 270). What is meant by the company's credo is that the employees are not simply housekeepers or restaurant servers, but instead are truly highly competent professionals who are serving other respected, professional individuals. When problems arise, members of departments and managers actually talk about those problems. In fact, departments have regular meetings in which all employees are expected to voice concerns and issues, both in terms of internal operations and issues involving guests. All of this is possible because employees are brought into the organization who are concerned about quality service during the hiring process, and the values of the organization are instilled during the training process and in everyday interactions with managers.
Finally, retaining employees occurs through a process of promoting from within. The Portman Ritz-Carlton has 70% to 80% of leadership positions filled by people who started within the organization in front-line positions. The overall result has been that not only has the external reputation and financial performance of the hotel improved, but employee turnover has declined to 15% as compared to the industry average in China of 29%. Even more, the hotel has had the highest employee satisfaction rating of all of the 59 Ritz-Carlton hotels around the world (Yeung, 2006, 267).
What is once again demonstrated is the way in which connecting human resource management to the strategies of the organization can result in positive outcomes. For the Portman Ritz-Carlton, strategic human resource management is at all aspects of operations. From the moment that a potential employee is interviewed, the leaders of the hotel are focused on hiring people will fit in with the internal culture of the organization. Then, training is carried out with a focus on showing employees how to fulfill the strategy of the hotel to behave like professionals who are serving other professionals. In addition, motivating employees is about giving them leadership abilities and promoting them to leadership positions.
Large Multinational Firms. Outside of the hospitality industry, there are other companies that have successfully used strategic human resource management to improve their operations and performance. One of these companies is Coca-Cola. In 2004, the company began a process of conducting internal focus groups in order to understand why it was experiencing negative rates of return on investment. Through the data obtained from the employee focus groups, it was discovered that there was a lack of a clear mission and clear functionality within the organization (Friedman, 2009, p. 234). Employees felt as though they were performing specific jobs and duties, but with no clear understanding of how those jobs and duties connected with the larger goals and strategies of the organization.
The result for Coca-Cola was the creation of a new corporate mission and new strategies that were communicated to all employees. What is important is that the new mission was not only about serving customers or achieving global growth. Instead, the new mission came with an internal plan that was focused on employee engagement. Employees were allowed to take part in leadership activities and encouraged to act as leaders in their jobs. Rather than simply performing duties, they were given the ability to take actions and think about the needs of the larger organization. The overall result was that employee engagement increased from 74% in 2004 to 79% in 2006. In addition, the volume of units of product sold increased from 2% to 4%, and 13 of the 16 markets in which Coca-Cola products were sold outperformed the performance goals that had been established (Friedman, 2009, p. 234).
The improvements in performance occurred because the company took the effort to inspire employees and make them feel as though they were respected for the skills and knowledge that they possessed. Employees were also given rewards and incentives for improvements in performance (Friedman, 2009, 234). With the use of non-financial and financial incentives, employees felt that they could be engaged with their jobs. The leaders of the company were part of this process as they wanted to see a change in internal culture, so they modeled the type of culture that they desired for the lower level employees.
General Electric is another company that has used strategic human resource management to improve its operations. In 2005, the company implemented its ecomagination program that was designed with the strategy of offering environmentally friendly products to consumers. As part of this strategy, corporate leaders empowered employees to take actions and even risks to design new products that were environmentally friendly (Friedman, 2009, p. 236). Rather than being afraid of taking risks, employees were trained and guided to take risks and to be willing to put forth ideas about new products, as well as improvements that could be made in existing products to reduce the amount of energy that they used. Even more, communication was increased to allow employees to express concerns and issues that arose in their jobs so that employees and managers could work together (Friedman, 2009, p. 236).
In much the same way, Google has become one of the most profitable companies in the world by creating a corporate culture in which employees are hired to be empowered in their jobs. The hiring process at Google involves finding people who are not simply smart at programming or application development, but who also have the characteristics needed to manage their own time and to create new ideas from scratch (Friedman, 2009, p. 237). By hiring people who are personally dedicated to technology and the development of new innovations, the company has been able to foster an internal culture in which employees and employee groups largely work independently. Employees are free to spend time developing new products and presenting them to the company for potential full-scale development. There is no need for employees to be micro-managed. Instead, employees have the freedom to work in different parts of the company's headquarters and even from other locations.
From the standpoint of human resource management, Google, General Electric, and Coca-Cola have been able to create an open work environment because the focus on strategies and the internal culture that will allow for those strategies to be carried out begins with the way in which employees are hired. Rather than hiring large numbers of employees and then hoping they will be motivated to carry out the strategies of the organization, the hiring process is about finding employees that match the needs of the company. Then, training involves more acclimation of the strategies that have been implemented. During these processes, executive leaders are also involved to model the actions and behaviors that they expect from employees, as well as the internal culture that is needed to achieve the objectives that have been established.
Healthcare Industry. One other industry in which strategic human resource management has been effective at improving performance is the healthcare industry. One of the organizations that has successfully utilized strategic human resource management is the Mayo Clinic, which is the largest not-for-profit medical practice in the world with 3,300 physicians and researchers and 46,000 health staff members that treat over 500,000 people per year. Because the focus of the Mayo Clinic is to provide the best service to its patients, the role of the human resource department within the organization is to find employees who are committed to serving patients and then fostering that belief and rewarding them for the work that is performed (Ramlall, Welch, Walter & Tomlinson, 2009, p. 17).
During the hiring process at the Mayo Clinic, potential employees are assessed to determine if they can work as part of multidisciplinary teams, which is a vital part of the system of care within the organization. Furthermore, they are evaluated to determine if they can work in an environment in which innovation and a commitment to patient outcomes is more important than simply treating a large number of patients on any given day. Even more, the organization is concerned about rewarding employees so that they feel appreciated for their work. This means that employees are given life insurance, health insurance, and paid time off. However, they are also given regular salary increases and continuing professional development opportunities (Ramlall, Welch, Walter & Tomlinson, 2009, p. 21).
By hiring employees that fit with the strategies and beliefs of the Mayo Clinic, and rewarding those employees for their efforts, the organization has truly become one of the most respected healthcare organizations in the world. The key to all of this has been connecting strategy with human resource processes. Rather than treating human resource activities as something that is different than the larger operations and strategies of the organization, human resources management is a vital part of those strategies. In fact, all of the case study examples that have been provided have shown that what is meant by the term "strategic human resource management" is the connection of human resource activities to the larger strategies of an organization. If an organization such as Google wants to grow based on a strategy of continual development of new products and technologies, then it needs employees who are not only smart, but also committed to working independently to develop new products. For the human resource manager, this means aligning recruitment and hiring practices to find those types of people who will fit the culture of the organization.
Types of HR Strategies. It is important to note that the examples that have been provided about strategic human resource management have focused on four different types of human resource strategies: Task focused, development, turnaround, and paternalistic strategy (Kandula, 2004, p. 42-43). The task focused human resource strategy is focused on job design and skills, while the development strategy is about developing individual employees and the use of rewards to motivate employees. The turnaround strategy, however, is about making structural changes to an organization, such as occurred with Coca-Cola or the Ritz-Carlton hotel in Shanghai. Finally, the paternalistic strategy is about the procedures that employees perform and the ways in which supervision occurs.
Understanding these four types of human resource strategies is important because each needs to be used based on different situations and conditions. The task focused strategy should be of concern when products or services are being changed, but the development strategy should be used when a company's market is growing or when expansion is occurring. The turnaround strategy, on the other hand, should be used when a business is undergoing a dramatic change because of not relating to the environment in which it exists. Finally, the paternalistic strategy should not be used very often and only when the organization has a monopoly in its industry that allows it to control processes in the external environment (Kandula, 2004, p. 42-43).
Comprehensive Plan for the Organization
With an explanation of what is meant by strategic human resource management how it has been effectively used in other organizations, as well as the types of human resource strategies that can be used, it is possible to lay out a comprehensive plan for how core human resource functions will be addressed in this organization in a manner that is consistent with the concept of strategic human resource management. Each of the core human resource functions will be discussed separately from each other in order to allow for further review as necessary.
Work Design. From a strategic human resource management standpoint, the work design, or way in which employees perform their tasks and duties, must allow for the strategies of the organization to be carried out. The way in which employees perform their duties must be reviewed to determine if specific work groups should be created, as well as the positions that should be part of those work groups. The process of creating a work design that is consistent with the strategies of the organization is not a one-time event, but something that will be reviewed at least once a year in order to determine if the strategies and conditions facing the company warrant a change in work design.
Job Analysis. As the organization changes and evolves, it is necessary to ensure that the jobs that are being performed are relevant and necessary. In this regard, an analysis will be performed on the types of positions that exist within the organization so that a determination can be made if the resources of the company would be better used by adjusting and changing job duties, or even merging some duties into entirely new positions. The goal of performing job analyses is to ensure that waste is not occurring by having people perform duties that are not adding value to the organization. It must be understood that this type of analysis is not about finding ways to eliminate positions in order to save money. Instead, the goal of this analysis is to utilize the employees in the best way possible so that the tasks that they perform are based on a real mission or goal. If employees are not sure why they are performing certain tasks, then there is a chance that those tasks are not of value and only serve to waste time.
Recruitment. The recruitment process is perhaps one of the most important part of the strategic human resource management function because it is where the initial effort to connect employees to the strategies of the organization begins. In order to find the best employees, the recruitment process must be more than simply receiving resumes and making offers. Instead, the recruitment process should involve seeking out employees who are likely to have the skills and attitudes that are necessary based on the strategies of the organization. This means that recruitment can occur in a variety of ways, from seeking out people who are known within the industry to using word of mouth referrals and recommendations.
As potential employees are sought, they must be given information about the culture of the organization and the strategies that are in place. This information should not be treated as unimportant until a person is hired. Instead, the company must be upfront with the types of employees that it wants to have in the organization and the skills and attitudes that they must possess. In this way, the recruitment process should not only be about the company finding employees that are likely to fit into the culture, but also about allowing potential employees to determine if the organization can fit into their goals and objectives for the future.
Selection. The actual selection process should not involve hiring employees based on a single interview. Instead, the selection process should allow potential employees to move beyond the front office to actually view the inter-workings of the organization and meet with the mangers and other employees. Potential employees should be allowed to ask questions, and should be interviewed by their immediate supervisors, as well as executive level managers. Then, each manager and employee who talked with the potential new employee should provide feedback about their skills, knowledge, and personality. Based on all of this feedback, a final decision can be made as to whether a potential employee should be hired. While this selection process may seem time consuming, it allows time to interact with an individual and determine how they are likely to behave in the actual work environment. When time is taken to interview and select a potential employee, then a higher quality of employee can be found who will possess the qualities that are needed to be successful in the organization and to allow the organization to meet its goals and objectives.
Retention. Employee retention is about more than simply providing regular increases in pay or seeking to improve financial benefits. Instead, retention is a process that involves the full range of concerns and motivations to employees. In order to retain employees over the long-term, it is necessary to provide ways in which they can grow with the organization and be promoted to higher levels of management. In addition, employees must feel as though they are respected. Showing respect to employees requires that they be given the opportunity to develop new products and new ways of performing tasks that will improve the performance of the company. Even more, employees want to be part of the decision-making process. This requires that managers seek the advise of their subordinates and integrate that advise into the way in which functions are performed.
Separation. While strategic human resource management is often discussed in relation to recruiting, hiring, and retaining employees, it is also necessary to separate employees from the organization. The separation process should not be something that occurs lightly. Instead, for employees who are not performing well in the organization, a process should be carried out to provide specific and measurable goals that have to be reached to improve performance. At no time should an employee be removed from the organization with doubts about why they were terminated or what they could have done better in order to remain with the company. In addition, for employees who voluntarily leave the organization, the company's leaders should not develop a negative attitude toward those individuals. Instead, employees should be allowed to leave on good terms as they may wish to rejoin the company in the future, or company leaders may wish to attempt to encourage those people to rejoin the organization in the future.
Performance Management. The process of performance management requiring setting specific and measurable goals for employees so they know how they are being evaluated and what is expected of them. In this regard, each employee should be given specific goals each quarter or every six months by which their performance will be evaluated. Throughout the performance period, employees will be required to meet with their mangers to determine how they are progressing on meeting goals, as well as what they might do to improve their performance. It is vital that the goals that are established are based on the strategies of the organization as opposed to simply performing job tasks. For example a performance goal for a customer service representative would be to achieve 95% customer satisfaction if the strategy of the company is to have the highest levels of customer satisfaction in order to create customer loyalty. A performance measure of completing each service call within four minutes is not likely to allow the employee to perform his or her duties in relation to the larger strategy of the organization.
Training. Training is a process that should be on-going and continual in the organization. Training should begin upon the initial hire of an employee and never stop. Training should be about both job duties, as well as the larger trends and issues facing the industry in which the company operates. Training should allow employees to take on leadership roles and activities in the organization and not simply allow them to perform a specific task or duty. The goal will be to have employees develop an internal and external view, and to treat the training of employees with both an internal and external view (Ulrich, Brockbank, Johnson & Younger, 2009, p. 5).
Development. Development is more than simply providing training to employees. The process of development is mentoring employees to take on new roles. Development should indeed be a mentoring process in which managers and executive-level personnel work with employees to increase their knowledge of the company, as well as their knowledge of the larger industry. Employees should also be given the ability to demonstrate their knowledge by working independently in new roles and then receiving feedback on their actions and results from a mentor.
Compensation. Employees need to know exactly the type of compensation they will receive. In addition, employees generally want to share in the successes of the organization. In this regard, all employees should receive basic compensation such as life insurance, health insurance, and paid time off. However, they should also be able to take part in profit sharing so that when the company generates profits, they are able to share in some of those profits. On a larger scale, compensation should be about motivating employees to be as efficient as possible toward the strategies and goals that have been established. In this way, employees should be given the tools that they need to work, whether that is computer equipment to use at home or the ability to work remotely.
Legal Requirements. All legal requirements regarding employment laws will be followed not based on the minimum that is required by the law, but based on what is considered to be ethically required. By acting in an ethical manner, employees will have a greater respect for the organization and be motivated to act in accordance with the larger strategies and goals of the organization. If employees perceive that the company is constantly trying to find ways to minimally comply with laws, then they will not view the company with credibility and may even believe that this is acceptable in their own actions.
Employee Relations. The goal of the human resource manager should be to develop the strongest relationships with employees possible. Within the framework of strategic human resource management, employees relations is vital to create a workforce that is dedicated to the goals and strategies of the company. In this regard, employees will be encouraged to raise issues or concerns that they have about the organization. In addition, quarterly surveys will be taken to assess employee attitudes and attempt to discover problems or issues even before they may be raised by employees.
Diversity. In a company operating in an international environment, diversity is a vital issue because by having a diverse workforce, the organization has employees who have a range of backgrounds, experiences, and skills (Ramlall, Welch, Walter & Tomlinson, 2009, p. 22). Diversity will be encouraged within the organization by monitoring the level of diversity among employees, as well as by recruiting employees from different ethnic and cultural backgrounds. Furthermore, as part of the training for all employees, including executive-level employees, the importance of diversity will be stressed in all activities. Any concerns about discrimination on the part of employees will be immediately investigated and corrective action will be taken.
E-HRM. Electronic human resource management has growth in popularity in recent years as information technology has made it possible for many human resource management functions, particularly those related to benefits administration, to be handled online as opposed to in person (Ruel, 2004, p. 4-5). The concern, however, is that too much of the human element can be taken out of the human resource management process. For example, IBM focused too much attention on E-HRM to the point that employees felt as though they were being ignored because of the reliance on computerized systems to answer questions and receive personal benefits (Parry & Tyson, 2011, p. 350). While computerized systems can be used for some functions, employees should always be able to ask a real person questions about their benefits and other HR processes. The computer should not be a replacement for face-to-face interactions. Instead, for employees who are comfortable requesting time off or making changes to their insurance plans, this should be available. For other employees, someone from the human resource department should be available to help make the changes and to answer questions.
International Issues. As the company is an international organization, it is necessary to recognize that human resource management is carried out different across countries and cultures. The question that arises is whether a standardized process should be used for all human resources or whether differences should occur based on the country of origin of the employees. In order to achieve the best outcomes, some human resource functions will need to be adjusted, particularly those based on compensation and benefits. The only actual changes that will occur will be the types of compensation and benefits that are offered, as these will have to comply with local laws and customs. In this situation, advice will need to be sought from local experts in the local countries to ensure that local laws and customs are followed. However, in terms of strategic human resource management, the goals of bringing together corporate strategies with employees will not change. Recruitment, selection, and retention will be carried out in the same manner across all countries in which the company operates. Interactions between employees and managers will continue to be monitored to ensure the best employee relations possible. In foreign countries, this will become even more important to ensure that local employees are not being exploited or in some way disrespected because of cultural differences. This also demonstrates the need for strategic human resource management as international expansion requires a focus on connecting international employees with the international strategies of the company.
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