Strategic HRM Principles Implementation & Organizational Performance: The Case of Ethio Telecom.
| Author | Tadesse, Worku Mekonnen |
| Position | Human resource management |
Background
In the past 20 years, globalization has been impacting the business environment by "increased competition, flexibility, responsiveness, quality and the need for all functions of the business to demonstrate their contribution to the bottom line" (Beardwell et al, 2004). To win the competition, organizations have been implementing varying strategies. The reality is that if we want the strategy to be executed, we are expected to manage the people of the organization accordingly. Acknowledging this fact, the HR's role in the organization has been dramatically changed in recent years.
According to Sisssion (1990:5) there are four principles of strategic HRM. The first states that HR policies should have a link to the company business strategy and the policies should have consistency and congruence in between themselves. The second describes that the line managers are responsible to play the personnel management role and the HR professionals are responsible to support the line managers so that they can play their personnel management role appropriately. The third and the fourth principles advise managers to establish a close relationship with the employees so that their motivation and commitment can be increased in return. The successful implementation of these principles will help organizations to apply the SHRM approach and contribute for the improvement of overall organizational performance. But when we observe the scenario of Ethiopia there are no studies to assess the practice of Ethiopian public utility companies in implementing SHRM principles. Thus, this study will contribute to fill this gap and create awareness for Ethio Telecom to show its current status in implementing the SHRM principles and reveal the implications on the overall performance of the organization.
The Problem
Literature supports that HR should play its strategic role by being involved in the development and implementation of the firm's strategies. As revealed by Tenkasi, and Mohrman (1999) the causes of many strategies' failure are not preparation of poor strategies, rather their poor execution the main cause of which is often the result of poor human capital management. However, since SHRM is a recent concept, there are limited number of evidences captured concerning its application especially in public organizations and its impact on the organizational performance. Based on the discussions with some of the management members, the researchers came to the conclusion that the management employees do not have enough information about the implementation of SHRM principles in Ethio Telecom. They feel that the company has a problem in implementing SHRM principles. Therefore, the researchers would like to contribute to the knowledge of SHRM and fill the information gap observed in the implementation of SHRM principles in Ethio Telecom.
Research Questions
The study is mainly intended to answer the following questions:
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Do Ethio Telecom's HRM strategies, policies and practices have a vertical (internal) alignment with the company vision, mission and strategies?
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Are the different HRM policies and practices consistent with each other (horizontal alignment)?
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Does human resource department play a mediating role in realizing organizational strategies?
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To what extent the implementation of SHRM principles affect the overall performance of the organization?
The Concept of SHRM & Its Principles
Strategic Human Resource Management (SHRM) is an approach that defines how the organization's goals will be achieved through people by means of HR strategies and integrated HR policies and practices (Armstrong, 2008). Strategic HRM centers on how organizations can improve their competitive performance by considering and utilizing their human resources effectively (Cynthia et al, 2006). Strategic HRM considers people as a source of competitive advantage and uses them to generate strategic capability of organizations by ensuring the existence of the required manpower with the right skill and motivation. (Armstrong, 2008).
Strategic HR is a recent approach and has significant differences from the traditional approach in which people management is the main responsibility of HR professionals and the focus is to create good employee relation. On the contrary, in strategic HR, people management is the main responsibility of all line managers and the focus of HRM is to create partnerships with internal and external customers. The traditional HR system is slow to take initiatives and it is reactive in nature but Strategic HR working system is fast and proactive to take initiatives. Traditional HR focus is short term and its controlling mechanism is bureaucratic while the focus of strategic HR can be short, medium or long term and its controlling mechanism is very organic and flexible. In traditional HR, the role of HR professionals is transactional in nature and HR is considered as a cost center by the management but in strategic HR, the role of HR professionals is transformational in nature and HR is seen as an investment center. In traditional HR, the key investment is made on capital or products but in strategic HR the key investment is made on people and knowledge. Strategic HR output is measured by what it delivers than by what it does and HR is expected to play strategic partner role as well as a change agent role, administrative expert role and employee champion role.
As stated by Sisssion (1990:5), there are four principles of Strategic HRM. The first principle states that the HR policies should have a link with the company business strategy and the policies should have consistency in between themselves. HR policies should have a link with the company business strategy (vertical fit) and the policies should have consistency in between themselves (horizontal fit). Vertical fit (Strategic fit) approach states that there should be alignment in between the business strategy and the HR strategy. To create a strategic fit, it is mandatory to drive the HR strategies from the overall business strategy, to ensure key HR issues are included as part of the overall business strategy, to assign HR director in a high-level seat (board of directors) in the company (Boselie, 2010), to clearly understand the business goal of the organization, to translate the business strategy in to actionable HR policies and practices (Dessler, 2017), to align a business strategy with the business plan, organization goals, team objectives and individual objectives, to get set the individual level goals having discussion with employees. The second principle describes that the line managers are responsible to play the personnel management role and the HR professionals are responsible to support the line managers so that they can play their personnel management role appropriately. The third and the fourth principles advise managers to establish a close relationship with employees so that employee's motivation and commitment can be increased in return. Mello (2011) has cited also Ulrch framework and explained that HR should be evaluated by the value it creates to its customers, investors and employees. He stated that HR should play the strategic partner role by conducting architectural assessment and identify ways to renovate the organization architecture, ensuring that employees are committed to the organization by partnering with line managers to recognize and avoid the causes of low morale, such as unclear goals, unfocused priorities and ambiguous performance and being the voice of employees on decisions that has direct impact on employees. In addition to Ulrch framework, the description of each principles is mentioned in the next section.
The Relationship
Different studies have showed that organizations have the practice of defining strategies to guide the direction of the business. However, there are many problems in applying the strategic HRM approach in the company. The study by Emebet (2017) in Ethiopian Financial Sector has revealed that the overall strategic link and integration of HR practices with corporate strategy was negatively perceived by the private banks. The line managers in the studied banks were not good at the execution of the intended strategy caused by lack of transparency and ignorance in regard to internalizing the objectives in a holistic manner.
Sahni'study (2015) on Modeling Human Resource Practices by taking the telecom industry of Kingdom of Saudi Arabia has explained that organization's performance can be increased by integrating HRM strategies with the business strategy. As explained by him, most of the companies are assigning HR just to perform administrative or public functions because they do not have enough understanding about the role and benefit of strategic HR and its impact...
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