Organizational level of human resource management

Organizational level of human resource management is a combination of human resource management and organizational strategy. Its purpose is to determine the organizational strategy and improve the efficiency and competitiveness of the organization on the basis of the competitive advantage that has been formed on the individual level. The organizational level of human resource management can be divided into two aspects, including strategic match and strategic flexibility management of human resources, benefit management of human resources.

2.4.2.1 Strategic match and strategic flexibility management of human resources

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Changes of the external environment and the organizational development have a significant impact on human resource management (Hong, 2002). Strategic match management is to ensure that human resource management and organizational strategy are consistent with the internal structure of the organization through human resource management practices. Strategic flexibility refers to the adaptation ability of the organizational strategy and structure to the changes of the business environment through human resource management.

In traditional human resource management, human resources are rarely considered to be the basis of the organization’s strategy (Xie, Jia, & Wang, 2000). Human resource management is not the part of the organization’s business strategy that is only used as a means of identifying or selecting strategic objectives. In traditional human resource management, human resource management and business strategy have only a one-way relationship that make people suitable for the strategy rather than make the strategy suitable for human resources (Zhao, 2002). Strategic human resource management focuses on the interdependence between human resource management and business strategy; it believes that the organization’s competitive advantage can be achieved through high-quality human resources (Huang & Hua, 2004). In modern organization management, the relationship between strategy and human resource management is getting closer. The formation and implementation of organizational strategy depends on the knowledge, skills and

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behavior of employees in the organization. Therefore, the organization should consider the status of the environment and human resources first when the organization develops its business strategy. One of the purposes of human resource management on the organizational level is to ensure a high degree of consistency between human resource management and organizational strategy.

The organization as a system, its external function, depends on the internal structure. Human resource management should match the organizational structure and should be able to ensure the flexibility of the organizational structure through human resource management activities. And the consistency of the links in human resources management is also an important part of strategic match and strategic flexibility management. Some scholars such as Schuler and Jackson (Schuler & Jackson, 1987), Gomez-Mejia, Balkin and Cardy (Gomez-Mejia, Balkin, & Cardy, 1997) also have a similar theory, they used either Porter’s general competitive strategy or according to their own business strategy classification, pointed out a number of similar models of human resource management and enterprise strategy. These scholars come to similar conclusions that different enterprise strategies need different human resource management practices, and the effect of human resource management depends on whether the human resource management matches the enterprise strategy.

Cynthia A. Lengnick-Hall and Mark L. Lengnick-Hall (Lengnick-Hall & Lengnick-Hall, 1988) proposed a bidirectional

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model to prove the existing interaction and interdependence relationship between enterprise strategy and human resource management. They believed that the enterprise strategy was not decided in advance, it was the product of a combination of a variety of factors, including human resources and human resource management and human resource management practices were also the integrated product of a variety of factors, which would be affected by the enterprise strategy. Thus, there is an interdependent relationship between enterprise strategy and human resource management. Although human resource management is not the only or major consideration in the formation of enterprise strategy, human resource management will have a direct impact on the formation of enterprise strategy. In this way, there is a possibility that the enterprise strategy may be adapted to the human resource management practices. In the long term, the enterprise that considers human resource management and enterprise strategy from the perspective of interaction in the process of the formation and implementation of the enterprise strategy will perform better than the enterprise that considers human resource management only as a tool to implement enterprise strategy.

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Figure 8. A perspective on enterprise strategy and human resource management interdependence Source: (Lengnick-Hall & Lengnick-Hall, 1988)

2.4.2.2 Benefit management of human resources

On the organizational level, the other aspect of human resource management is the benefit management of human resources. Human resource management as part of the organizational strategy, has a function to help the organization achieve strategic objectives. Thus, the organization needs to figure out the contribution of human resource management to the organization’s strategy in a way that it should contribute to the benefit of human resources. Benefit management of human resources includes profits of human resource

Enterprise strategy Human resource

management

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management and costs of human resource management (P. Liu & Liu, 2003).

Miles and Snow (Miles & Snow, 1984) divided enterprise strategy into three types, which are defender, prospector and analyzer.

Enterprises that implement defender strategy usually engage in a narrow and stable product marketplace with few adjustments to technology and organizational structures. Enterprises that implement defender strategy pursue a better and more efficient way to produce products or provide services and they pay more attention to market defense, but rarely focus on research and development. When they need new technologies, they often introduce technologies from outside the enterprise. Enterprises that implement prospector strategy usually pursue new products and new markets. This type of enterprise pays more attention to new opportunities, it will keep testing for a new product and entering a new market. Enterprises that implement analyzer strategy are more likely to be the combination of defender and prospector. They have stable market segments as well as enterprises that implement defender strategy; they also enter some new markets as well as enterprises that implement prospector strategy.

They are not the leaders of market changes but they are able to keep up with the changes of market faster than enterprises that implement defender strategy. According to different requirements of strategies for different organizations, Miles and Snow designed different combinations of human resources management practice and organizational strategies.

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Table 3. Model of enterprise strategy and human resource management Human resource

management

Defender Prospector Analyzer

Basic strategy Establishing

Source: Adapted from (Miles & Snow, 1984)