Strategic Human Resource Management

Introduction to Strategic HR

Strategic Human Resource Management
Introduction 1990s there has been an increased focus on the strategic role of human resource management 
The strategic approach to HRM refers to the relationship between human resource (HR)Practices and the strategic objectives that is the long term goals of the organization

Strategic Human Resource Management 
With the increasing recognition of the potential of human resources in providing competitive advantage Organizations have begun to consider employees as valuable assets or investments Todays knowledge economy depends on the skill and knowledge of the workforce From being routine administrative and reactive function the HR function today has evolved to being proactive and strategic

Strategic Human Resource Management 
In order to bring about a transformation from the fire fighting role the HR manager has to don the garb of professionalism A true professional with proper qualification and training to meet the expectations of society and the organization in particular HR professionals need to know their organizations business thoroughly not only in terms of people but also in terms of economic ,financial,environmental and technological forces affecting it

Strategic Human Resource Management 
As a strategic partner HR needs to participate and help the top management in framing the organizational strategy There is a paradigm shift from traditional HR function to strategic HR functions Example-strategic IR brings out the need to take the Trade Unions along to meet the global competitions without the traditional mutual distrust HR system need re-engineering Once performance standards fixed for HR professional need for evaluation,audited and benchmarked for constant improvement

Strategic Human Resource Management
In the past HR researchers and practitioners directed their attention to important questions 
What is HR strategy? What factors determine whether an organization adopts a strategic approach to HRM? Is there a relationship between the characteristic of the organization and the adoption of a particular strategic human resource management(SHRM)approach? Does an organization achieve competitive advantage by linking HR strategy with business strategy?

Strategic Human Resource Management 
Human Resource management(HRM) is concerned with the holistic approach towards the management of people working in an organization who contribute to the achievement of organizational objectives  Effective and efficient use of human talent for accomplishing the goals of an organization  To achieve organizational objectives each organizations need to develop a well ±defined HR strategy

Strategic Human Resource Management
Contd of HRM
‡ Organization has now to focus on its three core areas ‡ PEOPLE ‡ PROCESS ‡ PERFORMANCE ‡ Called the 3 Ps ‡ People- Known fact that the core strength of an organisation lies on its people(human resource ) all other resources can be replaced but not people ‡ Process-With the fast changing world emphasis is laid on flexibility and adaptability. In an IT enabled environment reengineering of process can be done

‡ Contd of HRM
‡ PERFORMANCE: the existence of an organisation is primarily dependent on its ability to create vale and continously increase the rate of return on investment 

The two pillars supporting the performance of an organisation are PEOPLE AND IT(technology)  The integration of these two factors plays the pivotal role in improving the performance of an organization at both individual and organizational levels  IT helps in documenting the knowledge pool in the organisation and making it available to the employees through intranet etc  Management of knowledge workers is different from that of conventional employees-intelligence and maturity higher and they expect greater levels of flexibility and freedom in their work area in the case of knowledge workers

A Model of the Shift to HRM

Hard HRM
‡ The 'hard' approach rooted in the manpower planning approach is concerned with aligning human resource strategy with business strategy

Soft HRM
‡ The 'soft' approach is rooted in the human relations school, with concern for workers' outcomes and encourages commitment to the organisation by focussing on workers' concerns.

Strategic Human Resource Management
Human Resource Strategy Human resources-valuable resources that help an organization to achieve its objectives(this depicts the centrality of human resources for achievement of organizational goals)
Financial capital Processes People utilization People Organizational goals

Technology

Contd of HRM
‡ Personnel policies and principles  Policies are plans of action  Organisations need to evolve HR policies as they ensure consistency and uniformity in treating people  They help motivate and build loyalty  Policies become benchmarks to compare and evaluate performance -policy on terms of hiring people -policy with regard to medical assistance -policy regarding housing allowance etc -policy regarding training and development -policy regarding IR-trade union recognition/CB/grievance/Participative Mgmt/communication

Principles
‡ ‡ If policies is a guide for managerial decisions and actions Principle is the fundamental truth establishment by research /investigation and analysis ‡ Many principles have been established through practice/experience and observation ‡ Principles are universal truths generally applicable to all organisations ‡ Policies on the other hand vary from organisations to organisations ‡ Principles guide managers in formulating policies programmes procedures and practices ‡ Come handy in solving any vexing problem ‡ Some principles are: Principle of individual development-equal opportunity for development  Principle of scientific selection  Principle of free flow of communication etc

HRM Models
‡ To understand the theoretical perspectives on HRM we have to know the models ‡ Four major models have identified and all these serve as many purposes 1.They provide an analytical framework for studying HRM(situational factors /stakeholders/strategic choice levels/competence) 2.They legitamise certain HRM practices: a key issue here being the distinctiveness of HRM practices(it is not the presence of selection or training but a distinctive approach to selection or training) 3.They provide a characteristics of HRM that establishes variables and relationship to be researched 4. Serve as heuristic device-something to help us discover and understand the world for explaining the nature and significance of key HR practices

HRM Models
‡ The four models are: 1. The Fombrun 2.The Harvard 3.The guest 4. The Warwick

Fombrun Model Of HRM
HRD

Selection

Appraisal

Organisational effectiveness

Rewards

The Harvard Model of Human Resource Management

Guest
Reflects view that a core set of integrated HRM practices can achieve superior individual and organizational performance.

Guest¶s Model of HRM

Guest

Warwick
Extends the Harvard framework. Maps the connections between the outer and inner contexts and explores how HRM adapts to changes in context.

Warwick

Strategic Human Resource Management
‡ The transformed HR department performs the following functions ‡ ‡ ‡       participating in the strategizing sessions of business policy Preparing the HR strategies in coordination with the corporate strategies Implementing the various HR policies and practices including HR planning, recruitment and induction compensation structuring, career planning, competence mapping, performance management

Strategic Human Resource Management

‡ Overall the HR department has outgrown its mere functional role and has come to assume the responsibility of building the brand of the company to: ‡ Attract best available talent in the market and retain them ‡ This helps in the recruitment cost and replacement cost ‡ Reducing the attrition rates ‡ This helps the organisation to completes its project

Strategic Human Resource Management
‡ Holistic Facet Of HRM ‡ HR personnel are increasingly expected to involve themselves in business planning and execution ‡ to understand the business requirements and tune the HR strategies to the emerging business realities ‡ Any Holistic HRM approach would include the following dimension  Participation in business strategies planning  Tuning HR strategies to business strategy requirements  Undertaking change management programmes to bring in cultural transformation  Coordination with the business heads to implement HR strategies and policies  Promotion of active ownership of HR policies by business heads to improve credibility of the policies and also for their successful implementation

Strategic Human Resource Management
Holistic Facet Of HRM-contd ‡ HR function has therefore become more demanding and is no longer restricted to be just a personnel training or administrative function ‡ It is a hybrid of all these functions which calls for new skills and attitude from the HR personnel

Strategic Human Resource Management
‡ ESSENTIAL SKILLS FOR AN HR MANAGER ‡ HR manager has to reorient him self to address the organizational challenges ‡ The skills required are: ‡ Strategic planning:  The global human resource development ±participating in strategic planning process suggests that strategic planner is the emerging role in HR  Strategic planning determines where an organization is headed for over the next year or more -How it is going to get there -How would it know if it got there or not An HR strategic plan helps in defining goals and strategies for achieving Them/beyond day to day work/

Strategic Human Resource Management 
Chandler (1962) defined strategy as 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 (Richardson and Thompson 1999)

1.Determining the Strategic objectives(What goals is the strategy supposed to achieve?-example high productivityreduced accidents etc 2.Developing a plan of action (How will the human resources be organized and allocated to accomplish the objectives of the organization?)

Strategic Human Resource Management 
Human resource strategy involves the planned and effective use of human resources by an organization to help it to gain or maintain an edge over its competitors Gain competitive advantage-organizations achieve competitive advantage when it is able to gain and maintain an edge over its competitors by differentiating its products and services from those of its competitors thereby increasing its market share The centrality of the people evident in knowledge based organizations-where success and failure depends on the skills and knowledge of its workforce rather than the technology

Strategic Human Resource Management 
Definition and Components Given the increasingly significant role of human resources in an organization HRM has become strategic in nature Strategic human resource management(SHRM) is concerned with the relationship between HRM and strategic management in an organization Strategic human resource management is an approach which relates to decisions about the nature of employment relationship,recruitment, training ,development ,performance management, reward and employee relations

Strategic Human Resource Management 
Definition and Components contd Wright and McMahan (1992) defined SHRM as ³the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals´ This definition implies the following four components of SHRM 1.It focuses on an organization¶s human resources(people)competitive advantage of the organization

2.The activities highlight the HR programmes ,policies and practices as the means through which the people of the organization can be deployed to gain competitive advantage

Strategic Human Resource Management 
Definition and Components contd 3.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)

4.The people practices, and planned pattern are all purposeful that is directed towards the achievement of the goals of the organization

Strategic Human Resource Management 
Definition and Components contd SHRM is concerned with people issues and practices that affect or are affected by the strategic plan of the organization The critical issues facing an organization today are mainly human issues such as -ensuring the availability of people -retaining -motivating -developing these resources Today organizations competes less on products or markets and more on people

Strategic Human Resource Management
Definition and Components contd An organization uses a combination of several resources-Tangible -Intangible in the pursuit of its objectives These resources can be grouped into three basic types 1.Physical capital resources-plant ,equipment and finances 2.Organizational capital resources-the organization¶s structure planning, HR systems, history and organizational culture 3.human capital resources ±the skills ,knowledge , judgement and intelligence of the organization¶s employee

Strategic Human Resource Management
Definition and Components contd An organization may have huge capital and the most advanced machinery but if it does not have capable ,motivated and high performing employees the organization is not likely to demonstrate sustained levels of high performance

Strategic Human Resource Management 
Defined as ³the linking of HR with strategic goals and objectives in order to improve business performance and develop organization culture that fosters innovation and flexibility

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