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Literature Review
The much revered best practices of attractive flexible work hours, job design, increased autonomy, high pay offs, skill enhanced payoffs and paid holidays are employed by companies in an attempt to get experienced and skilled workers (Olson 2003; Stovel and Bontis 2002) Every company seeks for skilled workers and do all they can to optimize their performance. In order to obtain skilled workers companies tend to pull them from their competition through an offering of better remuneration. This has resulted in unparalleled job uncertainty. Critical layoffs have aggravated the situation through minimizing loyalty in organizations to new laws; this is what has now been coined as the battle for talent (Hargie 2004; Michaels et al. 2001).
The battle for talent has become a calculated business problem and a fundamental driver for corporate performance (Michaels et al. 2001). High performing companies differentiate themselves from those that do not perform through an all-encompassing talent mindset. They believe in advanced talent and its control as a critical part of competitive advantage. The non performing companies on the other hand either are not capable of attracting the right talent or fail to control it upon obtaining it. The battle for talented employees has not just emerged as amongst the critical challenges in today’s companies but the obtaining of talent to improve a company’s competitive advantage has come out as a critical strategy for numerous fast growing companies.
The winners in this cut throat competition do it easily through their organizational capacities such as employee competence, speed, learning capacity, responsiveness and agility. Boudreau and Ramstad (2005) point out that as companies rapidly compete through talent it is their human capital investments that establish their competitive positions. Successful companies in this battle are those that are capable of turning their strategies into action create an environment of seamless change, effectively and intelligently control processes and optimize employee commitment and involvement. This rapid talent crisis has made companies to suffer from an imminent leadership crisis.
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HRM entails the development and execution of strategies that are consistent with a company’s objectives to guarantee that human capital contributes towards the attainment of long term strategic goals (Baird and Meshoulam 1988; Huselid et al. 1997). Companies that know how to control their human resources as their core organizational strategy tend to experience a lot of efficiency in their operations because it is cumbersome to acquire and employ human resources successfully because of the time involved (Wright et al. 1994). Studies indicate a positive correlation between strategic HRM and minimized turnover of employees, greater general effectiveness in organizational performance, higher productivity and great cost effectiveness (Arthur 1994; Ferris et al. 1990).
Studies have verified that innovation is determined by the attraction, construction and nurturing of fundamental capabilities (Pavitt 1991). On the other hand, employee innovation attitudes are closely related to employment conditions (Storey et al. 2002). In order for an organization to successfully incorporate HRM to strategy it is critical for it to understand internal and external factors that are likely to impact the efficiency of strategic HR. Khatri (1999) points out that the relationship between strategy and HRM is determined by the kind of strategy that an organization pursues. HR’s vertical and horizontal fits, organizational culture and HR managers competencies tend to function with strategy. The adoption of strategic HRM is also determined by ownership types, company’s market orientation, HRM competency and its significance (Horwitz et al. 2006).
However, most companies are not sure on the kind of HR strategies that have the highest impact as far as sustaining competitive advantage is concerned. Toor and Das (2007) point out that most companies tend to establish their human resource practices founded on various aspects of human resource management including; labour management relations, planning, training and development, staffing, compensating and appraising. There are critical relationship between companies’ performance and these core organizational functions. As much as remuneration and financial rewards tend to be employed in the attraction and retention of talent they are not consummate to employees’ job motivation or their personal satisfaction.
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Horwitz et al. (2006) points out that most companies struggle to be an employer of choice through the establishment of an impression of a perception of high performance, better lifestyle benefits, a reputation for opportunities for advancement and a challenging work environment. The creation of this type of firm character has been coined branding and is employed by most companies for strategic HR polices (Capelli 2001).
Amongst the robust and pioneering HR strategies employed in talent attraction, motivation and retention include the provision of attractive pay packages, the provision of problematic projects and assignments, availing opportunities for development in specialist fields, the freedom to work autonomously, guarantee of regular contact from senior management, the provision of performance feedback and providing incentive bonuses (Horwitz et al., 2006). Other HR strategies that are innovative in nature include; opportunities to top edge technology, assessment of the contribution and use of knowledge assets and assistance provided to others (Hansen et al. 1999; Kinnear and Sutherland 2000).