The educational department and its strategic human resource practices were analysed to identify best fit practice in human resource practices to manage employees in the business context.
The purpose of this report is to highlight the best fit theory success the contingency theory and the stakeholder theory in context to strategic human resource practice in the internal and external factors adopted in the management of business strategic choices.
A comprehensive review of the human resource system processes used in the human resource department of this organisation was undertaken following an analysis of the internal factors such as the management, business strategy and the organisational culture and external factors such as economic factors and legal compliance of the organisation.
Recommendations aligned to the strategic human resource practice was provided to promote best fit theory and that stakeholder theory to promote best practice management and business strategic human resource practices and strategic choice
Additionally, the organisation’s annual report and strategic human resource documentation was analysed to provide an effective evaluation to implement improvements using best fit practices rather than best practices.
2.0 Theoretical Foundation
2.1 ‘Best-fit’ Contingency Theory of HRM
2.2 Stakeholder Theory
3.0 Analysis of Factors
3.1 Internal Factors
3.1.1 Top Management Philosophy
3.1.2 Business Strategy
3.1.3 Organisational Culture
3.2 External Factors
3.2.1 Legal Requirements
3.2.2 Economic Factors
3.2.3 National Culture
3.3 Key Stakeholders
The organisation that was researched in this report is an educational organisation that provides learning support and professional opportunities to its customers. The organisations learning department This department operates as part of a major higher education institute and includes six full time and three part-time and casual staff.
An analysis of the internal and external factors was conducted based on a one-on-one interview with the general manager of the department. Human resource documentation was used in this report, and human resource management literature to reflect upon the internal and external factors and human resource theories.
In this report three internal and external factors were analysed to measure the effectiveness of its practices. The report analysed the HRM context theories such as the ‘best-fit’ contingency theory and stakeholder theory, its theoretical framework, in the analysis of these internal and external factors.
It has been acknowledged that the factors that have impacted the strategic decisions and overall human resource management practices in this department is focused on the analysis of the advantages and disadvantages of best practice benefits of its stakeholders in this organisation.
In the study of shrm decisions there are theories applied to different business contexts. In this report, the contingency theory and the stakeholder theory focuses on the environment context and human resource practices.
In the study of human resources, best practice and best fit is discussed for its effective approach in the organisation (Boxall & Purcell, 2011). In organisations, human resource management practices are known to impact the business environment in the acknowledgement of the employment relationships to enhance organisational effectiveness (Laszlo & Zhexembayeva, 2011).
In a shrm context, the contingency theory relates to the best fit approach that organisations have integrated into human resource practices to achieve its competitive advantage (Schuler, 1987). In addition Pfeffer (1994) asserts seven practices used to manage employees in order to achieve profitability. However, organisations use competitive business strategies to achieve organisational productivity (Pfeffer, 2005 ).
The contingency theory incorporates human resource practices to achieve organisational productivity therefore Becker (1996) argues that it is important for organisations to use the knowledge of its strategic position to align its business strategy and best fit human resource practices rather than best practice principles.
In the role of human resource practices, it is the role and responsibility of management to support the business strategy however, management practices should be aligned to the goals and objectives of the organisation to achieve its strategic direction (Doeringer, Lorenz, & Terkla, 2003). Management theories and business strategies have been developed to assist in the realignment of strategic direction (Doorewaard & Meihuizen, 2000). An example is the employee behavioural perspective that suggests the impact it has on the employee’s behaviour (Jackson & Schuler, 1995).
Furthermore, in a shrm perspective human resource practices use business strategy to encourage the positive behaviour of employees in response to meeting organisational objectives. For example, employees respond positively to induction programs, recruitment practice, training and development practice and are recognised for their performance with employee incentives and rewards (Boxall & Purcell, 2011).
The Miles and Snow (1984) framework, uses business level strategies such as the three strategic positions that can be used when adopting best fit hrm practices known as defender, prospectors and analysers. These business strategic approaches use the strategic direction and business characteristics to realign its human resource practices and systems in response to the organisations changing needs. The prospector approach is focused on the achievement of human resource practices that best fit the organisational goals secondly the analysers focus on a blend of strategies to align business strategy and shrm to meet organisational outcomes (Miles & Snow, 1984) . Furthermore. Miles and Snow (1984) believes that best fit contingency theory is reliant on the organisations ability to identify the business strategy and apply the human resource practice aligned to the respective strategy.
As funding is limited in an organisation and legal regulation change, government department need to comply with these changes to operate and perform successfully. A change model that supports the management of strategic change however supports best practice is kotters change model (Kotter, 1995). Furthermore resistance to change in the workplace will lead to the loss of productivity and staff morale (Kotter, 1995). The contingency theory may have limitations on the effectiveness related to business operations. It is argued that there are “basic assumptions underlying strategic HRM and using the HRM system to promote change” therefore organisations should be aware of the impact that the human resource system will have on the organisation (Jackson & Seo, 2010, p. 284). The factors that restrict the operations of the business such as the lack of resources adherence to legal compliance a competitive environment can limit the organisations strategy to remain competitive in the global environment. Miles and Snow’s framework agrees that the public sector educational institutions are adopting an analyser strategic approach adopted to a highly competitive and changing business environment (Miles & Snow, 1984).
In a human resource context, the stakeholder theory relates to the relationship between key stakeholders of the organisation such as employees and customers to maintain a sustainable HRM system. In organisations the management of stakeholders can be challenging “A central challenge for responsible leaders is to construct a value proposition for business that enriches and aligns its relationships with shareholders and stakeholders across economic, sociopolitical, ecological, and moral spheres” therefore it important for managers to understand stakeholder expectations (Mirvis, DeJongh, Googins, Quinn, & Van Velsor, 2010, p. 5).The manager’s ability to manage stakeholder expectations successfully in the design of human resource practices and systems will achieve the strategic choice of the organisation (Boxall & Purcell, 2011).
Managers should design human resource practices aligned to organisational goals and include key stakeholders in the decision-making process to identify stakeholder expectations in the design of these practices such as reward and remuneration practices to retain staff (Jenkins & Delbridge, 2013).
SHRM literature according to Dubois and Dubois (2012) suggests that there is a link between and organisation to achieve its competitive advantage with the stakeholder theory to achieve triple bottom line reporting in a business context. Therefore, Jenkins and Delbridge (2013) assert that stakeholders with access to the human resources policies and practices are linked to the business strategy such as work life balance practices will result in employee retention. Organisations addressing key stakeholder expectations in the development of human resource practices will effectively increase productivity in the long term (Dubois & Dubois, 2012).
Organisations that manager people effectively, acknowledge key stakeholders in the design of its human resource management system (Boxall & Purcell, 2011, p. 319). Furthermore Dubois and Dubois (2012) and McShane (2013) believe that an organisations response to change in a proactive manner and the use of knowledge in stakeholder management procedures and the link to human resource practices will lead to the achievement of the organisation strategic direction.
An analysis of the internal and external factors related to the learning department strategic choices in the business environment and the implemented strategic decisions of the human resource management practices are discussed.
The internal factors of the organisation related to the internal operations of the organisation. The key players in these factors are top managements roles, the business strategy and organisational culture used to develop the internal practices of the organisation.
The organisation chief executive officer, senior managements and human resource directors have the role in the organisation to provide an environment that is compliant with sustainable employee practices and involves employees in the decision-making process (Dubois & Dubois, 2012). However, managers should manage employees to nurturing employee behaviour in the workplace leading to positive attitude and outlook to achieve the organisations vision and mission (McShane, 2013). The organisation’s values promotes leadership and accountability (Curtin University, 2017b). These values are reflected in the managers practice managing employees and attract labour to the organisation.
In this organisation, the manager encourages employees voice as part of its services and quality improvement process (MacLeod, 2009) . The manager and employees are involved in the decision making of human resource practices and human resource system design as part of its strategic human resource management practices. In SHRM, the manager and employees work closely to transform the organisation using knowledge sharing and professional development and leadership skills to operate the department in an autonomous approach to lead in the organisation (Dubois & Dubois, 2012). As an employer of choice, the department recognises employee contributions of high achievers. Furthermore, in the performance development process key employees are provided with the opportunity to develop their careers and participate in the retention practices of the organisation for example access to long service leave entitlements (Boxall & Purcell, 2011). Individuals in the organisation recognised as mentors in leadership programs and are encouraged to participate as mentors and are provided with educational opportunities to develop these skills (Curtin University, 2017a) . This business strategy reflects management’s ability to promote strategic choice and human resource practices in the professional training and education practices that are aligned with key stakeholder needs in the organisation to transform the strategic human resource management practice (Curtin University, 2017b).
Business strategy is an action the organisation takes to meet the objective of the organisation (Waddell, Jones, & George, 2011, p. 308). The contingency theory applies to the human resource practices at the learning department aligned to the business strategy to promote equal access to educational opportunities for national and international students and to deliver services tailored to suit the individual learning backgrounds of the students (Curtin University, 2017b). This vision of the department is focused on a business strategy to compliment strategic human resource management and strategic choices of the organisation.
Public sector organisations will adopt the analyser strategic business strategy (Freeman, Boxall, & Haynes, 2007), furthermore in the contingency framework developed by Miles and Snow (1984) affirms that in the design of a human resource system the contingency theory should be adopted in human resources practices to gain the competitive advantage. The learning department has used the contingency theory in human resource management in the design of its human resource policies to adopt best fit practice and organisational goals. An example is that the public services may limit its provision of services offered to key stakeholders due to the limited educational funding received from the government. The human resource practices should be designed to reflect the changing business operations of the organisations. For example, casual staff are requested to increase sessional work hours to meet business demands periodically when new educational iniatitive projects are to be completed.
The services that the learning department provides despite its limited funding should be committed to the values of the organisation. An example of the values is to work together with shared goals and knowledge to achieve productivity in the workplace and improve work performance. (Curtin University, 2017b).
The values integrated into business strategy ensures that the organisation can achieve its vision to provide equal access to education to national and international students based on individual learning needs (Curtin University, 2017b). In addition, the organisation encourages a platform for employee voice to provide feedback and to recognise employee contribution and promote rewards as a result of achievement of organisational goals.. A system is developed by the organisation using the intranet to acknowledge high achievers and assist employees to meet their optimal level of performance in the organisation using performance management plans. These performance management plans are monitored and reviewed by managers to ascertain the types of learning and development opportunities employees require to support organisation is achieving its business strategy and improve work relationships while recognising and rewarding work efforts.
Organisational culture is the values beliefs and attitudes that are developed by the organisation to promote the psychological contract, workplace standards consistent with staff and employee’s behaviour committed to productivity (Keim & Wilkinson, 2010). Organisational values play a role in promoting the mannerism of acceptable employee behaviours that influences the organisations successful performance (McShane, 2013).
The organisations chief executive officer has defined its organisational values committed to leadership in the performance of the organisation (Curtin University, 2017b). These organisational values are incorporated into the human resource activities, for example it is values are integrated into the recruitment interviewing process, the design of employment contracts and the performance management appraisal practices (Compton, 2014). Organisational values are evident in the human resource practices and the human resource organisational system documentation such as performance management plans to reflect the legitimacy and commitment to the organisation.
The performance management plan is managed by the manager to integrate organisational values such as training and development in order to assist employees to meet organisational objectives (Curtin University, 2017b).
The organisations objectives are to ensure employees are productive using human resource practices aligned to the organisations culture furthermore its recruitment strategy is to attract and retain a labour force that reflect the values of the organisation (Dubois & Dubois, 2012). An organisational culture that focuses on the service delivery of key stakeholders suggests that there is a connection between the businesses strategy and strategic human resource choices.
The external factors of the organisations affect the ability of the organisation to attract market share and gain the competitive advantage (Wirtenberg, Harmon, Russell, & Fairfield, 2007).Globalisation and an evolving global business has impacted the business environment and its external factors such as legal compliance, economic factors and national culture that should be reviewed to align the services and operations of the organisation.
According to Kramar and Steane (2012) due to globalisation there has been an increase in the social and legal requirements for human resource professionals to comply in labour law such as industrial relation legislation. For organisations to attract labour successfully in Australia, human resource recruitment practices such as employer contracts should be designed to comply with workplace standards (Fairwork Australia, 2017) and (Kramar & Steane, 2012).
Some of the legal requirements relate to national workplace standards, occupational health and safety regulations and equal employment opportunity practices (Kossek & Pichler, 2007, p. 20).
The SHRM practices integrated into the organisations policies relate to the values and legislative requirements in the recruitment and selection process of key stakeholder interests. An example is the organisation should comply with legal requirements such as the Fair Work Act 2009 (Fairwork Australia, 2017) to ensure employers provide entitlements to employees. Furthermore, the learning department should consider the national employment standards employee entitlements in the modern award employment contract to fulfil legal requirements (Fairwork Australia, 2017).
In the Australian economy shrm have impacted the labour market demand, as organisations seek to develop recruitment initiatives that respond with economic trends (Boxall & Purcell, 2011).
Currently Australia has a skills shortage and an aging workforce. The public sector is impacted by economic factors and funding entitlements (Freeman et al., 2007). To remedy limitation of funding in response to economic factors affecting the organisation, to provide services aligned to its values by providing internal staff opportunities, for example the organisation has structed its full-time staff and part time staff based on specialisation, increased the use of sessional casual staff and promoted secondment internal employment opportunities. As a result, the department employees a fulltime senior educational program director and a full time senior educational facilitator and a part time sessional tutor and part time receptionist. This process reflects implemented strategic human resource strategies in response to limited economic factors.
National culture is the values and believes in a society. A national cultural theorist, Hofstede (1980) recognises the four-national cultural dimensions to be integrated into the human resource practices an example is employee voice use as a societal norm in workplace practice.
The learning department’s culture is related to values such as employee voice is reflected in the work environment. Firstly, employees and management are encouraged to access and participate in feedback and quality improvement process using the intranet in a confidential system. Secondly performance manage and feedback surveys related to the organisations performance enable employees to participate in sharing knowledge and improvements of practices. Thirdly an online system has been developed to assist employees to develop professional career goals for managers to access performance information and support training and development requirements (Curtin University, 2017).
This practice is used by management and SHRM decisions assists the organisation to improve its business operations and fosters a practice of professional development participation to shape the organisations culture.
The key stakeholders of an organisation impact the strategic choice and the design of the strategic human resource practices. The human resources practices will be discussed and its significance in the alignment to stakeholder interests will be highlighted using business strategy to achieve profitability.
The learning centre provides services to the national and international students with learning difficulties. It is the mission of the organisation to ensure that the key stakeholders interests are their main priority when providing services and achieving the strategic choices (Curtin University, 2017). After a service delivery, online customer feedback forms are provided to clients to the ensure the organisation has met expectations. For example, customer feedback surveys are used at the end of each learning period. In the shrm practice feedback collected during this process is used to assist the organisation to improve its practices.
During a learning session students can rate their learning advisor’s performance as part of a development plan process to encourage learning advisors to improve in learning areas that would assist students. These suggestions are discussed with the senior learning advisor and professional training is organised for the learning advisor to provide specialised services. An example of training is learning how to communicate in a cross cultural and special needs environment, therefore these practices can be adopted in the shrm practices of the organisation.
The government is a stakeholder as funding is provided to support this organisation by state and federal educational funding schemes in accordance with the strategic choices and the strategic plan. The funding must be managed in compliance with state and federal legislation. This practice is to ensure there is accountability and ethical practices aligned with government policy.
Government grants and policy amendments must be applied to funding schemes and incentives used in the operation of business. This organisation is responsible to the state education department for providing its educational services funded allocated from the educational and amenities funds that enable the department to provide services to internal and external stakeholders aligned to the vision and mission of the organisation’s to meet strategic educational goals (Curtin University, 2017b).
The organisation is required to submit a business case to support its request for funding this practice is reflected in the stakeholder theory for organisations to comply with government objectives to provide a service in compliance with standards of performance.
The stakeholder theory is impacted by compliance of service standards aligned with the goals of the government objectives and the organisations shrm practices.
The contingency theory best fit theory , stakeholder theory and strategic human resource practices which the organisation has implemented in the organisation affects factors such as the internal external environment and its stakeholders aligned to the strategic direction.
The contingency theory promotes the best fit approach in a strategic human resource management context to achieve organisational strategies competitive advantage and its strategic choices.
The stakeholder theory promotes the management of stakeholder’s business strategy and human resource policies and practices to achieve its organisational competitive advantage . The two stakeholder groups at the organisation’s learning department have contributed to the human resource practices developed to meet standards and guidelines.
The internal and external factors analysed in context to strategic human resource management decisions at the organisation was implemented by managements and the organisational values to aligned to workplace culture and strategic direction. The organisation has implemented a consultative approach to improve its practices and services and to manage long term retention strategies in its succession plan to promote staff and foster a strong learning culture in valuing its staff, these practices are aligned with strategic human resource practices. The organisation’s core values are an effective business strategy that supports the organisational culture and serves as a basis for human resource practices and strategic human resource management to achieve organisational goals.
The Australian legislation played a key role in the design of the departments policies. These policies were developed to support the labour casualisation, rostered hours and secondment of staff. In addition, the department has encouraged feedback to promote improvement aligned to the values of the organisation culture and strategic direction.
Finally, this report addressed internal and external factors and the strategic direction of the organisations to implement strategic decision and human resource practices in the organisation and core values as having the highest impact on the organisation to achieve its strategic human resource goals.
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