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Chapter

EXCEL BOOKS

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THE STRATEGIC ROLE OF

HUMAN RESOURCES MANAGEMENT

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ANNOTATED OUTLINE
Introduction
Organisations have to provide a healthy work climate in order to get the best out of people. To utilise the capabilities of people fully, you need competent leadership willing to recognise, reward and nurture talent at all levels. This is where human resource managers play a critical role by bridging gaps between employee expectations and organisational requirements by adopting appropriate human resource strategies and practices. HRM, in short, is the art of procuring, developing and maintaining competent workforce to achieve the goals of an organisation in an effective and efficient manner.

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Human Resource Management:

Features 
          Pervasive force Action oriented Individually oriented People oriented Future oriented Development oriented Integrating mechanism Comprehensive function Auxiliary service Inter-disciplinary function Continuous function

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Important terms Clearing the Fog 
Human resource: Knowledge, skill sets, expertise adaptability, commitment and loyalty of employees. of employees, the 

Skills: The individual abilities of human beings to perform a piece of work.  Resource: The stock of assets and skills that belong to a firm at a point of time.  Capability: The ability of a bundle of resources to perform an activity; a way of combining assets, people and processes to transform inputs into outputs.  Core competencies: Activities that the firm performs especially well when compared to its competitors and through which the firm adds value to its goods and services over a long period of time.  Competitive advantage: It comes from a firm's ability to perform activities more distinctively and more effectively than rivals. To attain competitive advantage, firms need to add value to customers and offer a product or service that cannot be easily imitated or copied by rivals (Uniqueness).  Value: Sum total of benefits received and costs paid by the customer in a given situation.

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Scope of HRM
HRM mainly covers three broad areas 
  Personnel aspect Welfare aspect Industrial relations aspect

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Objectives of HRM
HRM aims at achieving organisational goals, meet the expectations of employees; develop the knowledge, skills and abilities of employees; improve the quality of working life and manage human resources in an ethical and socially responsible manner.

Importance of HRM
From an organisational standpoint, good HR practices help in attracting and retaining talent, train people for challenging roles, develop their skills and competencies, increase productivity and profits and enhance standard of living

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Importance of HRM 

attract and retain talent  train people for challenging roles  develop skills and competencies Good HR Practices help  promote team spirit  develop loyalty and commitment  increase productivity and profits  improve job satisfaction  enhance standard of living  generate employment opportunities

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HRM as a central subsystem in an organisation
Product Subsystem

Finance Subsystem

HR Subsystem Procurement Training Compensation Appraisal Rewards

Marketing Subsystem

Technical Subsystem

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Functions of HRM
P/HRM

Managerial functions:
±

Operative Functions
Procurement Job Analysis HR planning Development: Training Executive development Career planning Succession planning Human resources development strategies Motivation and Compensation: Job design Work scheduling Motivation Job evaluation Performance and potential appraisal Compensation administration Incentives benefits and services Welfare Social security Collective bargaining Participation Empowerment Trade unions Employers¶ associations Industrial relations Safety Maintenance: Health Integration: Grievances Discipline Teams and teamwork Emerging Issues: Personnel records Personnel audit Personnel research HR accounting HRIS Job stress Mentoring International HRM

Planning

± Organising

Recruitment Selection Placement

±

Directing

Induction Internal mobility

± Controlling

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Strategic Human Resource Management
Competitive advantage through people?
Competitive advantage allows a firm to gain an edge over its rivals when competing. It comes from a firm¶s unique ability to perform activities more distinctively and more effectively than rivals. HR can be a source of competitive advantage when the talents of people working in the firm are valuable, rare; difficult to imitate and well organised to deliver efficient and effective results.

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The evolving strategic role of Human Resource Management
Strategic focus Strategic partner System Change agent People

Administrative expert

Employee champion

Operational focus

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Strategic Human Resource Management
Realising the growing importance of HR, a new line of thinking emerged elevating the status of HR to that of a strategic partner both in the formulation of a firm¶s strategic as well as in the implementation of business activities. SHRM, simply stated, is the linkage of HRM with strategic goals and objectives with a view to improve business performance and develop organisational cultures that foster innovation and flexibility. Strategic HR differs radically from traditional HR in a number of ways:

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Traditional HR vs. Strategic HR
Point of distinction Focus Role of HR Initiatives Time horizon Control Job design Traditional HR Employee Relations Transactional change follower and respondent Slow, reactive, fragmented Short-term Bureaucratic-roles, policies, procedures Tight division of labour; independence, specialisation Capital, products Cost centre Staff specialists Strategic HR Partnerships with internal and external customers Transformational change leader and initiator Fast, proactive and integrated Short, medium and long (as required) Organic-flexible, whatever is necessary to succeed Broad, flexible, cross-training teams People, knowledge Investment centre Line managers

Key investments Accountability Responsibility for HR

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EVOLUTION OF HRM
The field of HRM evolved both in India and elsewhere over a number of years to present level of sophistication and use of proactive methods 

   

The industrial revolution Scientific management Trade unionism Human relations movement Human resources approach

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Evolution of the Personnel Function
Concept The Commodity concept What is it all about? Labour was regarded as a commodity to be bought and sold. Wages were based on demand and supply. Government did very little to protect workers. Labour is like any other factor of production, viz, money, materials, land, etc. Workers are like machine tools. Welfare measures like safety, first aid, lunch room, rest room will have a positive impact on workers¶ productivity Management must assume a fatherly and protective attitude towards employees. Paternalism does not mean merely providing benefits but it means satisfying various needs of the employees as parents meet the requirements of the children.
Cont«

The Factor of Production concept The Goodwill concept

The Paternalistic concept/ Paternalism

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Evolution of the Personnel Function
The Humanitarian concept To improve productivity, physical, social and psychological needs of workers must be met. As Mayo and others stated, money is less a factor in determining output, than group standards, group incentives and security. The organisation is a social system that has both economic and social dimensions.

The Human Resource concept

Employees are the most valuable assets of an organisation. There should be a conscious effort to realise organisational goals by satisfying needs and aspirations of employees.

The Emerging concept Employees should be accepted as partners in the progress of a company. They should have a feeling that the organisation is their own. To this end, managers must offer better quality of working life and offer opportunities to people to exploit their potential fully. The focus should be on Human Resource Development.

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Growth in India 

Legal phase  Welfare phase  Development phase

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Personnel Function in India; Changing Scenario
Period 1920 ± 30 Emphasis Welfare management Paternalistic practices Status Clerical Roles Welfare administrator Appraiser Advisor Mediator Legal advisor Fire fighting Change agent Integrator Trainer Educator Developer Counsellor Coach Mentor Problem solver

1940 ± 60 Expanding the role to cover Labour, Welfare, Industrial Relations and Personnel Administration 1970 ± 80 Efficiency, effectiveness dimensions added Emphasis on human values, aspirations, Incremental productivity gains through human assets

Administrative

Developmental

1990s ± onwards

Proactive, growth-oriented

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Shifts in HR management in India
Traditional HR practice  Administrative role  Reactive  Separate, isolated from company mission  Production focus  Functional organisation  Individuals encouraged, singled out for praise, rewards  People as expenses  People as key investments/assets       Emerging HR practice Strategic role Proactive Key part of organisational mission Service focus Process-based organisation Cross-functional eams, teamwork most important

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HRM in the new millennium
Current thinking in HRM strongly supports the view that when opportunities for growth and enhancement of skills are available in an organisation, people will be stimulated to give their best, leading to greater job satisfaction and organisational effectiveness. To this end, therefore, HR managers in the new millennium are expected to successfully evolve an appropriate corporate culture, take a strategic approach to the acquisition, motivation and development of human resources and introduce programmes that reflect and support the core values of the organisation and its people. 
Size of work force Demands for better pay, benefits, working conditions
Cont«

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HRM in the new millennium 
Composition of workforce
Equal pay for equal work Breaking down of glass ceiling Constitutional protection to minority groups Importance to factors such as age, sex, religion, region, caste especially while dealing with multifarious, heterogeneous, culturally diverse work groups 

Employee expectations
Better educated, more knowledgeable, emotionally strong and demanding workforce Demand for educated, trained, experienced and knowledgeable workers growing Understand individual differences and develop appropriate policies to meet their growing expectations.
Cont«

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HRM in the new millennium 
Changes in technology
Modernisation, computerisation, sophistication increasing by the day Knowledge and skills need to be refined constantly Training, retraining and mid-career counselling important Equip employees so as to cope with dramatic challenges brought forward by rapid advances in science and technology 

 

Life style changes Environmental challenges Personnel function in future
Job redesign Career opportunities Productivity Recruitment and selection Training and development Rewards Safety and welfare

Cont«

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HRM in the new millennium 
Changes in 21st century affecting HRM
HR as a springboard for success Talent hunting, developing and retraining Lean and mean organisations Labour relations Health and benefit programmes

The Strategic Role Of Human Resources Management

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