Introduction

Strategic human resource management (SHRM) is devoted to the effective management of

human resource understanding the fact that human resources are the key source to achieve

competitive advantage. Traditionally HRM had little role in business objectives of the

organization but the new perspectives identifies that practices within HRM can have major roles

upon company performance and certain functions like training, incentives payments are now

fused with business objectives (Emerald Group, 2004).SHRM focus on long term issues related

to the people and also consider quality, ethics, culture and diversity and matching necessary

resources for effective business performance.

SHRM and Competitive Advantage

In today’s world of global business, the competition between the businesses is fierce and

organization always tries to seek competitive edge to differentiate its business with other rival for

the survival and success of business. Only recently the importance of HR competencies,

capabilities and skills as the source of sustainable competitive advantage has been emerged

(Ellinger et al., 2002). Besides providing goods and services, organizations are now focusing on

strategic human resources plans and policies for attaining and managing human resources for

achieving competitive advantage.

The question may arise why so much emphasis is given to human resource though other

resources are also responsible for firm’s success. Resource based view explains that resources

such as human resource capabilities are critical part of organization for effective performance.

Pfeffer (1994) advocates resource based view by pointing that human resource is preeminent

organizational resource and key to achieve outstanding performance. Barney (1991) developed

VRIO framework for achieving sustainable competitive advantage. According to which the

organization can achieved competitive advantage when the resources are valuable, rare, and

inimitable and have no substitute. Human intellectual unlike other resource possesses key

ingredients like knowledge, skills and ability which allows human resource to create value to the

organization improving individual’s efficiency and efficacy for developing sustainable

competitive capabilities. Comparing to other intangible resources, HR is more likely to produce

competitive because of their rarity and difficulty in imitation (Khandekar & Sharma, 2005).

Strategic human resource play vital role in competitive environment through the implementation

of management practices and developing strategy to possess and deploys unique strand of

resource (Barney, 1991).SHRM deals with placing right people with the right skills at the right

time. According to khandekar and Sharma (2005) organization should focus on strategic focus,

link between HR policies and practices, its business strategy and performance and further added

supporting high commitment work perspectives that organization should include the size and

composition of workforce, planning, staffing, retention and motivation, skills and competencies

with effective training and development to achieve these, remuneration and compensation , fair

employment practices and career planning (Khandekar & Sharma, 2005)

Bernardin and Russell (1998) describe that competitive advantage of an organization depends

upon the ability to attract and retain individuals. HRM practice sustain to attract and retain

valuable employees and provides motivation resulting in high profitability, high productivity,

quality products, lower cost in manufacture and faster acceptation and implementation of

organizational strategy (Pablos & Lytras, 2008). For the effective management of employees,

organizations should adopt more strategic orientation and should possess the resource to enable

employees to have greater involvement with broader organizational strategies (Tansley et al.,

2001).

Competitive advantage can be obtained through the concept of strategic target and strategic

thrusts (Schuler & MacMillan, 1984). Strategic target refers to company, distributor, supplier and

costumer. Company can approach forward and backward way to help in shaping the HRM

practices of other companies. Pepsi-co provided training to distributor to increase sales of store

as well as company whereas Nissan motors provide extensive training program to supplier to

enhance the quality of products Strategic thrusts refers to cost efficiency and differentiation

thrust (Schuler & MacMillan, 1984). Lincoln electric succeeded to increase productivity as well

as cost reduction through HRM practices.

Source: (Barney, 1991)

Ethics

“Imagine a world without ethics,where we put ourselves at first place, where no one was

interested in making the environment or making things better for all and in the UK,there would

be no NHS, no state education system,and our decision would be based on ‘whats in it for us?’”

(Orme & Ashton, 2003).This emphasizes how importance the role of ethics plays in our society.

Business ethics tries to answer the question “what is the role of business in society?” (Trezise,

1996). Ethics is the system of moral principles which deals with the broad perspectives about

what is good for individuals and society. In the commercial world Business ethics provides the

guidelines for managing acceptable behavior in the strategy formulation of an organization and

day to day operation. Organization intended to provide moral guidance to employees and also

with stakeholders (Langlois & Schlegelmilch, 1990).

Today large number of corporation are moving towards ethical philosophy in the expectation that

ethical behavior by their employees will lead towards business success (Svensson & Wood,

2004).Ethical practices and fair judgments and treatment of employee reinforce the employee

commitment and trust and also to attract investors. Since employee and organization are directly

linked with costumer, the ethical behaviors with the costumer increase the customer satisfaction

and customer loyalty. The ethical practices motivate the employee towards the right direction.

And also provides support to manager to make ethical decisions where there is hard to say what

is right and what is wrong (Holmes, 2008), Furthermore, Stainer & Stainer (1995) claims cultural

and social backgrounds,principles and personal values are the crucial factors in making decision.

Ethical business values translated into management behaviors can make the difference between

employees ‘satisfaction and frustration and motivated employee to do their best performance

(Holmes, 2008).

Ethical practices and code varies with the type of organization, the business they perform and

place. Common ethical behavior expected by an organization are honesty, integrity, commitment

and loyalty and similarly organization should consider the employees rights like freedom to

speech, privacy, freedom of conscience, fairness etc (Noe, Hollenbeck, Gerhart, & Wright,

2004). Langlois & Schlegelmilch, (1990) described code of conduct as a statement that lay down

corporate principles, ethics, rules of conduct, code of practice, responsibilities to employees and

shareholder, consumers and the Environment and Society. Mcdonald (2009) facilitates the

importance of code of conduct.

Performance is greatly influenced by how well or badly employees are treated which in turn

impact the overall organizational performance. According to (Leopold, Harris, & Watson, 2005)

long term perspectives of an organization directly depends upon employees, hence fair and

ethical treatment of workers is an important strategic concern. High commitment strategy

focuses on careful consideration of ethical choices to the employees. Further, Ferrell, Fraedrich

and Ferrell (2008, p.18) assert that “The more the organization is dedicated to taking care of

employees the more likely it is that the employees will take care of organization” .Hewlett-

Packard company is raked as 2010 most ethical company by Ethisphere Institute due to its

ethical standards, teamwork , integrity, cultural respect leading to product innovation.

Gandtz and Hayes (1988) explains ethical challenges in the area of discrimination, psychology

testing, anti union activity, work design , employment security, performance, rewards and

employee discipline which is supported by Leopold et al. (2005) .

National cultural difference on business performance

Culture is basically all about what people thinks, behaves and follows which provides identity,

belongings, behavior pattern of the people. Hofstede (2001) defined culture as collective

programming of the mind that differentiates the member of one group from another. Besides the

same cultural society, there is no uniformity on the behavior of individual, community, society

and country. Culture is dynamic and slow but continual process of adapting to environment and

circumstances and transmission of similar values, beliefs, skills and knowledge to subsequent

generation (Moran, Harris, & Moran, 2007 ;Hofstede ,2001 ; Alder,2002). Cultural difference

can be differentiated by the norms and values of group, language, religion, instititution where

they participate and social values.

Corporate culture is the product of daily interactions and their effects on attitudes, behavior,

values and the performance (Rohm, 2006).The sources of corporate culture according to Brown

(1998) are societal and national norms in which the organizations exists, vision and management

style, and types of business and environment an organization engages in. Hofstede (2001)

suggests the four dimensions of cultural differences between nation and clustered cultures which

are power distance, uncertainty avoidance, individualist, masculine culture. Hofstede classified

Greek people as low individualistic society as they expect organization to look after them as

family. Some researchers claim that reinforcing national cultural values in management practices

yields in high performance whereas other claim mismatch between management practices and

national culture reduce performance (Kessapidou & Varsakelis, 2002).

Culture affects the human behavior, morale which in turn affects the organization productivity,

values and pattern that influence attitudes and actions (Moran, Harris, & Moran,

2007).According to Khandekar & Sharma (2005). The performance of the global organisations

depends upon the ability to cope with heteregeneous culture ,coordinating diverse

resource,competitive environment and to leverage innovations across national boundaries.

Cultural practices exercise within the organization has greater impact on organizational goal. The

good culture within organization leads organization towards success whereas negative culture

leads towards degradation of company. The positive attitude, virtues and behavior are said to be

valuable assets for achieving corporate goals defined by senior management (Deal and Kennedy,

1982). Individual perspective in combination with culture difference can be great assets in

problem solving and task performance.

Contemporary organizations are multicultural in nature and the major factor in the success or

failure of inter-cultural in management is interpersonal communication and also manager

working in different culture should examine the “3Cs” of context, content and conduct

(Humphreys, 1996). The structure and functioning of the multicultural organization are not

determined by universal rationale, so the firm must acquire diverse set of routines and repertoires

in order to be competitive in diverse world (Kessapidou & Varsakelis, 2002).

Globalization in one hand creates opportunities to businesses ,in other hand there exists

formidable and unique challenges, Cultural difference often causes misunderstanding and

conflict than synergy (Hofstede, 2001).While working internationally decision based on own

country may be wrong in other country. Global business needs to deal with interaction between

service provider of one culture with costumer of another culture which may leads to unhappy

customer, frustrated provider and lost business due to difference in cultural norm and values

(Sizoo et al., 2005).Difference in national culture not only effects the entry mode but also the

difficulty in integrating foreign personnel in the organizations (Kessapidou & Varsakelis, 2002).

Link between equal opportunity and diversity

After the Civil rights movement in 1950s and 60s anti discrimination laws were introduced so as

to rectify workplace inequalities and social injustices faced by particular group like women,

ethnic minorities and disabled. Diversity as defined by Hubbard (2004) is a collective mixture

characterized by differences and similarities that are applied in pursuit of organizational

objectives. Managing diversity is important aspect of SHRM since diversity encourages the

contribution of people from different background, experiences and perspectives. Effective policy

is necessary to value and manage the diversity of employees, customers, and suppliers by doing

what is right for their employees and the communities they serve, thereby ensuring a competitive

advantage in the global marketplace (Hubbard, 2004).

Providing equal employment opportunities is an important aspect of strategic human resource.

There should not be any discrimination regarding gender, pay, disabilities, and minority ethnics

groups and so on. The social justice perspective assumes that men and woman are fundamentally

same and should be treated fairly. Merit approach supports social justice and also assumes that

equality can be achieved through the judgments of individuals on the particular merits against

same standards. Whereas, diversity approach approaches that inequality is due to the failure to

accept the differences and to respond to them (Leopold, Harris, & Watson, 2005).

While equal employment opportunity focus on employment opportunities to all people, diversity

means accepting, welcoming and valuing the differences among individual and recognizes the

contribution of diversity towards the effectiveness and performance of an organization (Strachan,

Burgess, & Sullivan, 2004).According to Ross and Schneider (1992) equal opportunity is very

important in contemporary business in face of changing labor market, skill shortages and the

necessity of attracting the best one and further added that is not only the right thing to do it is

business necessity (Humphries & Grice, 1995).

The strategic advantage of investing in a strong diversity program is the creation of positive

work environment that recognizes the contributions of all employees with diverse backgrounds.

For diversity to be successfully integrated, diversity initiatives must continue to be guided by

leadership’s full commitment with mutual adjustment and understanding. Equal opportunity

leads to diversity which is beneficial for not only individual but, ultimately, the nation and global

marketplace. Baptist Health S. Florida is ranked No.1 by fortune 500 in 2007as top place to work

providing employments to 71%of minority people and 75% women.

To create the required balance between employee satisfaction and customer satisfaction, the

organization must employ strategies and values that promote fairness and opportunities, instill

pride, and enhance safety in the workplace (Bibby, 2002).

Conclusion and Recommendation

To survive and thrive in this competitive environment human resource must be effectively

utilized in aid with other resources since human intellectual is inimitable and most valuable one.

Retaining and attracting qualified employee, providing training and development, proper job

design and motivation and healthy working environment are the most important aspect of SHRM

Ethics and diversity is integral part of organization which needs to be managed efficiently with

effective policy so as to encourage team working for better performance. Diversity and cultural

practice is an important aspect of gaining sustainable competitive advantage.

In present market turnover is high due to job dissatisfaction, poor management practice, and

discrimination and so on. So the organization should focus on managing relation with employee

with implementation of proper management practices in order to retain valuable employee.

Cross-cultural training and exchange of staffs can be vital for understanding national cultural

differences so as to improve performance while working in other country. Equal employment

should be provided to people and policies should be made effective as still there exists social

discrimination.

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