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By: SONAM SACHDEVA Assistant Professor GIBS
Human resources refer to the people who work in an organization. Human resource management is concerned with a holistic approach towards the management of people working in an organization, who contribute to the achievement of organizational objectives. Strategy is the determination of the long term goals and objectives of an organization, and the allocation of resources necessary for carrying out these goals.
Like strategy, HR strategy is concerned with two key elements: 1. Determining the strategic objectives (what goals is the strategy supposed to achieve? For example, the goals may be high productivity, reduced accidents, etc.) 2. Developing a plan of action (how will the human resources be organized and allocated to accomplish the objectives of the organization?)
An organization is said to achieve competitive advantage when it is able to gain and maintain edge over its competitors by differentiating its products or services from those of its competitors. therefore. Human resource strategy. . involves the planned and effective use of human resources by an organization to help it gain or maintain an edge over its competitors. thereby increasing its market share.
development. . reward and employee relations. performance management. recruitment. Strategic human resource management is an approach which relates to decisions about the nature of employment relationship. Wright and McMahan defined SHRM as „the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals’. training.STRATEGIC HRM: Definition and Components Strategic HRM is concerned with the relationship between HRM and strategic management in an organization.
directed towards the achievement of the goals of the organization. The pattern and plan imply that there is a fit between HR strategy and the organization‟s business strategy (vertical fit) and between all of the HR activities (horizontal fit). and planned pattern are all purposeful. . that is. and practices as the means through which the people of the organization can be deployed to gain competitive advantage. The activities highlight the HR programs. The people. policies. practices.COMPONENTS It focuses on an organizations‟ human resources (people) as the primary source of competitive advantage of the organization.
the plant.the organization‟s structure planning. These resources can be grouped into three basic types: 1. equipment. An organization uses a combination of several resources. . and finances. judgement. Human capital resources-the skills. Physical capital resources. 2. and intelligence of the organization‟s employees. Organizational capital resources.tangible and intangible. 3. hr systems history. and organizational culture.in the pursuit of its objectives.
but if it does not have capable. and high performing employees. and management. An organization may have huge capital and most advanced machinery. the quality of the people of an organization is important in attaining competitive advantage. Since all physical and capital resources depend on people for their efficient use. . motivated. maintenance. the organization is not likely to demonstrate sustained levels of high performance.
So if HRM is a coherent approach to the management of people. . strategic HRM now implies that what is done on a planned way that integrates organizational goals with policies and action sequences. Strategic HRM is based on HRM principles incorporating the concept of strategy.
This is achieved by developing and implementing HR practices that are strategically aligned. To provide direction to the organization so that both the business needs of the organization and the individual and collective needs of its workforce are met.Objectives of SHRM The major objectives of SHRM are as follows: To ensure the availability of a skilled. committed. and highly motivated workforce in the organization to achieve sustained competitive advantage. .
visionary and often charismatic leadership from the top. •A clear expressed business strategy which had been implemented successfully. •A personnel/HR director who plays an active part in discussing corporate/business issues as well as making an effective and corporate/business-oriented contribution on HR matters.THE REQUIREMENTS FOR STRATEGIC HRM Strategic HRM is most likely to be practiced in organizations with the following characteristics: •Strong. •Well articulated missions and values. •A cohesive top management team. . •A positive focus on well understood critical success factors •The organization offers a closely related range of products or services to customers.
In India. .EVOLUTION OF SHRM The HR function has evolved over time. the Tata Iron and Steel Company (TISCO) was one of the first organizations to set up a personnel department in the year 1947. However. The history of the function pre-dates Taylor‟s theory of scientific management and Fayol‟s administrative theory. it was only during the 1930s and 1940s that the function grew in significance. largely due to war-time imperatives.
SHRM (early 1908s) .Evolution of the HR Function 1. PERSONNEL MANAGEMENT 2. HRM (early 1970s) 3.
PERSONNEL MANAGEMENT Part of mechanistic organization Bureaucratic High centralization High formalization Low flexibility .1.
HRM (early 1970s) Part of organic organization Cross-hierarchical and cross-functional teams Decentralized Low formalization Flexible .2.
. SHRM (early 1980s) Convergence between HRM and business strategy Proactive HRM Concerned with organizational effectiveness and performance.3.
There is growing fusion of personnel management. industrial relations.EVOLUTION OF SHRM THOUGHT The success of Japanese firms in the 1980s was attributed mostly to their Human Resource practices and organizational and national cultures. This realization attracted attention to the crucial role of the HR function in providing sustainable competitiveness. human resource development and knowledge management which combinedly constitutes the field of Strategic Human Resource Management. .
There is stress on commitment and the exercise of initiative. coaches and facilitators. 2.employee relations. The focus shifts from management-trade union relations to management. A stress on the integration of personnel policies both with one another and with corporate planning more generally. from collectivism to individualism. 3. The locus of responsibility for personnel managers no longer resides with specialist managers but is now assumed by senior line managers. and 4. with managers donning the role of „enablers‟. Its key characteristics are best summarized by Sission (1989): 1. .
Focus of activities . Partnerships with internal (employees) and external (customers. all the HR managers department. stakeholders. compliance with laws.DIFFERENCE BETWEEN TRADITIONAL HRM & SHRM Basis Responsibility for HR programmes Traditional HRM SHRM Staff personnel in Line mangers. public interest groups) groups. Employee relations-ensuring employee motivation and productivity. responsible for people are HR managers.
Reactive and transactional. Initiative for Slow. or longterm). change fragmented. . not initiatives integrated with implemented in larger issues concert with other HR systems. Fast.Role of HR Proactive and transformational. change leader. and change piecemeal. Time Short-term Consider various horizon time frames as necessary (short. flexible. medium. and systematic.
teams and groups. and specialization.Control Bureaucratic control through rules. and cross-training . Organic control through flexibility. independence. and policies Job design Focus on scientific management principlesdivision of labor. as few restrictions on employee behavior as possible. Broad job design. flexibility. procedures.
Investment centre . and finance Cost centre Accountability People and their knowledge. technology.Important Investments Capital. skills and abilities. products.
Represents a framework for improved coordination and control of activities. Minimizes the effects of adverse conditions and changes. prioritization and exploitation of opportunities. Provides an objective view of management problems. Allows major decisions to better support established objectives.BENEFITS OF STRATEGIC MANAGEMENT Allows identification. .
Allows more effective allocation of time and resources to identified opportunities. Provides a basis for the clarification of individual responsibilities. Helps to integrate the behaviors of individuals into a total effort. . Allows fewer resources and lesser time to be devoted to correcting erroneous or adhoc decisions. Creates a framework for internal communication among personnel.
integrated and enthusiastic approach to tackling problems and opportunities. Encourages a favorable attitude towards change. . Provides a co-operative. Gives a degree of discipline and formality to the management of a business. Give encouragement to forward thinking.
“Watson Wyatt Study” . HR is more important than ever.The Changing Role of HR/ HRs New Role Orientation HR is shifting from focusing on the organization of the business to focusing on the business of the organization. people are the only sustainable source of competitive advantage.
” . . but give me my people. “You can take my factories. and I‟ll bring my business right back again.Henry Ford Employers want HR to address strategic issues involving the competitiveness and performance of the firm more than the role of protector and administrator. burn up my buildings.
Environmental changes have put pressure on the HRM function to justify its existence. . Human resource management is placed at the centre of business strategy today. High uncertainty in the environment has been a major reason for the increasing influence of the HR function on business strategy over the years.
dramatic changes have taken place in the past two decades. . Two major changes that have occurred in HR function are the roles associated with HRM and the partnership of HR managers and line managers. Though the HRM function and personnel continue to be in a transitional phase.
CHANGES IN HRM FUNCTION HRM Function Dual Roles Associated with HRM Partnership of HR and Line Managers ADMINISTRATIVE ROLE Day to day management of people within organizations DEVOLUTION STRATEGIC ROLE Transfer of Planning and some responsibilities DECENTRALIZATION attainment of and activities Structuring of organizational from the HRM department objectives. HRM Function to the line managers .
. the HR function performs the traditional administrative tasks associated with the day-today management of people within organizations.ROLES ASSOCIATED WITH MANAGEMENT OF HR The HR function today is seen as composed of two roles: an administrative role and a high-level strategic role. In its administrative role.
The strategic role of the HR function has increased in importance since the 1990s. The strategic focus of HRM is concerned with the planning and attainment of organizational objectives. .
without the participation of line managers.PARTNERSHIP OF HR AND LINE MANAGERS Human resource activities are no longer seen to be the sole responsibility of HR Managers. line managers play an important role in the formation as well as implementation of HR practices. responsibility for HR is increasingly shared among HR managers and line managers. . an employee involvement programme cannot succeed in a firm. In the knowledge economy. As HRM work expands. For example.
though firms spend huge amounts on employee training and development. Similarly. Devolution involves transferring some of the responsibilities and activities from the HR personnel function to the line managers. . the best developments take place on-the job through coaching by a senior and more experienced manager. There is both Devolution and Decentralization of the HR functions.
Decentralization refers to how the HR department is structured. Line managers and HR managers must jointly own all aspects of the business. Line managers must play a strategic role in formulating HR strategies. When the firm is organized around strategic business units. each business unit has its own HR staff. Therefore. . there are many HR skills that line managers must have. These HR personnel report to the head of the business unit rather than to the head of the central HR department at corporate headquarters.
Multiple Roles Of the HR Managers Administrative expert Operational role Employee champion Partner in Business Strategy Change Agent Customer Orientation .
The trends in SHRM and the issues to which it is trying to provide answers as follows: .Emerging trends and issues In the post-industrial society dominated by multinationals and information technology. which is strategic in nature. globalization. the field of people management has changed from reactive personnel management to proactive human resource management and to value creating function. and services.
compensation and employee relations have to be strategically managed to meet specific organizational situations. team building and concern for quality and customer care. There would be more focus on results and social responsibility of business. . HR interventions in the area of selection. process integration. Business strategy and the role. performance management. flexibility. It is generally felt that the competitive pressures will increasingly demand speed. Each organization has its own situational realities. characteristics and challenges. All the stakeholders have to be taken care of. strategy and process of HR therefore has to be customized.
HR roles are changing with decentralization. . Corporate and HR roles are changing to advisory and line managers are assuming direct responsibility of people under their charge. HR capability has to come out from narrow functional knowledge to encompass business capability. HR is a service to be provided to them. HR has to understand the concerns and language of other functions and become their trusted partner. They are internal customers of HR. delayering and downsizing.
visibly contributing to achievement of organizational goals. Internationalization and training of people in cross-cultural operations is gaining added importance and HR has to prepare organizations for expatriate management. . therefore. modernization of mind. preparing them to change. communication. retaining and rightsizing are being emphasized. leading to collaboration and innovation is another important role emerging for SHRM. Upgrading employees. to be more direct. Management of redundancy due to up gradation of technology is another area. redeployment. HR has. In this context transparency. More and more reliance on IT is making HR selfadministrating in its routine aspects.
acquisitions. the role of HR in business restructuring. Employee burnout. Building unions as strategic partners of business and to make business a joint partnership between unions and management is a challenge. . mergers and joint ventures has become the most important strategic responsibility of HR function. How organizations listen to the „voice‟ of employees and act on it is the responsibility of SHRM as unions are losing their hold in MNCs. Finally. work-life balance and management of stress have become prime responsibilities of HR because people are the most vital resource.
Human Resource Planning has got an important place in the arena of industrialization. doing the right things for which they are suited for the achievement of goals of the organization.HUMAN RESOURCE PLANNING: An Overview Manpower Planning which is also called as Human Resource Planning consists of putting right number of people. The procedure is as follows: Analyzing the current manpower inventory Making future manpower forecasts Developing employment programmes Design training programmes . right time. right kind of people at the right place. Human Resource Planning has to be a systems approach and is carried out in a set procedure.
retaining. training and development. It seeks answers to questions such as: What are the implications of proposed strategic plans with respect to human resources? What are the implications of proposed strategic plans for staffing.HRP helps in determining the HR requirements of firms and develop strategies for meeting those requirements so that the organization achieves its objectives. and management succession? How will a projected shortfall in the supply of skilled employees impact various HR practices of the firm? What are the implications for attracting. motivating and rewarding workers with skills that are in short supply? .
The HRP process cannot be carried out in isolation. marketplace. . HRP is a proactive process. society and technology to ensure that the organization is well prepared to meet these changes when they occur. economy. It anticipates the changes in industry. The HRP process examines the implications of business strategies and goals on human requirements.
(refer Tanuja Agarwala Pg 183-185) .BUSINESS STRATEGY AND HRP Business strategy directly affects HR strategies and activities.
For this they must develop and communicate the vision of the future and motivate organizational members to move into that direction . It is to do with the human side of enterprise and is essentially about changing people‟s attitudes. Therefore the leader has to change the behaviour of superiors. peers or subordinates. motivation and hard work from all manager and employees Influence Tactics: The organizational leaders have to successfully implement the strategies and achieve the objectives. Strategic implementation requires support. The behavioural of the employees affect the success of the organization. discipline. feelings and – above all else – their behaviour.Behavioural issues in strategy implementation It is vital to bear in mind that organizational change is not an intellectual process concerned with the design of ever-more-complex and elegant organization structures.
information power. Leaders often use their power their power to influence others and implement strategy. self managed work groups eliminating whole levels of management in organization and aggressive use of automation are some of the ways to empower people at various places. . coercive power) Empowerment as a way of Influencing Behavior: The top executives have to empower lower level employees. Formal authority that comes through leaders position in the organization (He cannot use the power to influence customers and government officials) the leaders have to exercise something more than that of the formal authority (Expertise. legitimate power. charisma. Power: it is the potential ability to influence the behavior of others. reward power. Training.
Promote understanding Allocate resources judiciously . They should Define job duties clearly Design job properly Demonstrate proper behaviors. Organization must try to manage political behavior while implementing strategies. Political Implications of Power: organization politics is defined as those set of activities engaged in by people in order to acquire. enhance and employ power and other resources to achieve preferred outcomes in organizational setting characterized by uncertainties.
The process of understanding and gaining insight into the existing culture can be aided by using one of the standard and properly validated inventories or questionnaires that a number of consultants have developed to measure characteristics of corporate culture. and the behaviors that stem from them. Firms culture must be appropriate and support their firm. beliefs. Leadership Style and Culture Change: Culture is the set of values. behaviors that help its members understand what the organization stands for. These offer the advantage of being able to benchmark the culture against those of other. . how it does things and what it considers important. The culture should have some value in it . and to adopt new ones. To change the corporate culture involves persuading people to abandon many of their existing beliefs and values. The first difficulty that arises in practice is to identify the principal characteristics of the existing culture. comparable firms that have used the same instruments.
The weakness of this approach is that the information thus obtained tends to be more superficial and less rich than material from other sources such as interviews and group discussions and from study of the company‟s history. In carrying out this diagnostic exercise, such instruments can be supplemented by surveys of employee opinions and attitudes and complementary information from surveys of customers and suppliers or the public at large.
Values and Culture: Value is something that has worth and importance to an individual. People should have shared values. This value keeps the every one from the top management down to factory persons on the factory floor pulling in the same direction. Ethics and Strategy: Ethics are contemporary standards and a principle or conducts that govern the action and behavior of individuals within the organization. In order that the business system function successfully the organization has to avoid certain unethical practices and the organization has to bound by legal laws and government rules and regulations.
Managing Resistance to Change: To change is almost always unavoidable, but its strength can be minimized by careful advance Top management tends to see change in its strategic context. Rank-and-file employees are most likely to be aware of its impact on important aspects of their working lives. Some resistance planning, which involves thinking about such issues as: Who will be affected by the proposed changes, both directly and indirectly? From their point of view, what aspects of their working lives will be affected? Who should communicate information about change, when and by what means? What management style is to be used?
more closely to support the long term objectives of the organization . bonuses etc. Linking Performance and Pay to Strategies: In order to implement the strategies effectively the organization has to align salary increases. merit pay. promotions.. Managing Conflict: Conflict is a process in which an effort is purposefully made by one person or unit to block another that results in frustrating the attainment of the others goals or the furthering of his interests. The organization has to resolve the conflicts.
SHRM for Competitive Advantage TRENDS IN BUSINESS ENVIRONMENT Globalization of Business Mergers and Acquisitions Downsizing CHANGING NATURE OF WORK Industry and Occupational Shifts Technological Advancements Outsourcing Flexible work arrangements .
SOCIETAL. AND WORKFORCE TRENDS Workforce Diversity Workforce availability Shortage of Skilled Talent Ageing population and Ageing workforce An educated knowledge workforce Women in workforce Changing family structures Global Workforce Contingent Workforce and Workforce flexibility CHANGING NATURE OF EMPLOYMENT RELATIONSHIP .DEMOGRAPHIC.
Strategic fit: A Conceptual Framework Organizations are often confronted with a dilemma-should they adopt business strategies that fit the available competencies and capabilities in the firm. or should they first decide their business strategy. and then stretch and modify their competencies and capabilities to fit the business strategy? .
it can face problems. . When an organization attempts to implement new strategies with outmoded or inappropriate HR strategies. SHRM is largely about integration. it must match its internal resources and skills (organizational competencies) with the opportunities available in the external environment. The strategic fit proposes that if an organization seeks to maximize its competitive advantage.
Fit as strategic interaction (best fit approach)-HR practices linkage with the external context. . Fit as contingency-HR approaches to ensure that internal practices of the organization respond to external factors such as the nature of the market. In 1997. Guest identified the following five types of fit: 1. etc. skill availability. 2.Guest emphasized that it is important to ensure that HRM is fully integrated into strategic planning.
3. 5. Fit as „bundles‟ (the configuration approach)-suggests a search for distinct configuration or bundles of HR practices that complement each other. Fit is an ideal set of practices (best practice approach)-there are „best practices‟ which all firms can adopt. in order to determine which „bundle‟ is likely to be most effective. . Fit is gestalt-emphasizes the importance of finding an appropriate combination of practices. 4.
and 3. That are relatively enduring over a period of time.MATCHING CULTURE WITH STRATEGY Organization culture is a set of characteristics that describe an organization and 1. . That distinguish one organization from another. That influence the behavior of people in an organization. 2.
there are strong informal networks of individuals and groups. delineate important relationships and emphasize what is important in the organization. which coalesce around specific issues to promote or resist a particular view. again. . Strategy and the external environment are big influences on corporate culture. In most companies. Organizational structure is likely to reflect the power structure and.
For example. Corporate culture should embody what the organization needs to be effective within its environment. the culture should encourage adaptability. The correct relationship between cultural values and beliefs. . organizational strategy and the business environment can enhance business performance. if the organization requires flexibility and responsiveness.
. The extent to which the competitive environment requires change or stability. Dan Denison conducted a study of culture and effectiveness and proposed that the fit among the strategy. and 2. Prof. The extent to which the strategic focus and strength is internal or external. environment and culture is associated with four types These categories are based on two factors: 1.
and 4. Involvement. The four categories associated with these differences are1. Adaptability 2. Consistency . Mission 3.
REFER HANDOUTS – ORGANIZATION AND NATIONAL CULTURE (Pg 144-148) .