Organizational Performance and “Soft” Human Resource Management Strategies

Abstract

There are many strategic human resource approaches that help improve an organization’s performance. The business world and market become more complex by day and to deal with each type of organization a different strategy should be implemented. The “Soft” HRM approach uses a yin and yang type of approach which seeks to build trust amongst employees to produce a harmonic work environment that promotes achieving tasks while maintaining a balance among all activities.

The “Hard” HRM approach views people as investments that should be trained and updated according to the needs of the organization to battle threats in a highly competitive business. The contingency approach offers a customized and microscopic solution to problems. All three approaches can be used to get improved organizational performance.

Introduction

There are many strategic human resource approaches that help improve an organization’s performance. The business world and market become more complex by day and to deal with each type of organization a different strategy should be implemented. The “Soft” HRM approach uses a yin and yang type of approach which seeks to build trust amongst employees to produce a harmonic work environment that promotes achieving tasks while maintaining a balance among all activities. The “Hard” HRM approach views people as investments that should be trained and updated according to the needs of the organization to battle threats in a highly competitive business. The contingency approach offers a customized and microscopic solution to problems. All three approaches can be used to get improved organizational performance.

Michael Armstrong and Angela Brown (2002) have underlined the theme behind strategic HR and how it can lead to an improved business. They define HRM as “a strategic and coherent approach to management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives.”(p. 3) One thing that is clear is that the right people are essential for an organization to be successful. “In the general business domain, it has become increasingly apparent that strategies for organizational change have become an aphorism for maintaining success and creating competitive advantage in complex organizations.” (Farquharson & Baum 2002, p. 243)

Body

There are two different forms of HRM: the hard and the soft. “The “soft” model, reflective of “development humanism” (Storey, 1987; Hendry and Pettigrew, 1990), recognizes the need for integration of HR policies with business objectives through treating employees as values assets which comprise a source of competitive advantage through commitment, adaptability, high-quality skills and performance.” (quoted in Farquharson & Baum 2002, p. 243) Successful organizational improvement depends on people who work in it. “This approach embraces the HR policies of recognition, development, trust, participation and employee choice (Beer and Spector, 1985) through communication, motivation and leadership (Storey, 1987).” (quoted in Farquharson & Baum 2002, p. 243)

People need leadership, a guiding hand a someone who will motivate them. People are the means to an end and not just objects according to the words of Guest (1999, quoted in Armstrong and Baron 2002, p. 6) This method uses more human methods of achieving improvement throughout the organization. People are motivated and asked to be highly committed to their jobs because a high level of trust is developed. Teamwork is essential for this method to be efficient. (Armstrong and Baron 2002)

Basically this method is like yin and yang. People are motivated to work harmoniously with each other to create a well-balanced work atmosphere. While one person completes certain tasks the other person focuses on his or her share of the work. Since trust development is the main focus people can work with each other and have complete ‘Feng-shui’.

“The “hard” model, which reflects “utilitarian instrumentalism”, emphasizes the importance of close integration of human resource policies, systems and activities with business strategy (Fomburn et al. 1984). From this perspective, the human resource is seen as an object of manpower planning and a factor of production (Tyson and Fell, 1986). Therefore, emphasis is placed on calculative HR policies such as performance-related pay or formal appraisal systems.” (quoted in Farquharson & Baum 2002, p. 243)

Hard HRM considers employees as people who will create competitive advantage. The Soft approach highlights how to increase the employee morale to get them to do the task in a synchronized way and the Hard approach focuses on how to equip people with the right kind of skills to perform a task in more competitive and cutting edge manner. In marketing, to premium price a product the company has to equip it with an added value aspect of service. The Hard HRM policy views its employees kind of like products; they are trained and value-added aspects are added to them. (Armstrong and Baron 2002) “It regards people as human capital from which a return can be obtained by investing judiciously in their development.” (Armstrong and Baron 2002, p. 5)

Guest (1999, quoted in Armstrong and Baron 2002, p. 5) commented; “The drive to adopt HRM is based on the business case of a need to respond to an external threat from increasing competition. It is a philosophy that appeals to managements who are striving to increase competitive advantage and appreciate that to do this they must invest in human resources as well as new technology.”

Realistically approaching the Hard HRM theory it proves to be present in every today. The essence of this theory is to continuously invest in new human resources alongside technological updates. In even simpler words it means that new people have to be hired to replace the old people. This does not always have to be related to age but younger individuals usually are more up to date with current technology changes. A computer is useless is if it is outdated. A new computer is useless if it does not have the appropriate person to operate it. Businesses continuously need new blood in their organization to keep up with the competitive market.

At any interview, when an HR person is asking questions it is only common sense to know that the interviewee is expected to bring something fresh to the table and show promise. The interviewee only gets hired if he has convinced the interviewer that he is worth the investment (the salary and future training costs). This strategy is the best way to accomplish improvements for the organization in an extremely competitive market.

The Soft HRM strategy is the best approach when it comes to hiring people for an organization that doesn’t necessarily face extreme and complex competition every day. For example, Microsoft can be viewed as a follower of the Hard strategy because it continuously invests in its people and new people who will battle the everyday threats towards the company. On the other hand, Goodwill or a Social Services organization would employ using a Soft strategy because it needs people to work together in unison to accomplish one big task.

“The contingency approach is based on the assumption that the relationship between leader behaviors and traits and effectiveness depends on characteristics of the particular situation the leader is in. The task of a leader, according to the contingency approach, is to first “read” the situation to determine what behaviors would be most appropriate. Once this is determined, the leader has to adjust his or her behavior to the meet the demands of the situation.” (Jex 2002, p. 273) This theory highlights what a leader should do to take control of the situation and how to handle it best for overall improvement of the organization.

James D. Thompson said that, “organizations that experience similar technological problems will engage in similar behavior.” (Barnat) The contingency approach is entirely different from the normal approaches of management. “The classical, behavioral, and management science schools assumed a universal approach. They proposed the discovery of “one-best-way” management principles that applied the same techniques to every organization.” (Barnat) This is a fallacy because today the world has become so complex that the same principles cannot be applied to each problem and “experienced managers know that not all people and situations should be handled identically.

Therefore, the contingency approach holds that universal solutions and principles cannot be applied to organizations.”(Barnat) Basically the contingency report teaches us to mold our actions according to a particular cause. This approach helps an organization perform better because it is not limited to specific functions. Unlike the universal approach which presents one way to tackle everything the contingency approach looks into the situation and then the decision is made on how to handle the situation. “In simple terms, the contingency theory suggests that what managers do in practice depends on, or is contingent upon, a given set of circumstances – a situation.” (Barnat)

Scott (1981, quoted in Bryman 1986, pp. 170-1) “has observed that, the only difference between the universalist and the contingency approaches is that the former tended to conceive of the organization as a closed system. The contingency researchers, by encapsulating contextual factors like the environment and technology within their purview, viewed the organization as an open system.” Basically the contingency approach is different from the universal approach because it views the entire environment and market situation to make decisions instead of just focusing on the inside of the company. The contingency approach helps boost organization performance because the tasks are handled more microscopically and the solutions and strategies are more customized.

Summary

Strategic human resource development can help boost organization performance. Depending on the type of organization a different theory can help the organization achieve success. ‘Soft’ human resource management deals with developmental humanism whereas ‘Hard’ human resource management deals with utilitarian instrumentalism. Both of these offer solutions to improving organizational performance depending on the type of organization. The contingency report differs from a universal approach because it requires a leader to customize a solution or strategy according to the current situation. The approach helps with our complex environment today by offering different solutions to tackle different problems.

Bibliography

Armstrong, M., & Baron, A. (2002). Strategic HRM: the key to improved business performance. Developing practice. London, Chartered Institute of Personnel and Development.

Barnat, R. The Contingency Approach. Web.

Bryman, A. (1986). Leadership and organizations. London, Routledge & K. Paul.

Farguharson, L., Baum, T. (2002) Enacting organizational change programmes: a centre stage role for HRM? International Journal of Contemporary Hospitality Management, 14 (5), pp. 243-250.

Govindarajan, V. (1988) A Contingency Approach to Strategy Implementation at the Business-Unit Level: Integrating Administrative Mechanisms with Strategy. The Academy of Management Journal, 31, pp. 828 – 853.

Hard HRM. Web.

Ivancevich, J. M., Szilagyi, A. D., & Wallace, M. J. (1977). Organizational behavior and performance. Santa Monica, Calif, Goodyear Pub. Co.

Jex, S. M. (2002). Organizational Psychology : A Scientist-Practitioner Approach. New York, John Wiley & Sons, Inc. Web.

Miner, J. B. (2005). Organizational behavior I. Essential theories of motivation and leadership. Armonk, N.Y., M.E. Sharpe.

(2008) Soft and hard human resource management (utilitarian instrumentalism versus developmental humanism). Web.