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This paper discusses a very important problem related to business management. This problem was ignored for a long time by the business society. Human resources were treated as a very unfortunate but necessary expense cause. Almost no thought was given to developing, training, motivating or at least proper selecting of human resources. According to Salaman, Storey, and Billsberry (2005), only very recently human resources started being treated as an asset, something the company owns and, hence, is in charge of. Flanders (1964) reports that even the most progressive approaches in the field of labour management had long been based on productivity bargaining. And exactly this stood in the way of increasing productivity standards.
The problem of human resources management, however, is a too wide field to be researched within such a short paper. Therefore, the goal set in this particular research is narrowed to defining and analyzing the two approaches in Human Resources Management, such as Strategic Management Approach to Human Resource Management and Performance Management. The main advantages of both will be analyzed within the paper, and at the same time, the paper will discuss interaction between these two approaches and the possible practical application of both. In order to understand this problem, it is very important to start with a literature review, which may help to understand all the advantages and possible difficulties that may be possibly related to those two problems. The literature review may also help understand the history of practical application of both methods and work out the possible recommendation for implementing them in the future.
In the beginning, the strategic approach to human resources management will be discussed. A lot of books and articles have been written on the phenomenon of a strategic management approach in human resources management. And, on the one hand, this literature can be divided into two groups. First of all, it is scientific literature, researching the approach in a more theoretical manner, and so to say "manual" literature - literature designed to help top managers and HR specialists understand how to apply the approach in their everyday practical work. But, on the other hand, this may not appear to be the most relevant way of dividing this literature into groups.
A different approach would divide these publications into two major groups. The first group contains the books which are trying to discover certain features that can play a determining role in the organizational performance of a particular company. Such books and publications try to reach the goal of discovering and defining major causes and estimate their possible influence upon the organizational performance as well as on the workers themselves, their potential attitude to work, their motivation, and many other important factors. And when looking deeper into this group of literature and trying to arrange it according to certain criteria, one can notice that there are such which may be characterized as theoretical attempts of classifying and defining the factors which influence the quality of work, performance, and motivation of personnel. They attempt to theoretically measure a possible influence of various selection approaches, training styles, different strategic approaches to employment on the effectiveness of organizational management. Another type of literature belonging to the first group is the literature which does not lead scientific discussions related to the issue. Instead, the authors of such publications stand up for certain solutions out of a variety of solutions based on the strategic management approach. They offer certain solutions and argue for their outstanding effectiveness. This is the literature that belongs rather to a practical group of publications on the subject.
The second part of literature is the books and publications which do not directly discuss possible impacts of certain practices and which do not stand up for certain approaches, but rather focus on the ideas which are or used to be behind or, rather to say, which caused those practices to appear. And this group of literature is also very important, since the practices change. They change because we obtain new knowledge; they change due to the cultural changes in the society; they change from a company to a company, from a country to a country. These changes are caused by cultural diversity, technological differences, and so on and so forth. However, what is more fundamental and, certainly, worthwhile paying attention to is the ideas which crossed somebody's mind once and which were primary compared to the practices themselves.
There are different ways in which strategic management in human resources is defined by different authors. For instance, Storey (2004, p. 1) defines it in the following way:
A distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques.
On the other hand, there is another approach to defining this. Human resource management (alternatively employee relations or labour management) includes the firm's work systems and its models of employment. It embraces both individual and collective aspects of the people management. “It is not restricted to any one style or ideology”, as stated by Boxall and Pursall (2003, p. 23).
Talking about performance management in HR, one should always keep in mind the definition provided by Heathfield (n.d.):
Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization.
There are definitions which suppose the meaning of the term to be somewhat wider. One of such is provided by "Business Dictionary" online portal. They provide the following definition of Performance Management: "An assessment of an employee, process, equipment or other factor to gauge progress toward predetermined goals." However, it often happens that wider definitions are less meaningful. Another way of seeing performance management was offered by Armstrong and Baron (1998). They wrote, “Performance Management is both a strategic and an integrated approach to delivering successful results in organizations by improving the performance and developing the capabilities of teams and individuals.”
When talking about the categories into which the whole spectrum of the literature on performance development can be divided, one can basically apply the same division system as was described for the systematic approach to HR management.
Comparison and Analysis
Strategic approach in HR management became very popular around the world in the early 1980s. According to Salaman, Storey, and Billsberry (2005, p. 2), "Employers such as British Airways began to talk in terms of wanting not simply compliance but "commitment"." This forced the company to spend unbelievable sums of money (as for that time) on training their staff and changing the cultural approach. At that time, many people did not understand what all this money was spent on. Moreover, it was believed that this is a waste of money, not an investment. Within the period of twenty or so years there was a true revolution happening in the way of approaching the problem of human resources management. Many were sceptical about the strategic approach, while others were very enthusiastic, but through the practical application, the strategic approach was making its way through to being one of the most effective and, hence, popular methods in human resources management.
Human resources management is becoming more and more of an important method in the field of business management. It is obvious from the fact that a chief HR officer in the majority major companies is a very significant figure and reports directly to the chief executive officer and often takes parts in the meetings of the board of directors.
There are two major categories of HR workers. They are generalists and specialists. Generalists directly work with the staff, and the employees address them directly with their questions, offers or projects. As stated by the U.S. Bureau of Labour Statistics, such specialists "may handle all aspects of human resources work, and thus require an extensive range of knowledge. The responsibilities of human resources generalists can vary widely, depending on their employer's needs." The other major category is specialists, and they work addressing only one specific HR function. Nowadays, HR management has grown into a very common educational discipline, and many universities in the world provide academic courses in this discipline. The first university which did it, though, was Cornell University, as stated on its official web site.
Turning back to the comparison of the strategic approach of HR management and performance management approach, we need to pay more attention to discussing the latter. Performance management is also an approach of HR management, and it is also designed for increasing the effectiveness of human resources, or, to be more precise, the effectiveness of their work. People who rely on this particular approach strongly believe that it allows the HR specialists to make employees unify their personal goals and strategic goals of the company they work for. At least this is what Zaffron and Steve (2009) state in their work. This approach can be applied and benefited from by the whole organization or its section or department. However it would be very wrong to believe that this is the only possible method.
Here are some approaches, or, to put it in different terms, visions of performance management. For instance, the U.S. Office of Personnel Management (OPM) describes performance management as such containing a process or a system. This system or process would have the following stages: at first, plans are being made regarding the future work and the expectations of its results are being described. Secondly, throughout the working process, the performance of work is being monitored. The third stage is developing and improving the performance of the employees. As the fourth step, the HR specialists summarize and estimate the performance of the employees. And, as the final stage, the reward is presented for the best performance offered.
Those who prefer this system to all other approaches in HR management believe that, being effectively implemented, this system is capable of providing benefits both to the employer and to the employee in several different ways. The company, or, in other terms, the employer, obtains improved productivity of the staff's work, employees' loyalty, and advantages in the cost of the labour. The HR manager also benefits from applying this system. First of all, he/she is capable of saving him/herself a precious resource - time. Together with time saving, he/she obtains such obvious advantages as conflict reduction as well as higher consistency of labour. As for the employee, he/she also obviously benefits from the implementation of this method. First of all, his/her main advantage is a clear vision of his career opportunities and their dependence upon his/her own effort. Among other benefits are also advantages of increased salaries or salary bonuses used as rewards in the system. These benefits are listed by the management Study Guide Portal. For an HR manager, it is critically important to always make sure that every person's activity contributes to achieving the common goal set before the team as the whole. This provides the manager with an excellent tool of keeping all the employees in the same line, achieving the goal of all the workers playing as one team and clearly seeing general goals and cooperating in order to achieve them.
However, it would be very wrong to believe that performance management approach has only benefits. There are some concerns to it as well. Among such McNamara (n.d.) names the following: "Typical concerns expressed about performance management are that it seems extraordinarily difficult and often unreliable to measure phenomena as complex as performance." Many specialists underline the fact that the organizations and the styles of their management are rapidly changing and the results of the measurements quickly become invalid. Besides, it is nearly impossible to put human desires, motives, and wishes into the strict tables of mathematical, or, rather to say, statistical measurements.
It is not easy to determine which one of the two approaches is the right one or even which one is preferable for an HR manager to equip him/herself with. Merkle (1980) strongly believes HR to be a sort of an art; therefore, a talented manager needs to be capable of applying both of the approaches effectively. It is important that each one of them should be treated not as the one which contradicts the other, but, on the contrary, they need to be treated as mutually complementary. As O'Brien (2009) reminds us, HR specialists are becoming more and more popular and more and more required by the companies all over the world. This means that the profession itself becomes more and more popular, and more and more students study this discipline. Meanwhile, as underlined by Towers (2007), HR management is not a very simple discipline and a specialist in this field has to be an intelligent, highly educated person. Therefore, for a company, it is critically important to be extremely cautious when hiring HR specialists, since it is them on whom the entire future success of the company is going to depend. And changing HR specialists usually costs a company much more than selecting and keeping one highly competent specialist for a long time. Therefore, it is important that such a specialist would be able to effectively apply both of the methods discussed above and make them complement each other and interact in the most beneficial for the company manner.
A lot can be said about the approaches of strategic management and performance management. Of course, this paper is very far from being a fundamental work on the subject. A lot needs to be researched and there is a big amount of literature which has not been discussed within this paper due to the limited volume of the essay. However, this leaves the field for the future investigations in this area. Such investigations may be of great importance for the whole discipline and of great practical value. This work is just an attempt to outline the main directions of the possible research or studies and to underline their significance and applicability.
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