1. Executive Summary
3. The Article’s Content
1. Executive Summary
“I believe we are in a war for talent. […] Let's face it — talented employees are the lifeblood of any successful organization. To remain competitive in the global marketplace, governments must do more to recruit the best and brightest, and then RETAIN them.” (Janice Lachance, 2000)
…and exactly that is the upcoming issue in NPOs as the rising financial problems often result from high turnover rates, unprofessional staff and unsatisfied volunteers. This article will help managers of NPOs to understand how to link their organisation’s strategy to their HR strategy in a way that their volunteer’s and staff’s behaviour match the organisation’s long term goals.
Nonprofit organisation, Human Recourse Strategy, Competitive Advantage, Human Recourse Practices, Best Practice Approach and Contingency Approach.
The presented article “Linking Competitive Strategies with Human Recourse Management Practices” was written in the late 80’s by Schuler and Jackson, both professors at the New York University. The reason for choosing this article was the fact that the authors did not add another theory to the millions of others but tried to combine the previously very recognised work of Porter (1984) on competitive industries with researches on employee’s behaviour. When the term competitive advantage came up in the late 80’s Schuler and Jackson (1988) discovered that organisations which follow different strategies also follow different HR strategies.
The field of Human Recourse (HR) Strategy is a relatively new area of research and therefore a lot of different approaches and opinions exist. During the last decade it became more and more important for Non Profit Organisations (NPOs) to follow a long term strategy and by that I mean more than one year in advance. Many of the smaller NPOs may have never thought about a strategy before but it helps the whole organisations to realise in which direction to move and which plans to pursue and which to drop. Especially for stakeholders like the donors and the volunteers it is essential to know for what exactly they are giving and working for. As soon as a mission and long-term goals are developed the HR strategy has to follow right away. One of the most obvious reasons for valuing HR strategy is the fact that the volunteers and staff became on of the most cost intensive elements of a modern NPO. Statistics show that the willingness to volunteer is going down constantly and that it is not enough anymore to wait for them to make the first step joining a NPO.
Academics in the area of HR strategy state that it is not enough to pick certain HR Practices and put them together, but that it matters which one we pick and to what extent. Everything depends on how you as a manager want your volunteers and employees to behave.
3. The Article’s Content
To see the whole picture I will first give a brief summary of the two mainstreams in the research area. Basically, all HR strategy approaches try to find a way how to influence the employee’s behaviour according to the strategy so that the organisation could perform better than its competitors. According to Delery and Doty (1996) the differences within HR strategy and how it can be linked with the business strategy can be identified within the categories of the Contingency Approach, the Universalistic Approach.
The Universalistic or better “Best Practice” approach argues that high performance work practices will increase organisational performance irrespective of organisational, industrial, or national context. Pfeffer (1998) presents empirical evidence that strongly supports a direct relationship between a company’s financial success and its commitment to HRM practices that treat employees as assets. He asserts that a greater use of seven HR practises: employment security, selective hiring, self managed teams/team working, incentive pay, training, information sharing and reduction of status differences results in higher productivity and profit across all types of organisations. This seems easy enough but not every company went through the same history and therefore not every practise which worked good in the one company will work in another one.
In contrary, Contingency theorists argue that to be effective, an organisation’s HR practices must be consistent with other aspects of the organisation such as business strategy. That is where Schuler and Jackson (1987) come into play with their HR strategy built on the competitive advantage model of Porter (1984) and identified the relationship between the employee’s behaviour and the three dominant strategies (cost reduction, innovation and quality improvement). Schuler and Jackson (1987) proposed flexible HR practices menus because in the author’s eyes, there is no “best” strategy; it all depends on the situation a company finds itself.
The article starts up with the example of external and internal recruitment. The authors demonstrate that nobody can tell that the one or the other is always the right choice. Schuler and Jackson try to show that there are situations where either the one or there other it the best way to go; again, it all depends!