Answers for Human Resources management

Topics: Costs, Cost, Cost-benefit analysis Pages: 5 (2955 words) Published: November 6, 2014

How does HRM enable organisations to adapt to the dynamic changes in the environment? Illustrate with examples. Nowadays most organizations operate in a dynamic environment. A dynamic environment, with frequent unpredictable events which have an impact on the organization, implies that management needs to align the organization with this ever changing context. Organizations struggle when the rate of change in their environment outpaces their organizational capacity to keep up (Foster & Kaplan, 2001). It is no longer possible for organization to get better: they need to get different (Hamel, 2000). We pose that organizations need to get different in the way they cope with dynamics. One way of doing this is by no longer managing uncertainty but by embracing it. This is what truly agile organizations do. Environmental dynamism has lead to a focus on organizational capabilities as the principle source of competitive advantage in such an environment (Grant, 1996). These organizational capabilities are referred to as dynamic capabilities (Teece e.a., 1997). Dyer and Shafer discuss a „growing interest in an entirely new organizational paradigm – one that views organizational adaption not as a one-time or even periodic event, but as a continuous process. That paradigm is Organizational Agility‟ (1998: 6). Organizational Agility is considered a necessary dynamic capability for organizations operating in a dynamic environment. Eisenhardt and Martin (2000) expand the concept of dynamic capabilities by stating that the effective patterns of dynamic capabilities varies with market dynamism. This means that organizational agility is not an on/off-switch. Organizations can have a certain level of organizational agility. In this paper we first discuss the organizational practices organizations apply to cope with a dynamic environment, thereby enhancing their level of organizational agility. The organizational practices focused on three agility-competencies will be explored: a scalable workforce (in terms of quantity and quality), fast organizational knowledge creation and a highly adaptable organizational infrastructure. The second, related issue we discuss and explore in this paper is the institutional setting in relation to the implementation of these organizational practices and more importantly the response organizations opt for. Organizations sometimes seem to apply organizational practices that at first sight seem to be incompatible with the objective of coping with a dynamic environment. For example, they continue to hire most employees on a permanent contract thereby creating organizational rigidity. Paauwe (2004) explains this by stating that contingency factors limit the leeway of both organization and management. In general institutional theory provides a popular and powerful explanation for organizational action within this leeway (Dacin e.a. 2002; Paauwe, 2004, Pursey, e.a. 2009). Where early institutionalists tended to emphasize the constraining effect of institutional mechanisms (Dacin e.a., 2002; Scott, 2008), more recently attention is given to using and enlarging the room to maneuver for organizations. This agency approach refers to the way in which an actor can choose his own response to institutional pressure (Oliver, 1991; Lee and Pennings, 2002). Human agency and strategic choice give organizations several options to cope with institutional pressures varying from active resistance to passive response (Oliver, 1991). Boon, Paauwe, Boselie & Den Hartog, (2009) develop three types of institutional fit based on Oliver (1991) and Mirvis (1997): conformist, innovative and defiant. This paper aims to identify which organizational practices are important determinants of organizational agility and to determine in what way institutional mechanisms facilitate or hinder organizations in achieving organizational agility. Our paper starts with setting out the characteristics of a dynamic environment and the challenges...
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