Strategic Human Resource Management (SHRM) – Top 5 Approaches: Performance Based,

Commitment Based, Resource Based and a Few Others

Over a long period of time, many experts have opined about the concept of Strategic Human
Resource Management. They discussed it with slight different approach. From their literature study
some approaches have been identified. These approaches are based on performance, commitment,
resources, involvement and strategic match based strategies.

These are explained below:

1. Performance Based Approach:

This approach is a backward integration approach. The focus of this approach is on the output or
performance of employees, machines or systems and organisation as a whole. To get the better
performance the performance affecting factors are to be studied backward. As strategies are
prepared for other factors, the strategy is prepared for human resource also because human
resource is an important factor that affects the performance.

The approach of management to SHRM is on performance base. The strategies can be prepared for
technology, materials, operating procedure, supply, maintenance, etc. The strategy is prepared for
human resource also. So it is the performance based approach of the top management to SHRM.
The performance of individual is kept in mind and calculation is done backward to design HR strategy
to improve the performance of employees.

The individual performance contributes in organisational performance in products, services, quality

of work, customers’ relationship, behaviour profit, growth and organisational effectiveness, etc. To
achieve higher performance at all levels, HR strategy is designed for procurement, development,
compensation, motivation and good relations. All these contribute to keep the people talented,
satisfied, and motivated and retained In return, they give their best contribution in achievement of
the objectives.

The approach includes backward integration keeping in view the end results and then HR strategy is
designed performance based approach is similar to the United States high performance work
systems or practices aims to make an impact on the performance of the firm through its employees’
performance. This approach was advocated by US Department of Labour.

2. Commitment Based Approach:

Commitment based approach is more psychological in nature. It is related the psychological and
internal feelings of the employees. For designing the strategies, the commitment level of employees
to their work and organisation is the focus point. The high level of commitment makes everything
favourable for the organisation.

Employees’ higher contribution to their jobs impacts positive on production volume, quality of
products or services, employer-employees relationship, industrial relations and peace. All the results
in higher performance of the organisation as a whole, profitability, progress of business, overall
effectiveness in business, and reputation in markets. Higher level of commitment of employees is
kept in mind while designing HR strategy.

Factor affecting employees, commitment level are considered for improving it. The strategies are
prepared to keep the employees satisfied and happy so they willingly cooperate everywhere. HR
strategies are prepared regarding planning, recruitment and selection, development, compensation,
incentives and rewards, motivation, opportunities for development, management approach, etc.

Through these functions the persons can be talented, satisfied and highly motivated that can give
higher contribution towards job and organisation.

High-commitment management approach was given by Wood stated that, ‘A form of management
which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than
controlled by sanctions and pressures external to the individual, and relations within the
organisation are based on high levels of trust’.

This approach was also supported by Beer and Walton separately by mentioning certain functions
for enabling higher contribution. Wood and Albanese further added that the higher level of
commitment can be achieved through proper job design, good industrial relations, proper system for
compensation and incentive. In brief it is concluded that the different experts have advocated for
higher level of commitment in different styles but focus point is higher level of commitment from
employees.

3. Resource Based Strategy:

This approach is a forward integrated approach. The focus is on input resources to achieve the
desired objectives. Resources are being utilized by every organisation for achieving the pre-planned
objectives. The resources are being utilized to avail the opportunities in the global markets. Under
this approach, human resource is one of the resources and considered the most important resource.
For every resource the management prepares a strategy. In similar way the management prepares a
strategy for human resource also. The human resource is deployed; capability to perform the tasks
developed and tasks are performed as planned. Further, manpower can be motivated to learn faster
and apply the expertise on the jobs better and before their rivals.

This approach is from starting to end. The quality of human resource as input is focused to achieve
competitive advantage. Human resources competency can include their ability, capability, skills,
knowledge, experience, problem-solving ability, etc. With good performance the employees add
value to products or services of the organisation.

The proper utilization of human resources ensures that the individual performance, overall
organisational performance, and organisational effectiveness in business are achieved. This leads to
progress of all stakeholders. Keeping in view this, the strategies are designed by human resource
management.

This is called human resource based strategy. The focus is on human resource because it is human
resource utilizes other resources to generate other resources further. It can be said definitely that
the human resource is most important. The strategies are prepared accordingly for procurement,
development, motivation, and commitment to achieve competitive advantage over rival competitors
in local and international markets.

Barney supported this approach stated that the human resource based approach increase firm’s
strategic capability by the development of managers who are well trained, motivated and committed
to the organisation and have good knowledge of the strategic issues relating to the business of the
company.

Hamel and Prahalad also supported this approach by saying that develop, motivate and enable
further to learn faster and apply expertise on job so that performance enhances before competitors.
Human resource based strategy believe that expenses on human resource is not a cost but an
investment because it adds value to human resources and organisation as well.

Human resource based strategy is only concerned with enhancement of human competencies or
human capital of the organisation. Ulrich advocated in favour of this approach and said that through
knowledge the company gets direct competitive advantage over its competitors. The organisations
must have expertise to procure, develop, compensate, motivate, utilize and retain the talented
employees.

It is a great challenge for the management of the company. Human resource based strategy has
been strongly supported by Grant He argued that the main factor for getting competitive advantage
is the unique talent or ability to differentiate between the products or services provided to the
customers by the company and its competitors. This can be done by a learning organisation.

The HR strategy ensures that company is having talented and motivated people better than that of
competitors.

4. Involvement Based Approach:

This approach is combination of psychological and physical aspects of the individual. In this approach
of management the involvement of the employees in their job is most important. In this first, the
employees must be satisfied and motivated and they should involve physically in the job.

The employees’ psychological satisfaction is possible by treating them properly in procurement,

development, compensation, incentives and rewards, opportunities for development,
communication, employees’ empowerment, favourable attitude of management and better
employees-employer relationship. All these contribute in maintaining good industrial relations and
harmony.

The healthy working environment of mutual understanding, openness, confidence, cooperation and
team-spirit should be created. The workers must be treated the partners and profit sharing scheme
would contribute further in this.

Keeping in view all these things the HR strategies are to be designed so the employees are satisfied
and involved in their assigned jobs at different level. SHRM is responsible for all these strategies to
tackle the global and competitive business environment.

5. Strategic Match Approach:

This approach is broader in nature and can be called vertical integrated approach. The focus is on
business environment. Keeping in view the rapidly changing business environment, the corporate
and HR strategy are prepared to carry-out the business activities effectively and efficiently. The
business environment changes drastically. The internal and external environmental factors are
undergoing drastic changes.

The organisation operates its business in the environment where it is located and influenced by
global environment. The business cannot be carried out in isolation because the environment
influences the performance of the business. Due to globalisation, the multinational companies are
entering in different countries for business purpose wherever they find the opportunity.

A high degree of competition is faced by the companies from local and multinational companies as
well. Now, it is the question of survival, growth, stabilize and excel in business. The companies are at
the crucial juncture and they are not sure what to do and what not to do.

In this situation, to tackle multiple challenges the right approach is to design the corporate strategy
according to environment and business condition and act accordingly. For achievement of the
corporate objectives, at department level strategies are also prepared. The corporate strategy is
vertically integrated with departmental strategy so that these can contribute in accomplishment of
the corporate goals and achieve competitive advantage over their competitors.

With the objective of corporate objective accomplishment, under vertical integration HRM is an
integral part of corporate management, HRM should also prepare the strategy accordingly. The HR
strategy should be aligned in line with the business corporate strategy. HR strategy should be an
integral part of the business strategy along with strategies of other departments.

The HR strategy should be supportive to corporate business strategy. Through vertical integration,
there must be proper match or strategy fit between corporate business strategy and HR strategy. HR
strategy should be in position to contribute in accomplishment of the corporate objectives.
According to the requirements of corporate business strategy, through HR strategy the required
manpower would be obtained, trained, maintained, motivated and enabled the employees to give
their best contribution in job performance.

This way the individual performance improves and organisational performance as a whole also. The
effectiveness of the organisation in business performance improves and it gets competitive
advantage over the competitors in the markets. The sales, revenue, profitability and image of the
organisation improve. This leads to progress of all stakeholders such as – employees, employers and
management and society as a whole.
It is only possible when the corporate business strategy is prepared according to business
environment and corporate business strategy is vertically integrated with departmental strategy that
HR strategy. It can be concluded that there must be proper strategic match between corporate and
HR strategy for effective working and better future. This approach starts from business at the top
and moves downward to corporate and HR strategies. It is an example of vertical integration.

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Universalist Approach To Strategic Human Resource Management Business Essay

Info: 3752 words (15 pages) Essay

Published: 1st Jan 2015

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Your role and background is that of a Human Resource Management generalist consultant who has
been called in to provide observations and suggestions to the current situation. You are an HRM
generalist who has been asked to sit in on the meeting with John of PF. The CEO will ask for your
opinions about how the organisation can move forward and overcome the current issues that it is
experiencing.

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This is based on two critical forms of fit. Firstly, external fit and secondly internal fit. The external fit
has to do with the HR strategy that fits with the demands of business Strategy. It is also referred to
as vertical integration, the internal fit which is also referred to as horizontal integration suggests that
all HR policies and activities fit together so that they make a coherent whole, are mutually
reinforcing and are applied consistently. The strength of this model is that it provides a simple
framework to show how selection, appraisal, development and reward can be mutually geared to
produce the required of employee performance.

Resource based approach

This approach in concerned with the relationships between internal resources of which Human
resources are one, strategy and the firm performance. It focuses on the Promotion of sustained
competitive advantage through the development of human capital rather than merely aligning
human resources to current strategic goals.

The ‘universalistic’ perspective posits the ‘best’ of HR practices, implying that business strategies and
HRM policies are mutually independent in determining business performance. The ‘contingency’
perspective emphasizes the fit between business strategy and HRM policies and strategies, implying
that business strategies are followed by HRM policies in determining business performance. The
‘configurationally’ perspective posits a simultaneous internal and external fit between a firm’s
external environment, business strategy and HR strategy, implying that business strategies and HRM
policies interact, according to organisational context in determining business performance.

Recruitment and selection

Using the three recruitment methods of advertising in the national press, advertising in the technical
press, and the internet, evaluate the advantages and disadvantages of each.

National press

When considering a press adverting campaign there are two main venues to think about;
newspapers and magazines. Each has its advantages and disadvantages. The magazine ads look
better but the quality and the workmanship that goes into producing a magazine ad make it
expensive. The readership of a magazine, on the other hand, is much easier to target, and is comes
with the type of magazine you choose; a car magazine, sports or fashion magazine. On the flip side,
magazine ads are viewed more times than newspaper ads and can double the exposure of the
readership. the newspaper ad is much quicker and cheaper. Newspapers vary in circulation and with
that they vary drastically in price. From the national press advertising campaign in newspapers,
advertising in newspapers still holds a charm.

Newspapers give credibility to the ads unlike radio advertising that is heard while doing something
else, newspaper reading is done when a person has leisure time and his attention is not diverted.
Local press advertising has benefits when dealing with a local supplier.

Internet

Advertising is the branch of marketing that deals with communicating to customers about products,
brands, services and companies. The Internet, as a global communications medium, provides
advertisers with unique and often cost-effective ways of reaching advertising audiences. As with all
media, however, advertising on the Internet has unique advantages and disadvantages.

Advertising on the Internet is almost a necessity for modern businesses, especially those that do
business outside of their local community. Consumers use the Internet for more than simply
entertainment or information, as they do with radio, television, magazines and newspapers.
Consumers use the Internet to assist them in nearly every aspect of life, creating countless
opportunities to place relevant, targeted ad messages. The Internet’s vast reach can allow
advertisers to reach significantly more people than traditional advertising media at a fraction of the
cost. Internet advertising is ideal for businesses with a national or international target market and
large-scale distribution capabilities. As a rule, the more people your business serves, the most cost-
efficient internet advertising can be. Internet advertising can also be more targeted than some
traditional media, ensuring that your messages are seen by the most relevant audiences. One
disadvantage of advertising on the Internet is that your marketing materials are automatically
available for anyone in the world to copy, regardless of the legal ramifications. Logos, images and
trademarks can be copied and used for commercial purposes, or even to slander or mock your
company. This is not the case with television and magazine advertising, wherein images must be
replicated rather than simply copied electronically. Another disadvantage is the fact that the
Internet-advertising gold rush has begun to introduce ad clutter to the Web. Web users are so
inundated with banner ads and spam email that they have begun to ignore internet advertising just
as much as ads on traditional media.

Technical press

There are many trades, technical and professional magazines read by customers, suppliers and
businesses in your sector. If your business sells to other businesses, advertisements in these
publications can be a powerful way of gaining sales, product enquiries, higher profile, trade
partnerships and even potential investors.
Editorials are generally perceived by readers to be independent and impartial and are therefore seen
as more trustworthy than advertisements. Editorial support or endorsement helps lend your
business credibility with the reader. A proactive PR strategy can increase your chances of gaining
favorable editorial content. The technical press can also be used for recruitment and to source
suppliers. Trade magazines provide a variety of ways to advertise:

Classified advertising – particularly for recruitment and gaining suppliers.

Display and semi-display – display advertisements are bigger and more sophisticated, often appear
on editorial pages or in special supplements, and can use pictures and other design devices.

Advertisement features – they’re laid out like editorial pages but feature you and your business or
product. You pay for them, and you may also be given advertisement space. Your suppliers might
advertise as well and offset the cost.

Loose inserts that you supply yourself to the magazine publisher for them to insert into the
magazine.

Advantages and Disadvantages of performance related pay

Performance related pay is the idea of Fredrick Taylor who comprised his theory of scientific
management. It is a bonus salary increase awarded in line with an employee’s achievement over a
range of criteria. These criteria depend on each job. Awards are decided based on appraisal results.
They must link achievements to pay.

Advantages

Rewards employees with highest productivity

It is argued this system motivates staff

It enables firms to recruit highly qualified staff who like the idea of being to earn a bonus
Encourages employees whose performance is not u to scratch to leave company on a voluntary basis

Easy to identify companies aims and objectives

Disadvantages

Only those who perform well get paid

High flyers find it attractive possible to give employees no pay rise at all

Inflation means pay will be cut and this coupled with; the indignity of being judged and found
wanting, would make it that employee’s see a job elsewhere.

Employees can be de-motivated if the goals set are too hard to achieve.

Disgruntled employees

Performance related pay cannot be determined unless there is a measuring system in place to assess
output. It also provides a limiting factor to the use and extension of incentive pay in instances where
work is difficult to measure. Where output cannot be measured, the sensible solution seems not to
pay any bonus. However, because some jobs are difficult to measure, doesn’t mean that good
performance shouldn’t be rewarded..

Learning and Training

The essential purpose of training is to develop that knowledge and those skills and aptitudes which
contribute to the welfare of the company and its employees. Further, all training programmes aim at
making the employees more effective and productive in their present job and increasing their
potential for higher level jobs.

For effective transfer of training to occur, two conditions must be met;

The trainee must be able to take the material learnt in the training process and apply it to the job
context in which they work.

The use of the learnt material must be maintained overtime on the job.

Benefits of Good Training Programme

It increases performance on the job, if applied. It help employee to raise current skill levels and
correct any deficiency that have in doing their job efficiently.

It enables present employees to acquire more and greater skill, thus increasing their versatility for
transfers and their qualifications for promotions.

If employees are properly trained, accidents, soiled work, and damage to machines and equipment
are reduced.

Training helps employees to adjust to new methods and processes that are introduced from time to
time.

Good training reduces dissatisfaction and absenteeism because it helps both new and experienced
employees to use to the full, their individual capacities.

It improves the quality of output which will benefit the company in the long run.

Training improves the promotional prospect.

Evaluation

The HR Manager has o critically assess the training after the training exercise to determine if there is
any change in their knowledge, skills, attitudes and ability. It is important to understand which skills;
attitude and ability existed before therefore it is recommended that a measure of performance be
undertaken before the training program begins.
Transfer/behaviour

This address the question, to what extent did the participant job behaviour change as a result of the
training? Are the participants using their newly acquired skills and knowledge in their work
environment? Is their change in behaviour and new knowledge sustained, are they using them
effectively overtime. Is the trainee able to transfer the new skills to another person?

Result

Results answer the question, how is the training impacting on the organization overall. Is There a
reduction in cost, increase in sales, are there more persons being attracted to company,
improvement in production levels, less customer complaints or reduction in incidents?

Performance appraisal

This system is designed to measure the actual job performance of an employee. It provides feedback
about the success about previous trainees and discloses the need for additional training. It helps to
determine rewards or sanctions eg, of reward are pay increases based on his/her performance,
promotion, commendation, demotion, warning or termination. It also gives the employee a clear
understanding where he stands in relation to the organisation performance expectation.

Performance Management System

Performance appraisal is a method of evaluating a workers performance to ascertain how well

he/she is meeting up with performance standards and targets and communicating it to the worker in
order to set up a plan of improvement. Performance is the degree of accomplishment of the tasks
that make up an employee’s job. An individual’s performance is a combination of:

Effort-physical and mental energy put in a work

Ability-personal characteristics used doing a job

Role perception-an understanding of direction and requirements of a job

Performance evaluation on individual and group is usually based on:

Standards set at the planning stage

Performance targets set for individual or groups

Accountability-the rate at which an employee understands and takes responsibility for his actions

Competencies-the skills, experience, knowledge that a worker exhibits in a job

Uses of performance appraisal

Performance appraisal information can be used for:

Promotions

Firings/layoffs

Merit pay increases

Individual and organisational training and development

Suggesting changes in behaviour, attitudes, skills or knowledge

Selection procedures, and

Human resource planning

Performance Appraisal Methods

Performance appraisal methods include:

Goal setting, or management by objectives (MBO)

Work standards approach

Essay appraisal

Critical incident appraisal

Graphic rating scale

Checklist

Behaviorally anchored rating scale (BARS)

Ranking methods

1. Goal setting or management by objectives. Management by objective consists of the following

steps:

Establishing a clear objectives for the work to be done by an employee

Developing an action plan indicating how these objectives are to be achieved

Allowing the employee to implement the action plan

Measuring objective achievement

Taking corrective action when needed

Establishing new objectives for the future

2. Work standards approach. This method of appraisal involves setting a standard or an expected
level of output and then comparing each employee’s level to the standard. Performance standards
include:

Quantity

Quality

Time

Cost

Dependability

Accuracy

Attendance, etc.

3. Essay appraisal
In this method the appraiser prepares a written statement (narrative) describing a worker’s
strengths and weaknesses, and past performance. A typical essay appraisal question might be
“Describe this employee’s performance, including quality and quantity of work, job knowledge, and
ability to get along with other employees.”

4. Critical incident appraisal

In this method the appraiser keeps a written record of incidents that illustrate both satisfactory and
unsatisfactory behaviors of the employee. The appraiser then uses these incidents as a basis for
evaluating the employee’s performance.

5. Graphic rating scale

This method requires the appraiser to indicate on a scale where the employee rates on factors such
as quantity of work, dependability, job knowledge, and cooperativeness. Graphical ratings include
both numerical ranges and written descriptions. Ex. On “quantity of work” (1) the worker does not
meet minimum requirement (2) Does just enough to get by…(5) has a superior work production
record.

6. Checklist

In this method the appraiser answers with a yes or no to a series of questions about the behaviour of
the employee being rated. The checklist can have varying weight assigned to each question.

7. Behaviorally anchored rating scale (BARS)

This method of appraisal determines an employee’s level of performance based on whether or not
certain specifically job behaviors are present. BARS consist of scale value and anchors.

Scale values define specific categories of performance such as: Excellent, good, average, poor, etc.
Anchors are statements which indicate the level of performance on the scale opposite that particular
anchor.
8. Ranking methods

In this method of appraisal, the performance of an employee is ranked relative to the performance
of others.

Ranking methods include:

Alternation ranking

Paired comparison ranking, and

Forced distribution

Alternation ranking-the appraiser lists the names of employees to be rated on the left side of a sheet
of paper. The rater chooses the most valuable employee on the list, crosses that name off the left-
hand list, and puts at the top of the column on the right-hand side of the paper. The rater repeats
the process for all names on the left hand side of the paper.

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Paired comparison ranking: suppose a rater is to evaluate six employees. The names of these
individuals are listed on the left side of a sheet of paper. The rater then compares the first employee
with the second employee on a chosen performance criterion, such as quantity of work; he then
makes a mark on the first employees name if he produced more. He then compares the first
employee with the third, fourth, fifth, and sixth employees on the same performance criterion.

Forced distribution-In this method, the appraiser places a certain percentage of employees at
various performance levels. It assumes performance in a group of employees is distributed according
to a normal curve. Thus, the rater could place 60% of employees as meeting expectation; 20% as
exceeding expectation, and 20% as not meeting expectations.
Model of Attendance

Your company won’t suffer much from the occasional employee day off or sick day, but patterns of
absences can create havoc in your work place. With several employees out of the office, production
slows, or other employees may have to pick up the slack causing the quality of their work to suffer.
While you can’t prevent every absence, you can take steps to decrease the number of overall
absences.

Create an Attendance Policy

Some employees may show up late or take several days off because they do not understand the
company’s stance on absences. You need a clear-cut attendance policy so every employee knows
what you expect of him. Include reasons for acceptable absences, what you consider unacceptable
and any disciplinary action or reduction in pay the employee may face after abusing holiday or sick
days. Make sure every employee receives a copy of this policy. Have your supervisors monitor their
employees and enforce the policy.

Improve Morale

If your office staff suffers from general low morale, employees will start to dread coming to work.
This can increase absences throughout the staff. Spend time each week on boosting morale. Make
sure every employee has regularly scheduled breaks throughout the day. Offer group lunches, prizes
for completing projects or other incentives. Creating a positive environment that incorporates hard
work with down time helps boost morale.

Reduce Stress

An employee can feel stressed in the workplace, especially if she has a large workload. High levels of
stress can lead to avoidance, or even cause an illness. Both of which can lead to frequent absences.
Make sure every employee has an even workload and can complete tasks given to them. Create
teams to complete projects, rather than assigning one employee to the entire task. Reducing
workloads and placing the right people with the right jobs will reduce stress levels in the office.

Steers and Rhodes developed a model on absenteeism which according to Harrison and Martocchio,
1998 was deemed to be very influential and frequently cited in literatures about absenteeism within
organizations. The model states that the capability of employees or workers to attend work is
primarily dictated by how motivated as well as their ability to attend and perform their duties. These
variables, ability and motivation have been thought to interact in a manner that an individual
supposed ability to be present at work usually moderates his/her enthusiasm to attend work-what
has been known as attendance relationship(Steers and Susan, 1978).The two further argued that
personal characteristics or attributes which include sex(gender), tenure, family size, education, in
addition to that, job satisfaction, organizational commitment, the ability to attend which encompass
sickness, family responsibilities, accidents as well as transport problems, pressure to attend that
include attendance reward system/incentives/bonuses, work group norms all either in isolation or in
combination influence absenteeism of employees. It is worth to note that these were addition to
their initial model developed in 1978 which only identified job satisfaction as the only specific
significant factor affecting attendance motivation. From the diagram, attendance motivation is
influenced by organizational practices, culture of absenteeism, attitude, values and goals of
employees. Employees who are fully satisfied with their jobs do have strong loyalty to the
organization and proud of it hence will desire to actively engage in activities to better the
organization, and this is done by being present at work.

REFERNCES

Retrieved August 12, 2011, from World Wide Web

http://smallbusiness.chron.com/things-improve-employee-work-attendance-19070.html

Retrieved August 3, 2011, from World Wide Web

Retrieved August 3, 2011, from, from World Wide Web

http://www.businessballs.com/trainingprogramevaluation.htm

Retrieved August 12, 2011, from, from World Wide Web

http://managementhelp.org/training/basics/reasons-for-training.htm

Daft, R. and Marcic, D. (2007). Management, The New Workplace. Ohio. USA: Thomson
Kotler, P., & Armstrong, G. (1996). Principles of Marketing. New Jersey: Prentice hall.

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What is Contingency or Situational Approach to Management Theory?

The contingency approach, often called the Situational Approach is based upon the premise that all
management is essentially situational in nature. All decisions by managers will be affected (if not
controlled) by the contingencies of a given situation.

There is no one good way to address any decision. Contingencies arise from various environmental
factors. As such, managers must take into account these contingencies when making decisions that
affect the organization.

Back to: Business Management

Contingency theory builds upon accepted elements of System Theory. It recognized that an
organization is an open system made up of interrelated sub-units. It adds, however, that the
behavior of individual sub-units is contingent upon internal and external environmental
contingencies.

These might include the relationship between two other sub-units or external systems. This is
particularly true when these internal or external units/systems have an effect on the desired
outcome of a sub-unit.

Contingency theory also proposes structural changes or designs, leadership styles, and control
systems in an organization that allow it to react to environmental contingencies.

What are the primary characteristics of the Contingency Approach?

The primary characteristics of contingency theory include:

Non-universality of management theory - There is no one best way of doing things.

Contingency - Management decision making is contingent upon the situation.

Environment - Managerial policies and practices to be effective, must adjust to changes in the
environment.

Diagnostics - Managers must possess and continue to improve diagnostic skills so as to anticipate
and ready for environmental changes.

Human Relations - Managers should have sufficient human relations skills to accommodate and
stabilize change.

Information and Communication - Managers must develop a communication system adequate to

deal with environmental changes.

How do Contingencies Affecting Organizational Structure?

Theorists Burns and Stalker, in their text "Management of innovation" (1968), identified two types of
organizational structure (mechanistic) and (organic) and two categories of the environment (stable
and dynamic).

Mechanistic structures are more common in stable environments. Organic structures are more
common and suitable in dynamic environments.

The commonly-identified contingencies influencing organizational structure include:

Organization Size

Nature of Business and Technology (the need for customization)

Environmental Uncertainty

Individual Differences or Organizational Preferences

The contingency approach defines not only patterns of internal interaction but also suggests
organization designs and management approaches most appropriate for specific situations.

Advantages and Disadvantages of Contingency Theory

The primary advantages of contingency theory include:

It provides a realistic view of management and organization.

It discards the universal validity of principles.

Managers are situation-oriented and not stereotyped.

Lends itself to an innovative and creative management style.

The negatives of contingency theory include:

It does not have a theoretical base.

Executive is expected to know all the alternative courses of action before taking action in a situation
that is not always feasible.

It does not prescribe a course of action.

A situation can be influenced by many factors. It is difficult to analyze all these factors.

Who are the Primary Contributors to Contingency Theory?

Some of the primary contributors to contingency theory include:

Burns and Stalker - In their work "Management of innovation" (1968), they identified two types of
organizational structures (Mechanistic and Organic) and two categories of the environment (Stable
and Dynamic).

John Woodward - She analyzed the influence of technology on the organization structure and
observed that the type of technology used for production, such as unit, small batches, large batches,
mass production, and continuous process of production. She also examined how production shifts
directly affected the span of control, use of committees, participative decision making, and other
structural characteristics.

J.W. Lorsch and P.R. Lawrence - In studies beginning in 1969, they proposed that organizations
functioning in a complex environment adopted a much higher degree of differentiation and
integration than those operating in a simple environment. They identified as key issues:
environmental uncertainty and information flow. They advocated to Focus on exploring and
improving the organization's relationship with the environment, which characterized by along a
certainty-uncertainty continuum.

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Strategic Management – Role of HRM

As stated earlier, the strategic management process involves four important stages: environmental
scanning, strategy formulation, strategy implementation, and evaluation and control.
Strategic Management

Contents [show]

Environmental Scanning

HR professionals play key roles in scanning the environment. More specifically HR can provide the
following:

“From public information and legitimate recruiting and interview activities, you ought to be able to
construct organization charts, staffing levels, and group missions for the various organizational
components of each of your major competitors. Your knowledge of how brands are sorted among
sales subdivisions and who reports to whom can give important clues as to a competitor’s strategic
priorities. You may even know the track record and characteristic behavior of the executives”.

Strategy Formulation

Strategies are formulated at three levels:

1. Corporate level

2. Business unit level

3. Functional level

Corporate-level Strategy

This is formulated by the top management of an organization made up of more than one line of
business. The corporate-level strategy of the family-controlled Siyaram Poddar Companies is to
continuously innovate in all its businesses with the right technology, relentlessly cut costs and focus
on the overseas markets. The major questions that need to be answered at this stage are- What
kinds of business should the company be engaged in? What are the goats and expectations for each
business? How should resources be allocated to reach these goals?
In formulating corporate-level strategies, the company should decide where it wants to be-in 10 or
15 years hence in at least eight areas-market standing, innovation, productivity, physical and
financial resources, profitability, managerial performance and development, worker performance
and attitudes, and social responsibility.

Business-level Strategy

While the major question at the corporate-level is, “In what industries or businesses should we be
operating?,” the appropriate question at the business unit level is, “How should we compete in the
chosen industry or business?” A business unit is an organizational subsystem that has a market, a set
of competitors, and a goal distinct from those of the other subsystems in the group. The concept of
the strategic business unit (SBO) was pioneered by General Electric (GE). At GE, there are over 200
strategic business units, each having its own strategies consistent with the organization’s corporate-
level strategy.

READ Factors Affecting Human Resource Planning

A single company that operates within one industry is also considered a business unit. For instance,
an independent company that builds and sells swimming pools is considered a business unit. In such
an organization, the corporate-level strategy and the business-unit strategy are the same.

Functional-level Strategy

Each business unit will consist of several departments, such as manufacturing, sales, finance, and
HRD. Functional-level strategies identify the basic courses of action that each of the departments
must pursue in order to help the business unit to attain its goals.

In formulating functional level strategies, managers must be aware that the different functions are
interrelated. A change in one department will invariably affect the way other departments operate.
Hence, the strategy of one functional area cannot be viewed in isolation. Rather, the extent to which
all functional strategies are integrated determines the effectiveness of the unit’s business strategy.

What is the role of the HR executive in strategy formulation? He or she should evolve his or her own
strategies which must be aligned with the corporate, unit and functional strategies. Motorola is a
vivid case. America based MNC has been riding a roller coaster for two decades. Through the 1980s,
the company’s market share was commanding. Profitability was excellent.
But in the early 1990s, the world of consumer electronics changed dramatically, as people began
spending more and more time out of the office-working from homes, in planes, and in hotel rooms.
They demanded faster, smaller, more integrated and energy-efficient electronics. At the same time,
competition for their business grew more and more intense. Major competitors sprang up in Europe
and Asia, which produced more attractive and easy affordable products. The competition resulted in
price cuts and heavy pressure on the bottom line of Motorola.

Working closely with line management, the HR professionals identified the culture that the increas-
ingly competitive environment demanded. The HR team provided a powerful agenda for integrating
staffing, performance management, training and development, structure, and communications with
common business focus and direction. This allowed HR to maximize its impact on performance. At
the core of the HR strategy was understanding the organizational culture and integrating the former
with business strategy.

READ Nature and Functions of Human Resource Management

Certain key steps in HR strategy formulation are worth recollecting in this context.

• Be clear whether the HR strategy is meant for corporate, unit or functional level strategies. The
decision is simple in as much as the same HR strategy shall be relevant for any level strategy.

• The next step is to identify the trends in the environment. Environmental scanning helps delineate
the major trends.

• The third step is to have a SWOT analysis of the firm. Scanning the internal environment of the
business helps list out its strengths and weaknesses and that of the external environment helps
identify opportunities and threats.

• The fourth stage is the identification of key HR practices. Key HR practices fall into four basic
categories.

The flow of People: Hiring, promotions, transfers, outplacement and training, and development

The flow of performance management: Measurement, rewards, and follow-up

The flow of information: Keeping the organization in touch with key external realities, managing
internal communications, and designing information technology infrastructure.

The flow of work: Organization structure, work process design, and physical arrangements

Strategy Implementation

Strategies formulated need to be implemented. The implementation of strategies is often more

difficult than its formulation. Implementing strategies require such actions as altering sales
territories, adding new departments, closing facilities, hiring new employees, changing an
organization’s pricing strategies, developing financial budgets, formulating new employee benefits,
establishing cost-control procedures, changing advertising strategies, building new facilities,
transferring managers among divisions and building a better computer information system.

Additionally, the HR function can contribute to strategic plans and actions of the firm in the
following ways:

(A) Encouragement of Pro-active Rather than Reactive Behavior

Being pro-active means that the firm has a vision of where it wants to go 10 years hence, and has
human resources who help it reach there.

READ Manpower Planning - Meaning, Need, Importance

(B) Explicit Communication of Goals

Generally, every firm shall have a goal and this must be communicated to all the employees.
Everyone should work towards reaching the goal.

(C) Stimulation of Critical Thinking

Managers often depend on their personal views and experiences to solve problems and make
decisions. The assumptions on which they make decisions can lead to success if they are appropriate
to the environment in which the firm operates. However, serious problems can arise if the
assumptions are no longer valid

(D) Productivity as an HR Based Strategy

The more productive an organization, the better is its competitive advantage. Perhaps none of the
resources used for productivity in organizations are as critical as human resources. Many of the HR
functions contribute to productivity. Pay, appraisal systems, training, selection, and job design are
HR activities that directly contribute to productivity

(E) Quality and Service are HR-based Strategies

Besides productivity, other factors that contribute to a firm’s competitive advantage are quality and
customer service. Quality can come from people, and realizing these firms are spending a vast sum
of money on quality training

(F) Proficient Strategic Management

It depends heavily on competent personnel, better-than-adequate competent capabilities, and

effective internal organization. Building a capable organization is obviously always a top priority in
strategy execution.

Strategy Evaluation

The strategic management process results in decisions that can have significant and long-lasting
consequences. The erroneous strategic decision can inflict severe penalties can be exceedingly
difficult, if not impossible, to reverse. Strategy evaluation, therefore, assumes greater relevance.
Strategy evaluation helps determine the extent to which the company’s strategies are successful in
attaining its objectives. Basic activities involve in strategy evaluation are:

1. Establishing performance targets, standards and tolerance limits for the objectives, strategies and
implementation plans.
2. Measuring the performance in relation to the targets at a given time. If outcomes are outside the
limits, inform managers to take action.

3. Analyze deviations from acceptable tolerance limits.

4. Execute modifications where necessary and feasible.

About Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related
topics. I hold a degree in MBA from well known management college in India. After completing my
post graduation I thought to start a website where I can share management related concepts with
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Clarifying the Strategic Role of HR

Dr John Sullivan August 21, 2006

HR “work” can be classified into five distinct levels from the basic to the most strategic. Those levels
include:

Level One –Information Management and Basic Transactions

Every HR department must provide basic information, answer employee and manager questions and
complete operational level transactions. These most would agree are the oldest and most
elementary of HR services and include:

Processing of new-hire documentation, payroll, separations and benefits enrollment/changes

Providing answers to employee and manager questions pertaining to policy, benefits, employment
law

Level Two – Providing Functional Services

In addition to level one activities a majority of HR departments provide several services that
comprise what many would agree are the essential services that keep an organization staffed. This
level incorporates many of the activities that create the standard functional areas within HR
including staffing, compensation and benefits, employee relations, and training. Each functional
department maintains its own goals and objectives and although there is some interaction, services
are provided relatively independent of each other. Several examples of activities that exist at this
level include:

The formation of standardized processes and policies for requesting more staff, developing staff,
compensating staff, and performance management

Basic reporting on the status of talent management efforts

Level Three – Coordination of Efforts to Improve Productivity

In level three HR activities begin to fall under the umbrella of some larger planned contribution and
take on more of a tactical emphasis. This coordinated effort exists to impact one of the primary goals
of every major corporation, increasing productivity. In the case of HR that goal translates into
increasing or maximizing workforce or employee productivity.

Any effort to directly impact workforce productivity requires specific resources dedicated to
improving productivity, metrics for assessing productivity and an organizational component that
encourages (or forces) the distinct HR functional departments to work as a team for this goal.

Improving the over-all productivity of the workforce requires that HR develop initiatives to
continuously increase the dollar value of employee output while maintaining or reducing the
average labor cost per unit.

The traditional HR functional work that goes on in level 2 is to isolated and finite in focus to have any
real impact on workforce productivity. In fact, typically none of the independent functional units in
HR even have workforce productivity as a goal. Some of the non-traditional HR activities that are
“added” to traditional functional offerings include:

Development of tools and strategies to retain key employees

The redeployment of employees from areas of low business impact to high

The introduction of non-monetary motivation and recognition systems

Usage of workforce analytics or metrics

Coordinated efforts for knowledge capture, sharing, and management

Level Four – Development of Competitive Advantage Through Talent

Level four signifies a major transition point as HR work begins to provide a strategic contribution.
Increasing competitive advantage is a focused effort to ensure that each key HR program and service
is best in class when compared directly to that of competing firms. In level four the focus of HR
efforts take on an external environmental component where prior to this every HR effort was
internally focused. Rather than simply tracking what competitors do, the goal in level four is to
identify and exploit weaknesses found in competing organizations. To date, only the most elite HR
organizations have funded efforts in this level. Typical competitive advantage building efforts
include:

Competitive analysis of people programs found in competing organizations

Workforce planning and productivity forecasting

Employment branding

Competitive intelligence gathering

Level Five – Develops Solutions to Strategic Business Problems and Opportunities

Level five represents the pinnacle of work providing strategic contribution in HR. Efforts in this level
go well beyond influencing employee productivity. They attempt to address strategic business
problems in areas such as product development, product/service quality, customer service and
corporate position. Few HR organizations attain this level of strategic contribution, of those that do,
most are found in performance driven cultures. Typical strategic business problem and opportunity
efforts include:

HR involvement in turnaround swat teams

HR consultation in product design and development efforts

Analysis of workforce management impact on time-to-market and innovation

Management of performance culture

HR involvement in merger and acquisition planning (prior to decision to MorA)

WHO IS HR’S CUSTOMER, MANAGERS OR THE EMPLOYEES?

It’s not unusual for HR departments and factions within each department to debate for hours about
“who is their customer?” For HR departments whose goal is to become a strategic partner that
debate should end quickly. All strategic businesspersons define their customer as the ultimate end-
customer of the firm’s products or services. Everyone and function inside the firm should have as
their priority increasing value to the end customer. However, when providing services internally it is
also important to define the internal customer.

During the 1990’s most HR executives listed earning a seat at the executive table as their most
important goal. Fortunately, many HR leaders succeeded and now enjoy a new level of visibility that
has dramatically changed the game and redefined the internal customer of HR services. To those
who have achieved senior leadership team status and those currently pursuing it, it should become
abundantly clear that if you wish to demonstrate strategic impact, you must define “your internal
customers” as the other senior managers of the corporation. There are a variety of reasons why
senior managers must become your primary HR customer. They include:
The senior managers are “by definition” strategic. They control resources and business units and as a
result, anyone expecting to have a strategic impact must seek their cooperation and support. Few if
any mid-level managers or employees can ever have a strategic impact, so defining them as
customers ends any chance of producing strategic results.

Senior managers have supervisory responsibility for the line managers under them. As a result, their
influence and cooperation are needed to help persuade managers and supervisors to follow your
advice and utilize your programs.

If HR executives want to be consulted in other areas of management, they must first establish a track
record within HR of advocating productivity, profit and attainment of corporate goals that are shared
by other members of the senior management team.

These points highlight the need to establish upfront that the senior managers of the corporation
(general managers and above) are HR’s primary internal customers. HR must identify the senior
managers business objectives and their expectations when it comes to HR and then design systems
to ensure that HR is contributing directly to meeting those needs and objectives. All HR plans,
services and performance metrics must be designed with the goals and objectives of this customer
set in mind.

Naming senior managers as a primary HR customer has been known to “irritate” some HR
traditionalists. Because they feel so strongly that HR should be an employee advocate it’s
appropriate to spend a little time demonstrating the negative business consequences of such an
approach.

Being Strategic Means Being A Proponent Of Productivity Not Employee Advocacy

Many traditional HR theorists and practitioners have cast the role of HR as that of an “employee
advocate” or someone who helps employees when they have conflicts with their managers. In sharp
contrast, others (especially those who advocate a performance culture) accept this notion as the
antithesis of being strategic. While neither position is totally “right or wrong”, the “employee
advocate” position has some inherent weaknesses. Some of them include:

Assuming that employees need an advocate categorizes them as second-class citizens that are not
capable of defending themselves. In addition, advocating for them might actually make them
weaker, which could eventually make them less capable of making decisions, advocating their own
position and pushing their ideas within the company

Making HR an employee advocate creates an “us against them” situation, when in fact increasing
productivity requires both managers and employees to work together as a team. Providing
employees with too many “third party” options might actually hurt direct employee/ management
relationships because instead of talking face-to-face they get in the habit of bringing in a third-party

In most countries, unions are by law advocates for the employee. Whether you have a union or not,
advocating for employees could be construed as usurping an employee’s right to representation

HR managers are paid by management and the business not by employees so HR might not even
appear credible to employees

HR professionals are paid by the corporation to represent the company’s interests. Because HR’s
strategic role is defined as increasing workforce productivity the HR department must assume the
role of “asset manager” for what in most cases is the most expensive corporate asset. Any focus on
workforce productivity and profitability can get blurred when HR considered the employee
perspective because quite frequently, employee self-interest is not consistent with increasing
productivity and profit. Whether we like it or not, HR’s job is to help get employees to do things that
they wouldn’t do “naturally”. If employees naturally produced at the highest level possible, we
wouldn’t need performance pay, incentives, rules, training and numerous other tools that help
manage talent.

It may sound a little “dehumanizing” on the surface, but the primary job is to increase the
workforce’s output using all the management tools available to us.

CLARIFYING HR’S ROLE AND RESPONSIBILITY IN MANAGING THE PEOPLE ASSETS

Often when HR professionals accept their role in increasing worker productivity and building a
performance culture they also, not to subtly, complain that it’s “unfair” to expect them to manage
workforce productivity because the actions of managers and employees and so many other factors
impact HR’s ability to produce results. Most would agree that accepting responsibility without
authority is difficult but not uncommon in today’s complex business world.The next few sections will
highlight the importance of HR accepting responsibility and accountability in spite of their lack of
control.

Being Strategic Means Taking Responsibility And Ownership For Things You Don’t Control

As previously established, being strategic means producing results that impact business objectives.
In order to take credit for success at something, you first must take responsibility for it. What that
statement means is, that if you want to take credit for some strategic result, you must first assume
some degree of “ownership” over that strategic area. In this case, HR needs to assume responsibility
and ownership for employee productivity, so that when employee productivity improves, HR can
legitimately take credit for their part in the accomplishment. Unfortunately, all too often HR
professionals want to take credit when productivity is high but they refuse to accept the blame or
responsibility when it falls.

Many people equate being strategic with having some degree of formal authority or control but
there is really no automatic connection between the two. Strategic individuals seldom have as much
power as they would like. For example, the CFO takes responsibility for all financial actions but in
fact, they have little direct power over how money is spent. In most cases, they don’t formally own
or even possess the funds that they must take responsibility for. Most of the CFO’s power comes
from educating and influencing others, not from any formal authority to change direction, make
product/service decisions, or even manage execution. In short, what CFO’s do is take responsibility
for the things that they have determined to be important to the success of the organization, even
though in most cases, they do not have total control or power over the entire situation.

In a similar light, even though HR is classified by some as an overhead function, (where overhead
functions do not by definition, have direct “line” manager authority) it cannot use this “I’m
powerless” excuse if it ever expects to be considered a strategic function. Strategic individuals,
rather than making excuses “find a way” to influence others, so that the net result is that people
together toward a common goal. Taking responsibility for things you don’t completely own or
control is known as the “captain of the ship” approach.

Non-strategic individuals in HR take a narrow perspective and accept only the responsibility for the
“operation” of people management systems. This narrow perspective guarantees you will not be
considered strategic because the very definition of strategic moves beyond taking responsibility for
the “operation” and instead focuses on taking responsibility for the “results”. If you accept this
broader view that HR is responsible for the “output” or results of the people management systems
(not just the operation of the systems), then you are already taking a strategic view of HR. If you
assume the “captain of the ship” role you must move beyond accepting responsibility for the
operation of all people systems and you must add to that the broader responsibility for the actions
and the performance of the employees, which were hired, trained, rewarded and appraised by using
those systems.

When you adopt this view, you accept the fact that you must advise, cajole, educate and somehow
influence managers and employees throughout the organization so that they can “execute” and
produce the highest workforce productivity.

Chief “People” Advisor To The CEO

Before leaving the topic of accepting responsibility for all people management, it’s important to
determine if there are any limits on that people management with regards to “responsibility and
ownership”. This important note is added because many individuals in HR assume that their people
results responsibility goes only in a downward direction. This means that while many vice presidents
of human resources accept their responsibility for the people and systems “below them”, few even
consider their people management responsibility “above them”.

Win HR takes an upward view, the question often arises “Who is responsible for advising the CEO in
the management of their executive team?” Unfortunately this is a question most VP’s of HR are
afraid to address. Yes it is true that technically the CEO is responsible for managing the executive
team but it’s equally true that not every CEO gets promoted to that level based on their strong
people management skills. There are numerous accounts of CEOs that lack people management
skills and as a result, the CEO’s executive team does not operate as an effective unit. I am not
proposing here that the VP of HR actually run the executive team but what I am suggesting is that
great VP’s of HR must “manage up” and serve as the chief people advisor to the CEO on the
management of his or her executive team.

HR TRADITIONALLY FOCUSES ON COSTS BUT INCREASING REVENUE IS MORE STRATEGIC

One final area that is important to address when defining the strategic role of HR is HR’s historic
emphasis on cutting costs. While cutting costs are important there are several reasons why it is
essential that HR shift its focus away from cost cutting and towards increasing output and revenues.

Every major corporation strives to increase its profits, however in striving to meet that goal it is
important to realize that there are two distinct parts of any profit loss equation, revenue and costs.
A business can increase profits into basic ways: first, by reducing costs and second, by increasing
revenue (either by charging more or selling more). HR has traditionally focused almost exclusively on
the cost cutting portion of the equation, quite possibly because cutting people cost is relatively easy.

Unfortunately, cutting people costs can have some disastrous consequences. HR’s long-standing
practice of “undercounting costs” is one of the prime reasons that HR fails to increase worker
productivity. “Undercounting” is the process of omitting the additional costs caused by a bad
practice or process because these “unintended consequences” are not directly connected to the
initial action by HR. Some obvious examples of dubious cost cutting and the “undercounting” might
include:
Hiring workers with fewer skills in critical positions is certainly cheaper than hiring individuals with
superior skills but it may negatively impact product quality and innovation

When top performing workers demand more money, they can be replaced with cheaper, albeit less
effective workers that in the long run creates the need to hire significantly more workers just to
maintain the same level of production

Ignoring market compensation rates and underpaying in salary and benefits that ultimately hinders
he ability to hire and retain top people

The substitution of low cost training for average cost training that results in increases in error and
safety rates

As you can see, there are some potential negative consequences of arbitrarily cutting costs without
simultaneously looking at the impact of cost cutting on revenues and productivity. In fact, any
accountant can blindly cut costs but it takes a true productivity expert to understand that cutting
costs and “undercounting” can actually have a significant negative impact on the firm.

The strategic target for HR should be to increase revenues and productivity while simultaneously
maintaining or reducing your relative labor costs. If you give any CEO a choice as to whether they
would prefer increasing revenues or cutting costs, they invariably pick the option to increase
revenues. This is because whenever you increase revenue in a competitive marketplace it’s obvious
that you are improving your products and services, which are long-term competitive advantages.
Short-term cost cutting might actually improve short-term profits but in the long-term, profits may
go down and careless cost cutting may permanently harm our competitive position and image
among customers.

CONCLUSION

Strategic HR presents a new challenge that few HR departments universally accept today, the
challenge of managing workforce productivity. For some the reluctance to accept accountability for
managing productivity is an issue of control, while for others it is the lack of a clearly defined
customer the muddles their existing efforts. Regardless, becoming strategic requires that all HR
efforts become coordinated and united under a uniform set of goals and objectives. Firms can use
the “Five Levels of HR Contribution” model to determine their current standing and map out a
course to becoming more strategic.

Foundation of SHRM
The SHRM Foundation is a values-based charity organization whose mission is to champion
workforce and workplace transformation by providing research-based HR solutions for challenging
inclusion issues facing current and potential employees, scholarships to educate and develop HR
professionals to make change happen and opportunities for HR professionals to make a difference in
their local communities.

The SHRM Foundation is a 501(c)(3) nonprofit organizational affiliate of the Society for Human
Resource Management.

VISION

Empowered HR professionals building inclusive organizations where all employees thrive, and
organizations achieve success.

MISSION

The SHRM Foundation champions workforce and workplace transformation by providing...

Research-based HR solutions for challenging inclusion issues facing employees and potential
employees.

Scholarships to educate and develop HR professionals and students to make change happen.

Opportunities for HR professionals to make a difference in their local communities.

PURPOSE

The SHRM Foundation is a values-based charity organization that champions workforce and
workplace transformation and inspires HR professionals to make it happen.

SHRM FOUNDATION SCHOLARSHIPS AND AWARDS

In 2017 alone, the SHRM Foundation set aside $500,000 in support to students seeking
undergraduate, graduate, certification and professional development opportunities. We encourage
all eligible SHRM members, student members, Chapters and State Councils and organizations to
apply for one or more of the scholarships and awards listed at
https://www.shrm.org/foundation/ourwork/scholarships/pages/all-deadlines.aspx

YOUR INVOLVEMENT

To support its important work, the SHRM Foundation conducts an annual fundraising campaign.
Your contribution is important in the continuation of the Foundation's work.

Please invest in HR students and professionals as well as the HR profession by contributing to the
SHRM Foundation. Your contribution is tax deductible.

THE RESOURCE-BASED VIEW OF SHRM - HR MANAGEMENT

« Previous Topics

Exploring The Relationship Between Strategic Management And Shrm: The Best-fit School Of Shrm

The Rise Of Strategic Human Resource Management

Approaches To The Strategy-making Process

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Best-practice Shrm: High-commitment Models

High-performance Work Practices

Human Resource Management In Context Introduction

The resource-based view of the firm (RBV) represents a paradigm shift in SHRM thinking by focusing
on the internal resources of the organisation, rather than analyzing performance in terms of the
external context. Advocates of the resource-based view of SHRM help us to understand the
conditions under which human resources become a scarce, valuable, organisation-specific, difficult-
to-imitate resource, in other words key ‘strategic assets’ (Barney and Wright, 1998; Mueller, 1998;
Amit and Shoemaker, 1993; Winter, 1987).

Proponents of the resource-based view of the firm (Penrose, 1959; Wernerfelt, 1984; Amit and
Shoemaker, 1993) argue that it is the range and manipulation of an organisation’s resources,
including human resources, that give an organization its ‘uniqueness’ and source of sustainable
competitive advantage. Their work has resulted in an ‘explosion of interest in the Resource-Based
perspective’ (Boxall and Purcell, 2003: 72), particularly in seeking ways to build and develop ‘unique
bundles’ of human and technical resources that will lead to enhanced organisational performance
and sustainable competitive advantage.

Barney (1991, 1995) and Barney and Wright (1998) contribute to the debate on strategic HRM in two
important ways. Firstly, by adopting a resource-based view (Barney, 1991; Wernerfelt, 1984), they
provide an economic foundation for examining the role of human resource management in gaining
sustainable competitive advantage. Secondly, in providing a tool of analysis in the VRIO framework,
and by considering the implications for operationalising human resource strategy, they emphasise
the role of the HR executive as a strategic partner in developing and sustaining an organisation’s
competitive advantage.

The resource-based view therefore recognises the HR function (department) as a key ‘strategic’
player in developing sustainable competitive advantage and an organisation’s human resources
(employees) as key assets in developing and maintaining sustainable competitive advantage.

The VRIO framework

The resource-based view of SHRM explores the ways in which an organisation’s human resources
can provide sustainable competitive advantage. This is best explained by the VRIO framework:

Value

Rarity

Inimitability

Organisation

Value

Organisations need to consider how the human resources function can create value; it is quite
common in organisations to reduce costs through HR such as the reduction in headcount and the
introduction of flexible working practices etc., but it is also important to consider how they might
increase revenue. Reicheld (1996) has identified human resources’ contribution to the business as
efficiency, but also as customer selection, customer retention and customer referral, thus
highlighting the impact of HR’s contribution through enhanced customer service and customer
added value.
This view is reflected by Thompson (2001), in recognising the paradigm shift from traditional added
value through economy and efficiency to ensuring that the potential value of outputs is maximized
by ensuring that they fully meet the needs of the customers for whom the product or service is
intended. The suggestion of the resource-based view is that if Human Resources wishes to be a
‘strategic partner’, they need to know which human resources contribute the most to sustainable
competitive advantage in the business, as some human resources may provide greater leverage for
competitive advantage than others.

Hamel and Prahalad (1993) therefore identify that productivity and performance can be improved by
gaining the same output from fewer resources (rightsizing) and by achieving more output from given
resources (leveraging). In order to achieve this, Human Resources may ask themselves the following
questions:

On what basis is the firm seeking to distinguish itself from its competitors? Production efficiency?
Innovation? Customer service?

Where in the value chain is the greatest leverage for achieving differentiation?

Which employees provide the greatest potential to differentiate a firm from its competitors?

This approach has further implications for the role of human resource managers in a firm, as they
need to understand the economic consequences of human resource practices and understand
where they fit in the value chain. Barney and Wright (1998: 42) suggest that the Human Resources
function needs to be able to explore the following questions:

Who are your internal customers and how well do you know their part of the business?

Are there organisational policies and practices that make it difficult for your internal clients to be
successful?

What services do you provide? What services should you provide? What services should you not
provide?

How do these services reduce internal customers’ costs/increase their revenues?

Can these services be provided more efficiently by outside vendors?

Can you provide these services more efficiently?

Do managers in the HR function understand the economic consequence of their jobs?

The value of an organisation’s resources is not sufficient alone, however, for sustainable competitive
advantage, because if other organisations possess the same value, then it will only provide
competitive parity. Therefore an organisation needs to consider the next stage of the framework:
rarity.

Rarity

The HR Executive needs to consider how to develop and exploit rare characteristics of a firm’s
human resources to gain competitive advantage. Nordstrom is an interesting case, because it
operates in a highly competitive retail industry where you would usually expect a lower level of skill
and subsequently high labour turnover. Nordstrom, however, focused on individual salespeople as a
key source of its competitive advantage. It therefore invested in attracting and retaining young
collegeeducated people who desired a career in retailing.

To ensure horizontal integration, it also provided a highly incentive-based compensation system (up
to twice the industry average), and it encouraged employees to make a ‘heroic effort’ to attend to
customers’ needs. Thus, by investing in its human resources, and ensuring an integrated approach to
development and reward, Nordstrom has taken a ‘relatively homogeneous labour pool, and
exploited the rare characteristics to gain a competitive advantage’ (Barney and Wright, 1998: 34).

Inimitability

If an organisation’s human resources add value and are rare, they can provide competitive
advantage in the short term, but if other firms can imitate these characteristics, then over time
competitive advantage may be lost and replaced with competitive parity. The third element of the
VRIO framework requires Human Resources to develop and nurture characteristics that cannot be
easily imitated by the organisation’s competitors. Barney and Wright (1998) recognise the
significance of ‘socially complex phenomena’ here, such as an organisation’s unique history and
culture, which can be used to identify nique practices and behaviours which enable organisations to
‘leapfrog’ their competitors.

Alchian and Demsetz (1972) also identified the contribution of social complexity in providing
competitive advantage, in their work on the potential synergy that results from effective teamwork.
They found that this ensured a rare and difficult-to-copy commodity for two reasons: firstly, it
provided competitive advantage through its causal ambiguity, as the specific source of the
competitive advantage was difficult to identify; secondly, through its social complexity, as synergy
resulted as team members were involved in socially complex relationships that are not transferable
across organisations. So characteristics such as trust and good relationships become firm-specific
assets that provide value, are rare and are difficult for competitors to copy.
The extract above (Box 2.3) demonstrates the strength of inimitability: SW Airlines exemplifies the
role that socially complex phenomena, such as culture, can play in gaining competitive advantage.
Top management attribute the company’s success to its ‘personality’, a culture of ‘fun’ and ‘trust’,
that empowers employees to do what it takes to meet the customers’ needs. This is reinforced
through an extensive selection process, and a culture of trust and empowerment reinforced by the
CEO. SW Airlines attributes its strong financial success to its ‘personality’, which CEO Kelleher
believes cannot be imitated by its competitors. So the human resources of SW Airlines serve as a
source of sustainable competitive advantage, because they create value, are rare and are virtually
impossible to imitate.

Organisation

Finally, to ensure that the HR function can provide sustainable competitive advantage, the VRIO
framework suggests that organisations need to ensure that they are organized so that they can
capitalise on the above, adding value, rarity and inimitability. This implies a focus on horizontal
integration, or integrated, coherent systems of HR practices rather than individual practices, that
enable employees to reach their potential (Guest, 1987; Gratton et al., 1999; Wright and Snell, 1991;
Wright et al., 1996).

This requires organisations to ensure that their policies and practices in the HR functional areas are
coordinated and coherent, and not contradictory. Adopting such a macro-view, however, is relatively
new to the field of SHRM, as ‘each of the various HRM functions have evolved in isolation, with little
coordination across the disciplines’ (Wright and McMahan, 1992). Thus there is much best-practice
literature focusing on the microperspective, for example on identifying appropriate training systems,
or conducting performance appraisals, or designing selection systems.

Although this literature has now evolved and recognised the ‘strategic’ nature of the functional
areas, it has tended to focus on vertical integration at the expense of horizontal integration, thus
there is still limited development in the interplay between employee resourcing, employee
development, performance, reward and employee relations strategies. This discussion is explored in
more detail in the next section: best-practice SHRM.

So, to conclude on the VRIO framework, if there are aspects of human resources that do not provide
value, they can only be a source of competitive disadvantage and should be discarded; aspects of the
organisation’s human resources that provide value and are rare provide competitive parity only;
aspects that provide value, are rare but are easily copied provide temporary competitive advantage,
but in time are likely to be imitated and then only provide parity.
So to achieve competitive advantage that is sustainable over time, the HR function needs to ensure
the organisation’s human resources provide value, are rare, are difficult to copy and that there are
appropriate HR systems and practices in place to capitalise on this. Mueller (1998), in advocating the
resource-based view of SHRM, argues that ‘the existing theorising in strategic HRM needs to be
complemented by an evolutionary perspective on the creation of human resource competencies’.

He echoes Mintzberg’s concerns (1987) that an overly-rationalistic approach to strategy-making

tends to focus too much attention on past successes and failures, when what is really needed is a
level of strategic thinking that is radically different from the past. He identifies a lack of theoretical
and empirical evidence to justify the emphasis on rational, codified policies of HRM, and reflects
Bamberger and Phillips (1991) in describing human resource strategy as an ‘emergent pattern in a
stream of human-resource related decisions occurring over time’.

Thus the strategic planning approach may be viewed by some as a ‘metaphor employed by senior
management to “legitimise emergent decisions and actions”’ (Gioia and Chittipeddi, 1991). Unlike
contingency and universalist theorists (Schuler and Jackson, 1987; Miles and Snow, 1978; Kochan
and Barocci, 1985; Pfeffer, 1994, 1998; Huselid, 1995), Mueller is more wary of the claimed
relationship between strategic HRM and the overall financial performance of an organisation. He
recognises that enlightened best-practice HR activities do not automatically translate into
competitive superiority but rather require more complex and subtle conditions for human resources
to become ‘strategic assets’.

He defines these as ‘the social architecture’ or ‘social patterns’ within an organisation which build up
incrementally over time and are therefore difficult to copy. The focus on ‘social architecture’ rather
than culture is deliberate as it provides an emphasis on developing and changing behaviours rather
than values, which are notoriously difficult to change (Ogbonna, 1992). Mueller identifies an
organisation’s ‘social architecture’ as a key element in the resource-based view of SHRM, together
with an embedded ‘persistent strategic intent’ on the part of senior management and embedded
learning in daily work routines, which enable the development of ‘hidden reservoirs’ of skills and
knowledge, which in turn can be exploited by the organisation as ‘strategic assets’. The role of
Human Resources is then to channel these behaviours and skills so that the organisation can tap into
these hidden reservoirs. This thinking is reflected in the work of Hamel and Prahalad (1993, 1994),
discussed below.

Applying the resource-based view of SHRM

In adopting a focus on the internal context of the business, HR issues and practices are core to
providing sustainable competitive advantage, as they focus on how organizations can define and
build core competencies or capabilities which are superior to those of their competitors. One key
framework here is the work of Hamel and Prahalad (1993, 1994) and their notion of ‘core
competencies’ in their ‘new strategy paradigm’. They argue that ‘for most companies, the emphasis
on competing in the present, means that too much management energy is devoted to preserving the
past and not enough to creating the future’.

Thus it is organisations that focus on identifying and developing their core competencies that are
more likely to be able to stay ahead of their competitors. The key point here is not to anticipate the
future, but create it, by not only focusing on organisational transformation and competing for
market share, but also regenerating strategies and competing for opportunity share. Thus in creating
the future, strategy is not only seen as learning, positioning and planning but also forgetting,
foresight and strategic architecture, where strategy goes beyond achieving ‘fit’ and resource
allocation to achieving ‘stretch’ and resource ‘leverage’.

The level of both tacit and explicit knowledge within the firm, coupled with the ability of employees
to learn, becomes crucial. Indeed, Boxall and Purcell (2003) argue that there is little point in making a
distinction between the resource-based view and the knowledge-based view of the firm, as both
approaches advocate that it is a firm’s ability to learn faster than its competitors that leads to
sustainable competitive advantage.Alternatively, Boxall and Purcell present Leonard’s (1998) similar
analysis based on ‘capabilities’.

These are ‘knowledge sets’ consisting of four dimensions: employee skills and knowledge, technical
systems, managerial systems, and values and norms. In this model, employee development and
incentive systems become a key driving force in achieving sustainable competitive advantage
through core capability. Interestingly, Leonard emphasises the interlocking, systemic nature of these
dimensions and warns organisations of the need to build in opportunities for renewal, to avoid
stagnation.

Hamel and Prahalad’s notion of ‘core competency’

When organisations grow through mergers or acquisitions, as they appear increasingly to do

(Hubbard, 1999), it has been argued that the resource-based view takes on further significance.
When mergers and acquisitions fail, it is often not at the planning stage but at the implementation
stage (Hunt et al., 1987) and people and employee issues have been noted as the cause of one-third
of such failures in one survey (Marks and Mirvis, 1982). Thus ‘human factors’ have been identified as
crucial to successful mergers and acquisitions.

The work of Hamel and Prahalad (1994) indicated that CEOs and directors of multidivisional firms
should be encouraged to identify clusters of ‘know-how’ in their organisations which ‘transcend the
artificial divisions of Strategic Business Units’ or at least have the potential to do so. Thus the role of
Human Resources shifts to a ‘strategic’ focus on ‘managing capability’ and ‘know-how’, and ensuring
that organisations retain both tacit and explicit knowledge (Nonaka and Takeuchi, 1995) in order to
become more innovative, as organisations move to knowledge- based strategies as opposed to
product-based ones.

The resource-based view of SHRM has recognised that both human capital and organizational
processes can add value to an organisation; however, they are likely to be more powerful when they
mutually reinforce and support one another. The role of Human Resources in ensuring that
exceptional value is achieved and in assisting organisations to build competitive advantage lies in
their ability to implement an integrated and mutually reinforcing HR system which ensures that
talent, once recruited, is developed, rewarded and managed in order to reach their full potential.

This theme of horizontal integration or achieving congruence between HR policies and practices is
developed further in the next section, best-practice approach to SHRM.

Limitations of the resource-based view

The resource-based view is not without its critics, however, particularly in relation to its strong focus
on the internal context of the business. Some writers have suggested that the effectiveness of the
resource-based view approach is inextricably linked to the external context of the firm (Miller and
Shamsie, 1996; Porter, 1991). They have recognized that the resource-based view approach provides
more added value when the external environment is less predictable.

Other writers have noted the tendency for advocates of the resource-based view to focus on
differences between firms in the same sector, as sources of sustainable competitive advantage. This
sometimes ignores the value and significance of common ‘base-line’ or ‘table stake’ (Hamel and
Prahalad, 1994) characteristics across industries, which account for their legitimacy in that particular
industry. Thus in the retail sector, there are strong similarities in how the industry employs a mix of
core and peripheral labour, with the periphery tending to be made up of relatively low-skilled
employees, who traditionally demonstrate higher rates of employee turnover.

Thus in reality, economic performance and efficiency tend to be delivered through rightsizing, by
gaining the same output from fewer and cheaper resources, rather than through leverage, by
achieving more output from given resources. The example of B&Q in the UK, employing more
mature people as both their core and particularly their peripheral workforce, is a good example of
how an organisation can partially differentiate themselves from their competitors, by focusing on
adding value through the knowledge and skills of their human resources.
Thus leverage is gained, as the knowledge of B&Q’s human resources add value to the level of
customer service provided, which theoretically in turn will enhance customer retention and
therefore shareholder value. An exploration of the empirical evidence to support this relationship
between SHRM and organisational performance is discussed in more detail in the next section: the
best-practice approach to strategic human resource management.

Five Different Perspectives of Human Resource Management

2010-06-30

Resource Management

The Normative Perspective

The Critical Perspective of Human Resource Management

The Behavioral Perspective of Human Resource Management

The Systems Perspective of Human Resource Management

Agency or Transaction Cost Perspective of Human Resource Management

References

The Normative Perspective

The normative perspective of human resource management bases itself on the concepts of “hard
HRM” and “soft HRM,” on which the foundations of human resource management rest.

The concept of “Hard HRM” is the basis for the traditional approach toward human resource
management. This concept traces its origins to the Harvard model that links workforce management
to organizational strategy. Hard HRM stresses the linkage of functional areas such as manpower
planning, job analysis, recruitment, compensation and benefits, performance evaluations, contract
negotiations, and labor legislations to corporate strategy. This enforces organization interests over
the employees' conflicting ambitions and interests. It views the workforce as passive resources that
the organization can use and dispose at will.

Soft HRM is synonymous with the Michigan model of human resources and is the bedrock of the
modern approach to strategic human resource management. This model considers human capital as
“assets” rather than “resources” and lays stress on organizational development, conflict
management, leadership development, organizational culture, and relationship building as a means
of increasing trust and ensuring performance through collaboration. This approach works under the
assumption that what is good for the organization is also good for the employee.

Image Credit: flickr.com/ken lund

The Critical Perspective of Human Resource Management

The critical perspective of human resource management is a reaction against the normative
perception. This highlights some inherent contradictions within the normative perspective.

This perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies
when they actually enforce hard HRM. A study by Hope-Hailey et al. (1997) finds that while most
organizations claim employees to be their most important assets and make many commitments for
their welfare and development, in reality employers enforce a hard HRM-based strategic control,
and the interests of the organization always take priority over the individual employee.

The Behavioral Perspective of Human Resource Management

The behavioral perspective of human resource management has its roots in the contingency theory
that considers employee behavior as the mediator between strategy and organizational
performance. This theory holds that the purpose of human resource intervention is to control
employee attitudes and behaviors to suit the various strategies adopted to attain the desired
performance. This perspective thus bases itself on the role behavior of employees instead of their
skills, knowledge, and abilities.

For instance, an organization aiming to innovate will require a workforce that demonstrates a high
degree of innovative behavior such as long-term focus, cooperation, concern for quality, creativity,
propensity for risk taking, and similar qualities. The role of human resource management in such a
context is to inculcate and reinforce such behavioral patterns in the workforce.

The Systems Perspective of Human Resource Management

The systems perspective describes an organization in terms of input, throughput, and output, with
all these systems involved in transactions with a surrounding environment. The organized activities
of employees constitute the input, the transformation of energies within the system at throughput,
and the resulting product or service the output. A negative feedback loop provides communications
on discrepancies.

The role of human resource management in the systems perspective is

Competence management to ensure that the workforce has the required competencies such as skills
and ability to provide the input needed by the organization.

Behavior management through performance evaluation, pay systems, and other methods to ensure
job satisfaction, so that employees work according to the organizational strategy, ultimately
boosting productivity.

Setting up mechanisms to buffer the technological core from the environment in closed systems.

Facilitating interactions with the environment in open systems.

Agency or Transaction Cost Perspective of Human Resource Management

Different Perspectives of Human Resource Management

Among the different perspectives of human resource management is the agency or transaction cost
perspective, which holds the view that the strong natural inclination of people working in groups is
to reduce their performance and rely on the efforts of others in the group. When one person
delegates responsibility to another person, conflicts of interests invariably arise.

The major role of human resource management in such a context is to promote alternative ways of
controlling behavior to reduce the effects of such conflicts and minimize the cost to the organization.
The two major approaches include

Monitoring employee behavior and preventing shrink of work by establishing effective control
systems and improving productivity.

Providing employees with incentives such as rewards, motivation, and job satisfaction to increase
their individual performance.
The human resource department needs to adopt the approach that minimizes transaction cost to
the organization.

A FRAMEWORK FOR STRATEGIC HR MANAGEMENT - STRATEGIC MANAGEMENT

« Previous Topics

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Borrowings

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What Are The Factors Affecting The External Environment/assumptions ?

A Strategic Approach To Management Development And Training

A Strategic Approach To Competency Assessment

Strategic HR management is characterized by focusing more on strategic rather than operational

issues. However,the administrative work must still be done efficiently. Strategic HR management
involves making the function of managing people the most important priority in the organization,
and integrating all human resource programs and policies within the framework of a company's
strategy. Strategic HR management recognizes that all decisions on finance, marketing, operations or
technology are made by an organization's people.

Strategic Hr Framework Approach

Strategic HR management involves the development of a consistent, aligned collection of practices,

programs, and policies to facilitate the achievement of the organization's objectives. It considers the
implications of corporate strategy for all HR systems within an organization by translating company
objectives into specific people management systems.The most important consideration of strategic
HR management is that there is no one best way to manage people.

Therefore, the specific approach and processes will vary from organization to organization. It may
even vary in an organization with clearly defined business units or functional areas. However, all HR
programs and policies must be consistent and must therefore be integrated within a larger
framework, leading to the facilitation of the organization's vision and its objectives.Human resource
management has been traditionally defined as the set of philosophies, processes and procedures a
firm uses for the following four basic tasks:
Managing the entry and exit process. The HR function has normally been responsible for recruiting
people the organization would need in the future. Therefore, manpower forecasts are made and a
corresponding plan is made. HR managers have also been involved in the exit or separation process.
This is normally done by retirement or by having the employee fired.

Managing the growth and development process. There are traditional HR tasks such as orientation
or socialization, training and development, and performance appraisal. Processes are also designed
so that employees understand the overall scope and direction of the organization.

Managing the reward and recognition process. Rewards come through the administration of
compensation and benefits, and recognition comes in the form of promotion, job assignments and
rotation. However, the process of rewards and recognition includes the countermeasures of
demotions and disciplinary action. Performance appraisal is also a critical input into the reward and
recognition system.

Managing the overall organization climate. In the highly competitive and rapidly changing business
environment of today, it is necessary to foster a climate that challenges employees to better levels
of performance. Of course, the organizational climate is not a variable to be managed or designed.
However, it is necessary for all the organization's processes and procedures, from its compliance
with the law to its new strategic initiatives, to be aligned.

In the shift from traditional HR to strategic HR, there are a number of issues which HR practitioners
must contend with. The first is whether the main responsibility for people management programs
should rest with staff specialists in the corporate HR department, or with the line managers who are
the ones most in contact with the workers. Traditional HR assumes the role of handling transactions
as they arise.

These may involve compliance with changing laws, rectifying problems between supervisors and
subordinates, recruiting and screening applicants for current needs and basically responding to
events after these happen.Figure sets out the framework in diagrammatic form. The heart of the
model holds the vision, values, objectives and strategies of the organisation. These should drive the
strategies and policies of the activities in the middle ring. As mentioned, there is a two-way
influence, in that the activities in this ring can affect the corporate strategy.

The inner-ring activities are management development, manpower planning, succession planning,
climate and culture, competency assessment, and a group of policies towards recruitment,
remuneration, and industrial relations. The activities in this group may vary in their degree of
strategic importance from time to time.In planning HR activities a starting point should be the
corporate strategic elements at the heart of Figure. There are a number of steps to go through which
are illustrated in Figure. Most of this diagram is self-explanatory, but two steps are worth stressing.
The figure suggests that if the HR department is not given access to the strategic information, the
whole planning process should be abandoned. It also suggests that if no plan exists, and it is not
possible to clarify the strategy officially, assumptions should be made. The different view taken is to
do with how the HR department is perceived. If in good esteem, it is worth making assumptions to
fill gaps. If not esteemed highly enough to share the plan, then assumptions would be a waste of
time because someone else has the true picture, and assumptions from a source that lacks
credibility would have no meaning. The implication of what I am saying here is that no worthwhile
strategic plan for HR can be prepared if the function is shut out from other strategic discussions: in
addition, no organisation that excludes HR can expect to produce sound strategies that are capable
of being implemented.

There is a box in Figure which questions the depth of the analysis. This is a point born from
experience and supported by Harbridge Consulting Group research. It is possible to treat a de-
layering and downsizing decision at two levels. The first is the obvious one, of redundancy actions,
early retirement, and communication. The second is more subtle, like how do we make the
organisation work now that we have de-layered? This involves new management processes such as
empowerment and performance management, and the training that enables both the empowered
and the empowerers to understand how to make the new concept work. The research showed that
very few companies were thinking at the second level. It is not surprising that the sort of motivation
problems identified in Scase and Goffee11 should be found when no action is taken to make the new
organisation function.

Human-resource management and corporate strategy

corporate plan in HR terms

Figure shows how to begin to see the corporate plan in HR terms. The example is illustrative only,
and the examples are deliberately kept at a simple level to show the method. Behind each tick
should be a list of explanations: for example, what is it that management development will have to
do to support the de-layering strategy? It is worth mentioning that few strategic plans are written
with HR in mind, and that very often HR thinking will not appear in those plans.

There is always a need for intelligent interpretation, and it may often be necessary to take the
interview route suggested in Figure to fill some of the gaps. An alternative to one to one interviews
is to organise a meeting where senior managers are persuaded to think through the HR implications
of the plans. The point is that in this type of thinking is new to the company it may be rather more
ragged than the figures suggest. This is how experts earn their keep!
Conceptual Framework of Strategic Human Resource Management Analytical Essay

Available only on IvyPanda

Updated: May 27th, 2020

Introduction

Globalisation and IT integration have reshaped the business world with free flow of human
resources crossing the limit of national boundaries and mass media has deliberated to the quick-
changing competitive business environment where the theoretical framework of strategic human
resources management (SHRM) is gaining central attention to respond to the business performance.

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The essential arguments rose from the conceptual perspectives how the organisation’s resource-
based presumptions of competitive advantage would contribute to the implications of SHRM linking
with theories and models of HRM practice.

This paper has designed with conceptual framework of SHRM, its model and relationship with
competitive advantage, linking corporate strategy with HR strategy, and organisational performance
under SHRM practice. To come into conclusion, this paper also integrated the raising challenges to
HRM that has driven the organisations towards the practice of SHRM.

Raising Challenge to HRM

Ansari and Babu (2010) pointed out that the poses of globalisation and IT integration in the business
arena has raised tremendous challenges to the traditional HRM practice particularly who are
working outside of the national boundaries, such as MNCs while the different international alliances
and unions have confirmed free flow of HR and financial resources within their territories.

Ulrich, et al. (2008) added that, such advancement has deliberated new market characteristics that
put emphasis on the requirements to deal with HR successfully to achieve competitive advantage in
the comprehensive marketplace.
To meet these demands, it is essential for the organisations to identify and understand the factors
those can resolve the needs of effectual HR practices.

Different counties have diverse dimensions those persuade the charisma of attracting FDI1 and such
factors determine the economic feasibility to establishing a foreign operation for an organisation
and it will bring predominantly strapping impact on the existing HRM of that country.

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There are various factors those have an effect on HRM practice in the global arena such as social and
organisational culture, economic system, existing legislation of the country and human capital and all
these factors possibly have measurable challenges to the traditional HRM where SHRM facilitate the
organisations to gaining competitive advantage.

Conceptual Framework of SHRM

Datta (2007) pointed out that SHRM is an approach of decision making relating to the organisational
objectives connecting people rather than employees who are essential to implementing the business
strategy of the organisation.

At the same time, SHRM sets up a rapport connecting HRM with Strategic management while SHRM
aimed to clarify the whole course of action that the organisation would like to accomplish its
objectives by the concerned people.

Wright (1998) added that as a component of the strategic management, SHRM would consider to
handling with all people linked with the business for long-term and integrate inclusive issues of the
organisational structure, its culture, managerial effectiveness, performance, resources, as well as
changes of management that deals with HR actions applied to support the competitive strategy of
the organisation.

Jakson and Schuler (1995) indicated SHRM as a means and approach of supporting the management
of HR connecting with the strategic context of the business while it aimed to endow with an intellect
to directing any disorderly environment of the organisation towards an ordered and coherent way
adopting effectual actions and policies.
Becker and Huselid (2006) explained that the SHRM takes into account those verdicts and course
actions to managing the employees of all stages in the way that rooted to the direction of generating
sustaining competitive advantage for the organisation.

Sheehan (2005) explored that SHRM should make available of guidelines to selecting triumphant
action to gaining eventual trial of the authenticity of strategic HRM where HR is considered a
strategic issue for overall corporate function and evidence.

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To implementing SHRM, it is essential to enlarge the existing strategy of the organisation with clear
reflection on the HR dimensions and comprehensible guidance for the HR management regarding
their responsibility and accountability.

Datta (2007) also mentioned that a great deal of the literature endows with the facts of strategic
amalgamation, but it is necessary to address the reasons why strategic incorporation would be
advantageous to organizations.

The wider viewpoint of modern business advocates to amplify the input of HR reflections within the
strategic planning with an outlook to caring employees as an asset of the organisation ensuring their
further participation and apprehension through effectual communications, result oriented
procedural practices, well aliened training, reward and career expansion opportunities concerned
with performance.

Schuler and Jakson (1987) explained the necessity of SHRM arguing that it will provide well-built
visionary and captivate leadership at the top of the organisation that dedicated to the exposed
missions and values with clear understanding to the business strategies, eager to implementing
them effectually, positive focus to the critical success factors, and friendly to working consistent
management team.

Model for SHRM

Delery and Doty (1996) introduced the two stages model of SHRM while Truss and Gratton (1994)
presented the three stages model to deliver the process of SHRM. Krishnan and Singh (2006)
integrated both the two stages and three stages strategy into a single platform and presented a
modified version that has demonstrated in diagram – 1 with explanation of the three stages.

Wright (1998) pointed out that the first stage is to put together with the business strategy and
decode this connecting with the strategic objectives of HRM while the HR strategy generates from
the strategic objectives of HRM.

The next level is to put into practice of HRM systems supporting the HR strategy while the
concluding level is to weigh up and reviewing the efficiency as well as strategic incorporation of the
HRM systems within the organisation.

The course of action of SHRM is enough dynamic with the three levelled strongly inter-linked
procedure including diverse enablers and deterrents for every level, which are the organisational
factors to assist the course of action of SHRM practice.

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Three Stages SHRM Model with Enablers

Diagram – 1: Three Stages SHRM Model with Enablers

Source: Krishnan and Singh (2006)

The above model is a modified version of both two and three stage method of SHRM practice where
the horizontal configuration presents assorted HR practices as well as the connections of then with
strategic objectives including the entire five major features of SHRM.

The First Steep of SHRM Model

Krishnan and Singh (2006) described that the elementary stage of the model endow with the basic
opinion for commencing efficient SHRM and the organisation considers its HR department just like a
business collaborator and facilitate it with the opportunities to be a convenient partner.
At this level, the strategy team would put together the business strategy where the integration of
the HR departmental head as top of the team would generate the organisational strategy that aimed
to build up a positive strategic association with the HRM systems of the organisation.

Delery and Doty (1996) mentioned that, both the external and internal environment of the
organisation would seriously influence the strategy formulation where the external factors identified
as environment of the product market and level of competition, labour market condition including
demography, politics, legislation, and economic circumstances together with external stakeholders
of the organisation.

Trussa & Grattona (1994) added that the organisational factors have been identified as the
organisational state of affairs that stand for different departments as well as functions, which
contribute to put together the business strategy integrating with people’s management factors and
all other internal factors.

One of the key factors for successful execution of SHRM is the requirement of competencies at HR
while the other necessary factors are the organisational capacities, training the HR to improve and
meet up the existing gaps, identifying critical factors for HR strategy and competencies to executing
business strategy including HRM components.

The Second Steep of SHRM Model

Wright (1998) pointed out that the second step of SHRM is to putting into operation of a range of
HRM systems supporting the HR strategy connecting through vertically, horizontally, and temporally.

Truss and Gratton (1994) identified that the vertical linkage involved with HR selection, recruitment,
performance measure, reward, training and career development while the horizontal linkage
integrated with HRM related policies and practices and the temporal linkages concerned with
organisational development and sudden changes through automation or for any merger.

Integration of Information System within HRM practice and outsourcing also contribute the HR
department to implementing SHRM while the first step and second step of the model has interlined
as a strategic partner (Krishnan and Singh, 2006).
The Third Steep of SHRM Model

Krishnan and Singh (2006) mentioned that the third steep of SHRM the model concentrated to
assessing and reviewing the efficiency of HRM systems including their strategic amalgamation to
gaining strategic objectives as an essential component of SHRM.

At this stage, the total HRM systems supporting business strategy would be evaluated with aim to
determining the effectiveness of the HR practices and presentation through scrutinising the
association between the three steps.

It is essential for the HR department what are the standard and measures to assessing the progress
as the model involved with different survey and reviewing process while some of the theoretician
suggest to measuring the productivity of employees in terms of financial returns, others argued for
turnover as well as advanced performance shaping the intensity of strategic integration.

SHRM & Competitive Advantage

Elliott (2006) identified three major standpoints that have come into sight to delivering competitive
advantages from SHRM practice and the first one is Universalistic viewpoint that engage with a HRM
practice to ensure prolonging competitive advantage, but a number of researchers disagreed with
this view.

Guest (1997) put down to a contingency viewpoint as well as argue that one organisation to another
the HR strategy and practices would be dissimilar for which the HR practices are not quite synergistic
and dependable with organisational strategies and may equally unfavourable for both individual and
organisational performance.

Delery, et al. (1996) and Bobko, et al. (2008) explained the configurational viewpoint of SHRM that
support the HR practices to contribute the organisational performance and to attain business
objectives fitting with configurational perspectives that put forward the organisation to establish the
HR system complying with both horizontal and vertical fits.

SHRM to linking Competitive Advantage & HR Strategy

Elliott (2006) and Inyang (2010) established the linkage of competitive advantage and HR practices
based on SHRM with the resource-based framework for which it is essential to highlight on the
following points-
Human capital resources as valuable: organisations must provide highest value and care to the HR
treating it as tremendous source to provide competitive advantage where the demand and supply of
workforce are heterogeneous to the organisation (Miles & Snow, 1984);

Human capital resources as rare: Under this approach of SHRM, the rarity of human capital has
derived of HR expertise and capabilities altitude as well as predestined on the proposition HR skills
and competencies as a rare feature;

Human resources as inimitable: The SHRM scholars delivered this approach arguing that HR is
inimitable to generate sustained competitive advantage for the organisation based on complex
social networks (Elliott, 2006 & Wright, 1998).

This SHRM loom applying the HR practices is further fitting from resource-based observation to
deliver competitive advantage for the organisation to systemically to control and administer the HR
pool through implementation HR behaviour that has demonstrated in the following diagram – 2:

Model for HR as Foundation of Sustained Competitive Advantage

Diagram – 2: Model for HR as Foundation of Sustained Competitive Advantage

Source: Elliott (2006)

Linking corporate strategy with HR strategy:

Porter (2009) clarified the corporate strategy as an overall road map for the diversified organisations
though there is long gap among the top management to understanding the core context of
corporate strategy and the root to implication.

A diversified organisation belong to double ranked strategy that formed with business unit strategy
and corporate strategy with reference to two queries – first one is for which business the different
units would go for and the second query is how the corporate office would administer the
assortment of business units.

The corporate strategy drives the diversified organisations add and sum up the activities of the
business units including portfolio management, reengineering, transmitting skills, and shared vision
and activities where the HR is the vital strength for implication.
Deloitte (2009) added that the key success factors for the modern diversified organisations have to
taking into account their people first as the ultramodern HR executives have to face the challenge to
enlarge the well-organised, effectual, and influential, but easygoing solutions for the people related
to the business.

It is enough complicated to settle on the exact input of HR function to gaining such objectives, but
integrating SHRM framework it will exclusively contribute the organisations to reinforce the strategic
responsibility of HR function supporting the business strategy.

Ulrich, et al. (2009) added that recognising the human capital value, this approach uphold the
corporate strategy through transforming business strategy into actionable HR strategy, then
transforming HR strategy into people’s initiatives and programs of the organisation identifying the
best fit to motivate and retain existing employees and pull attention of the new workforce.

Consequently, the entire process would contribute the organisation to survive and grow up by
accelerating the greater shareholder value (Delery, et al., 1996).

Boxall and Purcell (2000) investigated and identified a number of logical linkages among the HR
strategies and corporate strategies where the major acquaintance set up through the portfolio
theory that correspond to the market growth rate considering as a function market share and the
adoption of HR strategies would generate a changing organisational circumstances.

Graetz, et al, (2010) recognised other linkages such as value chain that endorse with service quality,
continuous innovation, sensitivity where the HR treated as a critical success factor complying with
complexity, emergence, and organisational structure.

SHRM and Organisational Performance

Ansari and Babu (2010) emphasised on the elevated utilisation of SHRM and put forward arguing
that the practices of SHRM would constantly carry on superior organisational performance ensuring
long-term inducement policies for the HR executives to enhancing ROI (return on investment).

Graetz, et al. (2010) identified that the well extent of managerial reimbursement has direct influence
on the future financial well-being of the organisation while Delery and Doty (1996) argued that the
pay-mix have straight interconnection with the financial performance of the organisation as well as
to appointing most excellent staffing would bring successful outcomes in practice.

Robson (2008) presented the example of Brunt Hotels, PLC, a British company with sixty hotels in the
UK and it has recently purchased an undersized hotel chain in France while the strategic objective of
the company is growing gradually with sure shot new ventures within budget.

The company decided to utilise the generic framework of SHRM approach integrating enhanced
training, excellent pay-mix, and vertical and horizontal fits for the HR while the company sends few
of the UK-based managers to train the new HR in France.

Consequently, the company jumped into a remarkable position acquiring more 152 hotels within the
next few years that proved enough evidence of success SHRM and organisational performance.

human resources and business strategy

Reading time: about 7 min

Posted by: Lucid Content Team

Many considerations go into creating a go-to-market or business strategy. From brand messaging to
product roadmaps to sales processes, effective business strategies also rely on the input of lots of
people across many departments.

Few departments have a better bird’s-eye view of the entire organization than human resources. HR
professionals can see both why a strategy exists and how it’s developed and implemented. Yet, too
often, HR departments don’t have a seat at the strategy table. Let’s take a look at how HR can help
shape business strategy and bring it to life.

Why HR should get involved with setting corporate strategy

Today, business moves faster than ever—it’s a platitude, but it’s also never been more true.
Technologies, industries, and consumers themselves are continually evolving in a digitally-driven
market, and companies are continuously shifting their strategic focus to keep pace.
This culture of change has a significant impact on people. Every business decision has a real-life
impact, and HR departments are specially equipped to inform strategy and help employees navigate
the resulting changes.

Consider these reasons why it’s so important for HR to align with business strategy:

Move in lockstep with the rest of the company: Goals are always more achievable when there is
universal buy-in and alignment across teams.

Give HR initiatives a strategic focus: In today’s changing economy, there are countless ways to
recruit, train, attract, invest in, and support employees. But it’s impossible to tackle every initiative
all at once. Aligning with business strategy gives HR a strategic focus and helps prioritize goals.

Secure the right talent: Good talent is always valuable, but companies may need to invest in
different skill sets or roles at different times. Understanding the strategic goals of the business will
help HR attract and retain the right talent at the right time.

What role human resources plays in strategic planning

So how does HR become part of the broader business decision-making process? How do HR
departments move from a reactive, service-oriented function to a more executive-level, strategic
one?

It starts with setting clear objectives for the department and strong values for the entire
organization. Companies with documented values are less likely to ignore the real-life impact of any
strategy shifts or big decisions. Consider these steps as you begin.

1. Align and set your HR goals

The main strategic role of HR is to create goals to help meet key business objectives. Goals may vary
depending on the company’s strategic plan, but focusing on HR fundamentals is an excellent place to
start. Here are some areas of HR most commonly affected by broader strategic business shifts.

Organizational structure

The way companies are organized largely depends on their current strategic objectives and growth
stages. If a company is in a high-growth stage, it may have a sales-driven culture with more sales
employees and sales executives in decision-making roles. Mature companies with a retention-
focused strategy may hire more customer success roles.
illustration of people working together

See 7 types of organizational structures—along with pros and cons for each—to find one that fits
your strategy.

Read more

Employee compensation

Maybe current business goals are more focused on employee retention or culture-building.
Conversely, perhaps the company needs to cut costs. In either case, compensation structure may be
an important consideration. When HR is aligned and informed on these goals, they can make
strategic decisions to help the organization meet them.

Employee development

Depending on the business goals and immediate initiatives, it may be necessary to train employees
on new skill sets. Some employees may resist additional roles and responsibilities, so the role of HR
in these situations is to both evangelize additional training and ensure teams are developed to keep
pace with shifting needs.

Performance reviews

Clear business strategies are also tied to clear KPIs. With HR aligned on these performance
benchmarks, it can better evaluate employee performance and provide more actionable feedback
during review discussions.

Change management

As a people-focused department, HR often has the best pulse on employee sentiment throughout
the organization. It makes sense, then, that HR can act as effective advocates and change agents in
implementing business strategy, creating a blueprint employee engagement and success. HR
departments can encourage employees to share their feedback on new business strategies or
technology investments to ensure any changes or strategic shifts make sense from an operational
perspective.

2. Formulate specific actions to hit those goals

Once you’ve aligned and set goals, it’s time to develop action plans to execute your HR strategic
vision. Focus on developing and improving processes for recruiting, hiring, employee development,
and performance reviews.

When creating an optimized action plan, it’s important to have a clear understanding of your
organization’s current structure and identify any gaps or shortcomings in your processes. Where
should you invest more in recruiting? If budgets are tight, what training or employee development
programs need to be in place to maximize the productivity and effectiveness of your existing talent?
How many sales reps does HR need to hire in a specific territory?

The ability to visualize where every player fits into the larger organization can help HR departments
align employees to business strategy, maximize efficiency, and see data in context to drive better
decisions. Org charts and related visuals can help HR departments optimize organizational structure
at every level and make better people decisions, such as:

Assigning employees where their skills can make the most significant impact

Making informed decisions about pay, equity, and performance

Modeling current and future org structures to determine how best to scale your business

Does your organization needs to hire new talent to meet its strategic goals? See how to develop a
staffing plan.

Read more

3. Track and measure performance

Historically, the role of HR has lied in the “softer,” people-focused side of the business. However,
people analytics are now the new HR, and HR departments are just as responsible for reporting on
the performance of their initiatives as any other department.

With human resource alignment around data-driven goals, HR leaders can ensure that decision-
making not only aligns with strategic business objectives but also helps drive those goals. HR leaders
can analyze data from sales, marketing, and accounting to break down departmental silos and better
align with overall business goals.
Data-driven human resource alignment

According to a Bersin by Deloitte study, data-driven HR teams are four times more likely to be
respected by their business counterparts, which can result in more input in strategic decision-
making. By combining departmental data and HR data and visualizing it all in a single workspace, HR
departments can better align their decisions to business strategy. Consider the ways these types of
people analytics can impact the broader business:

Employee analytics: Measure the performance of all the HR initiatives in terms of cost, time,
performance, then use a dashboard to track recruiting times, onboarding speed, employee
satisfaction, and employee salaries. This data-driven approach to people management helps HR
departments evaluate pay disparities, track employee retention, identify trends, and see critical
employee metrics that will provide quick insights for better decision-making.

Benefit: Efficient onboarding, improved employee satisfaction, and retention

Talent analytics: Today, effective talent acquisition goes way beyond budget and headcount. HR
departments can rely on algorithmic data to quickly sift through deep pools of qualified applicants to
attract and retain top talent.

Benefit: Identify and attract higher-quality employees and improve workforce planning

Predictive analytics: Set up indicators to see when an employee is at risk of leaving the company. HR
departments can use data to identify risk facts and predict employee churn and how this will affect
the company.

Benefit: Better retention and employee planning

Invest in better people planning

Modern human resources departments manage much more than hiring, onboarding, and benefits.
Aligning HR with business strategy can boost employee satisfaction and performance, ensure teams
are aligned to help the business achieve its strategic objectives, and increase their influence and
decision-making power across the organization.
Five ways HR really can impact business strategy

Published Oct. 15, 2015

By Tom Starner

Contributing Editor

Many experts believe that HR has a holistic perspective on talent alignment to the business strategy.
Those who follow the HR space, in fact, know that helping with “business strategy” is arguably the
profession’s Holy Grail.

According to two experts in organization transformation at BPI group North America, HR is in a

unique position to help leaders understand that how strategy is developed is just as important as
what the strategy is. They say HR has the tools, competencies and capabilities to support the
organization in bringing the strategy to life.

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Silvia Masini, managing director, Organization Transformation & People, BPI group, and Emily Smith,
senior manager, Organization Transformation & People, BPI group, shared some thoughts with HR
Dive on the five most critical roles today for HR in shaping business strategy.

Ensure alignment around the organization’s vision and values as a solid foundation for strategy

Business leaders sometimes focus so much on strategic planning and day-to-day operations that
they can lose sight of the core of the organization – the vision and values. HR, as organization and
talent experts, can “re-ground” business leaders in the vision around what the organization’s
purpose is and the values that drive people’s motivations and behaviors. HR, in facilitating
discussions with the leadership team, can refocus the organization on what’s important and reignite
the vision and values.
HR leaders can also play a powerful role by modeling organizational values in their own team’s
behavior and actions, which can be especially helpful during the changes that a new strategy
creates.

Keep culture top of mind as an enabler of strategy

The best of strategies can be derailed by a dysfunctional culture. A great culture powerfully enables
the right strategic vision and plan. Leaders must think carefully about how their organization’s
culture aligns and support its strategy.

As the only function with an organization-wide view on employee’s performance and effectiveness,
HR is ideally positioned to drive the right conversations about the current culture and how the
culture may need to evolve to support the strategy. The most successful HR leaders help leaders and
employees alike articulate the desired culture in specific, relatable examples and behaviors.

Help leaders clearly identify and articulate the people components of the strategy

While the organization’s financial goals are often front and center in a top-level strategy, in most
organizations, people and talent priorities are equally important. These may include attracting and
retaining top talent, developing new core capabilities, or enhancing diversity and inclusion – all of
which are driven or supported by HR in some way. HR can ensure that talent and people factors are
addressed head-on in the organizational strategy.

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The people and talent requirements of the organizational strategy are owned by business leaders
and managers, but HR professionals can establish the people requirements and ensure that the
organization is set up to successfully execute on those requirements. HR often has access to useful
analytics and knowledge around the current and future talent strengths, weaknesses, opportunities
and threats, and can bring these insights to early stages of strategic discussions.

Build plans to align the organizational “levers” to support the strategy

While the overall strategic objectives and major initiatives are critical, so are the cross-functional
plans that support execution of the strategy. In fact, many organizations fail when they don’t have
practical, tactical implementation plans that take into account the changes that must occur to align
the organization around the strategy.

HR can be an important partner in determining what aspects of the organization will need to be
addressed going forward, who will be impacted and how, and what actions will be required to
ensure success.

Keep employees engaged around the strategy and other changes ahead

HR is often able to tap into the opinions and feelings of employees across levels, business units,
functions and geographies. Engaging employees around the strategy early-on is critical for capturing
their hearts and minds in the long-term. With people engaged, the strategy moves from mere words
on paper to a blueprint for success.

HR can help solicit employee feedback, ideas, reactions and suggestions about what the strategy
should be and how it should be implemented. If there are major changes ahead – such as a
restructuring or a new technology implementation – HR also can act as a “change architect:”
creating and executing strategies and plans necessary to lead and communicate the change.

Human resources strategy

A Human Resource strategy is a business's overall plan for managing its human capital to align it with
its business activities. The Human Resource strategy sets the direction for all the key areas of HR,
including hiring, performance appraisal, development, and compensation.

What is HR Strategy?

HR Strategy is the strategy adopted by an organization which aims at integrating an organization’s

culture, its employees and system by coordinating a set of actions to get the required business goals.
Therefore it must be aligned to organization’s mission, vision and goals. The characteristics of the
industry in which the organizations is to be analyzed and its competitive advantage need to be
determined for developing an HR strategy.

The four key dimensions must be addressed in order to develop HR strategy:

1. Culture: It is the beliefs, rules and style of management of the organization

2. Organization: It is the structure, job types, job descriptions and reporting lines of the organization.

3. People: The most important part of the organization is its people. The skills level, employee
potential and the capability of the management constitutes the people.

4. Human Resources Systems: It is the people focused mechanism which deliver the correct strategy
for the organization- recruitment, communications, training and development, compensation and
benefits etc.

The senior managers frequently in managing people element focus on only one or two dimensions
and neglect the other people. Typically companies prefer to relieve their managers of bureaucracy
and push for more creative and entrepreneurial spirit but then the management fail to develop a
suitable compensation and training system.

When the mentioned creative or entrepreneurial flair does not appear from the employee’s work,
the managers blame the employees and not the system. If an organization wants to retain the
quality of work then its duties are not only to retain talented staff but also the organization needs to
be reviewed and the training and compensation benefits need to be improved in order to facilitate
employees in a better way.
5 ways to successful strategy

1.Align your initiatives

Strategic relevance/ Profit resource/demand risks

2.Align budgets and performance

Performance Incentives should be directly connected to strategy

3.Strategy After Structure

The structure should allow organizations to create strategies

4.Staff Engagement

Communication , Participations etc

5.Monitor and adapt

Strategies must be adaptable and flexible

This article has been researched & authored by the Business Concepts Team. It has been reviewed &
published by the MBA Skool Team. The content on MBA Skool has been created for educational &
academic purpose only.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over
2000 business concepts from 5 categories.

Objective of a Human Resource Strategy

Small Business

Business Technology & Customer Support

Human Resource Information Systems

By

Leigh Richards

Even small businesses can benefit from effective human resource strategies.

Human resource strategies are designed to ensure that small businesses have the staff they need to
meet customer demand. Considerations that impact human resource strategy include both internal
and external environmental changes, such as anticipated turnover, the need for new types of skills
and experience, growth or expansion into a new market, changing economic pressure and
competitive pressures.

Key Questions

At the highest level, the objectives of a human resource strategy will require businesses to consider
two key things: the type of staff needed to manage and run the business to meet stated business
objectives, and the pay/benefits and other programs necessary to attract, develop and retain
effective staff. These foundational questions form the basis for the development of a human
resource strategy.

Organizational Dimensions

Aspects of the organization will impact the development of strategies related to human resources.
The company's culture has a critical impact and represents the personality of the organization in
terms of its management style and values. This will dictate whether, for instance, the company is
one where employees will be expected to "do more with less," or where they will be overstaffed to
fuel a culture of experimentation and innovation. The organization itself and how it is structured is
another key dimension that will impact strategy. Finally, the human resources systems, policies and
practices will impact the ability of the organization to effectively hire and retain the staff necessary
to meet business objectives.

Role of Mission, Vision and Values

When developing objectives for a human resource strategy, the small business must consider its
mission, vision and values, whether these are explicitly stated or not. The mission of the organization
indicates who the organization serves and why it exists. The vision is an indication of where it hopes
to be in the future. The business's values are the beliefs that guide its actions. Each of these has a
direct impact on the type and numbers of employees that will be needed to achieve organizational
goals.

Workforce Analysis

A key part of the human resource strategy is a workforce analysis. This analysis will focus on the
culture, the organization, the people and the systems that are in place. Small businesses need to
consider where they are currently at in terms of each of these elements and where they would like
to ideally be. Identifying these gaps will allow the business to focus on specific objectives designed to
narrow or close the gaps.

Evaluation

Ultimately, human resource strategies will be guided by evaluation based on specific measurable
factors. There are a variety of factors that a small business will consider as it develops, implements
and evaluates the effectiveness of its human resource strategy. Commonly, these may include
employee turnover, the number of vacant positions, the number of employee grievances, customer
complaints and the levels of satisfaction and dissatisfaction of both employees and customers.
Purpose of Human Resource Management

The Mission of Human Resource Management

Human resource management’s mission is to coordinate people within an organization to achieve

the organization’s goals.

LEARNING OBJECTIVES

Demonstrate the mission of human resource management, in both the broader organizational
perspective and the narrower individual one

KEY TAKEAWAYS

Key Points

Human resource management (HRM) views people as organizational assets and internal customers
and works to create job satisfaction and employee efficiency and effectiveness.

HRM concentrates on internal sources of competitive advantage. It regards people as an

organization ‘s most important asset.

The department of human resources (HR) communicates with employees and adapts the
organization’s culture and structure to their needs—for example, in negotiating with unions or re-
engineering processes.

HR leads the employment life cycle, from attracting and hiring the right employees to facilitating
performance reviews and eventually processing terminations.

Key Terms

human capital: The stock of competencies, knowledge, and social and personality attributes,
including creativity, embodied in the ability to perform labor so as to produce economic value.

asset: Any component, model, process, or framework of value that can be leveraged or reused.

Human resource management (HRM) is the coordination of an organization’s people to achieve

specific business objectives, fulfill staffing needs, and maintain employee satisfaction. HRM
accomplishes this through the use of people, processes, and technology that focus on the internal
parts of the organization rather than on the external environment. HRM draws from many diverse
fields—such as psychology, business management, process management, information technology,
statistical analysis, sociology, and anthropology—to achieve these objectives.

image

Human resources: People are assets for an organization.

People as a Resource

HRM concentrates on internal sources of competitive advantage. It regards people as the most
important single asset of the organization. HRM is proactive in its relationship with people and seeks
to enhance organizational performance in its relationship with them. HR professionals emphasize
the quantitative, calculative, and strategic aspects of managing the human resource in a systematic
way. It also manages communication, motivation, and leadership between people in the
organization.

General HRM Functions

Aligning human resources and business goals

Re-engineering organization processes

Listening and responding to employees to maintain high job-satisfaction levels

Managing transformation and change

Staffing (i.e., hiring and firing) and training

Understanding and integrating labor laws and ethics

Organizational Level

At the macro level, HR is in charge of overseeing organizational leadership and culture. It also
ensures compliance with employment and labor laws, which differ by geography, and often oversees
health, safety, and security.

In circumstances where employees desire, and/or are legally authorized to hold, a collective
bargaining agreement, the human resources department will typically also serve as the company’s
primary liaison with the employees’ representatives (usually a labor union).
HR professionals engage in lobbying efforts, usually through industry representatives, with
governmental agencies such as the United States Department of Labor and the National Labor
Relations Board to further their priorities.

Employee Level

On an individual level, HR’s mission is to manage the employee experience during the employment
life cycle. It is first charged with attracting the right employees. It then must select the best
employees through the recruitment process. HR then onboards new hires and oversees their
training and development during their tenure with the organization.

HR assesses talent through the use of performance appraisals and then rewards them accordingly.
HR may sometimes administer payroll and employee benefits, although such activities are now often
outsourced, with HR playing a more strategic role.

Finally, HR is involved in employee terminations—including resignations, performance-related

dismissals, and layoffs.

Human Resource Planning

Human resource planning identifies the competencies an organization needs to fulfill its goals and
acquires the appropriate people.

LEARNING OBJECTIVES

Express the way in which planning, evaluation and improvement can create competency relative to
developing human resources

KEY TAKEAWAYS

Key Points

The human resource planning process identifies organizational goals and matches them with the
competencies employees need to achieve those goals.

Human resource planning serves as a link between human resource management and the overall
strategic plan of an organization.

A plan is made to either develop necessary competencies from within the organization or hire new
people who already have them.
The plans and strategies for fulfilling human resource needs are continually evaluated and improved,
and the acquired resources are continuously developed.

Key Terms

competency: The ability to perform some task.

Human resource planning is the process of systematically forecasting both the future demand for
and supply of employees and the deployment of their skills with respect to the strategic objectives
of the organization. Human resource planning is a process that identifies current and future human
resource needs for an organization, based on the goals and objectives set by upper management. It
responds to the importance of business strategy and planning in order to ensure the availability and
supply of people—in both number and quality. Human resource planning serves as a link between
human resource management and the overall strategic plan of an organization.

image

Planning: Organizations gain an advantage by planning the implementation of their people.

Planning Process

The planning processes is loosely about determining what will be accomplished within a given time
frame, along with the numbers and types of human resources that will be needed to achieve the
defined business goals. This is typically accomplished by defining competencies that are required by
workers to achieve business goals, matching people with these competencies to the right tasks, and
assessing the overall process for progress and improvement.

In this way, human resources professionals need to understand each and every task within the
organization, as well as the skills and competencies required of the individuals who carry out those
tasks. When appropriate, human resource managers may note experience and/or competency gaps
or the need to create new roles or hire new individuals to ensure proper functioning.

Planning to Develop Competencies

Competency-based management supports the integration of human resource planning with business
planning by allowing organizations to assess the current human resource capacity based on
employees’ current skills and abilities. These skills and abilities are measured against those needed
to achieve the vision, mission, and business goals of the organization. If the available people lack
necessary competencies, the organization plans how it will develop them.
Targeted human resource strategies, plans, and programs work to address these gaps in the
organization’s workforce through:

Targeted hiring/staffing

Employee learning and education

Career development

Succession management

Evaluation and Improvement

These strategies and programs are monitored and evaluated on a regular basis to ensure that they
are moving the organization in the desired direction, including closing employee-competency gaps.
Corrections are then made as needed to the broader human resource planning process. It is a
constantly evolving planning process for human resource professionals.

Human Resource Strategy

How to create an HR Strategy with examples

Whether you´re working in a large corporate or a smaller enterprise, a Human Resource strategy
forms the basis of everything you do in HR. In this article, we will give a definition of the HR strategy,
explain how the HR strategy impacts daily HR practices, and we will end with a Human Resource
strategy example.

What is a Human Resource strategy?

How to create an HR strategy

The Human Resource mission statement

7 HR strategy best practices

An example of a Human Resource strategy

HR strategy framework

Conclusion
FAQ

What is a Human Resource Strategy?

A Human Resource strategy is a business’s overall plan for managing its human capital to align it with
its business activities. The Human Resource strategy sets the direction for all the key areas of HR,
including hiring, performance appraisal, development, and compensation.

The HR strategy is thus a long-term plan that dictates HR practices throughout the organization.

An HR strategy has a set of characteristics:

It requires an analysis of the organization and the external environment.

It takes longer than one year to implement.

It shapes the character and direction of Human Resources Management activities

Helps in the deployment and allocation of organizational resources (i.e. money, time, personnel)

Is revised on a yearly basis.

It incorporates the expert judgment of senior (HR) management.

It is number-driven.

It results in a specific behavior.

These characteristics give a good overview of what an HR strategy consists of.

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How to create an HR strategy

The next question is: how do we create a Human Resource strategy?

A very useful model here is the standard causal model of HRM, one of the key HR models. This
model shows where HR strategy originates from and how it influences HR execution and business
performance.

The model shows that the HR strategy is a result of the broader (business) strategy. It shows that HR
activities create value when they are aligned with what the organization tries to achieve. When
there is alignment (fit) between the two, HR will contribute to the performance of the organization.

The overall business strategy is formulated based on the past and the present. It is a result of what
the company has been doing in the past and its current internal capabilities. An often used tool to
arrive at this strategy is the SWOT analysis.

In the SWOT analysis, the organization’s internal Strength and Weaknesses, and its external Threats
and Opportunities are mapped. Strengths include the company’s core know-how and know-what.
These are its production capacity, existing brand, marketing channels, sales capabilities, R&D
expertise, and other human capital factors.

AIHR-SWOT-analysis-1024x1024

The company’s strategy leverages its Strengths to capitalize on the Opportunities in the market. At
the same time, it tries to circumvent Threats and minimize the impact of Weaknesses.

The result of this strategy-setting is the company’s value proposition. For example, the value
proposition of Walmart, a discount retailer, is “every day low prices”. This explains a number of
internal HR practices, especially the ones related to worker compensation. For more unique value
propositions, check this article.
The HR strategy is based on the organizational strategy. The HR strategy touches on all the key areas
in HR. These include recruitment, learning & development, performance appraisal, compensation,
and succession planning.

An example of an HR strategy is an HR mission statement and HR vision, with concrete, high-level

actions about how to execute on this mission and vision. We will give an example later on.

The Human Resources mission statement

The result of an HR strategy is often an HR mission statement. The HR mission statement helps to
clearly define where the organization wants to go. All Human Resource Management practices and
decisions can be judged based on that statement.

An example is the HR mission statement of the University of Marquette in Milwaukee, Wisconsin:

“The Human Resources Department creates, encourages, and maintains an environment that
supports, develops and sustains the well-being of Marquette University’s employees, students, and
the broader community.”

This mission statement clearly focuses on the creation of an environment for different groups. This
makes it easier to make decisions and start initiatives regarding HR’s involvement in different
projects. For example, I would be very surprised if this HR department is not actively involved in
(student) community-building projects.

Digital HR plays a pivotal role in enabling the HR strategy. In the final section of this article, we will
explore the role of digital in more depth.

6 HR strategy best practices

When creating and implementing an HR strategy, there are a number of best practices to keep in
mind.

HR professionals should know the strategy and (at least to some extent) be involved in its creation –
A strategy will only be effective if it is clearly communicated. Involvement in the creation of the
strategy will help in the communication and create buy-in.
Management buy-in and HR budget are critical enablers of strategy execution – An HR strategy can
never be realized in isolation. Conditions are management buy-in, budget, skilled HR professionals,
and appropriate digital technology.

HR initiatives should be aligned with the HR strategy – The strategy is there for a reason: it should be
followed. HR practices and initiatives should follow the strategy.

Performance incentives should be directly connected with the execution of the strategy – The idea
of contingent compensation is as old as HR itself. People will work harder if their goals and
incentives are aligned.

Strategies should be monitored and execution measured through KPIs – Strategy will never be
effective without consistent implementation and monitoring of results. This is done through KPIs
(metrics that measure strategic goals)

Strategy is a long-term plan – A strategy is, by definition, long-term. This doesn’t mean it isn’t subject
to change. A strategy can be – and sometimes should be – adapted to better fit the external
environment.

These best practices help to create, implement, and execute the Human Resource strategy.

Human Resource strategy example

A good example of a Human Resource strategy that worked was how Netflix managed its people.
After the dot-com bubble burst and the 9/11 attacks, Netflix had to lay off a third of its employees.

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It had always been Netflix’s strategy to hire only A players. This was an opportunity. By letting go of
the B-players, the remaining employees were happier and more productive. To quote one of the
engineers: “I’ve learned that I’d rather work by myself than with subpar performers.”
This also had consequences for people who once were invaluable but had become redundant as the
company grew. According to Patty McCord, Netflix’s chief talent officer from 1998 to 2012, “if we
wanted only “A” players on our team, we had to be willing to let go of people whose skills no longer
fit, no matter how valuable their contributions had once been.”

Working with only A players also impacted Netflix’s holiday policies. After Netflix went public, there
was some pressure to formalize the paid-off-time policy. After some research, McCord decided to
use a system in which employees could take as much time off as they felt was appropriate – in
dialogue with their boss.

For a full overview of Netflix’s unique definition of company culture, check out their culture
guidelines.

HR strategy framework

A very useful tool I discovered while doing research for this article, is the Deloitte HR Strategy
Framework. This framework follows a 10-step approach towards defining strategy and delivering
value.

The first phase is about defining human capital value. This happens in two steps:

1. Understand the business strategy – this is about understanding the market forces and identifying
how they impact HR strategy and priorities.

2. Define HR strategy – in this second step, you create a roadmap about how HR aligns its strategy
and how it helps to build a competitive advantage for the organization.

Second, HR products and services need to be aligned.

3. Segment HR customers – not all HR customers are equal. In the third step, you segment your
different (internal) customer groups and identify the most crucial ones. Different customer groups
require different policies and approaches.
4. Prioritize HR investments – your HR budget and other resources are limited. Prioritize the
investments that benefit your key customers and that provide the best ROI. A good technique to
prioritizing these investments is calculating an ROI through HR costing.

5, Design HR services – in this phase, you will go through all the HR focus areas and analyze and
identify all the processes that should be streamlined or re-engineered.

Third, HR practices need to deliver value. This is the right side of the standard causal model for HRM.

6. Ensure the right HR service delivery model – in this step, you will assess the current HR service
delivery model and assess how effectively it helps to meet the organization’s goals. You should also
analyze the key HR enablers such as HR systems, processes, and infrastructure. Optimizing these will
help in delivering HR services that add value to the organizational strategy.

7. Establish the right HR capabilities – another HR enabler that requires special attention are the HR
capabilities. By identifying the current skills and competencies and the ones required to deliver HR
strategy, a skill gap can be identified and filled.

8. Improve HR operational excellence continuously – this step is about the optimization of what we
do in HR. By assessing the efficiency of our HR processes, we can continuously improve them.

9. Build an HR brand – establish the HR department in the wider organization and obtain information
on how HR is and should be performing.

10. Measure the impact of HR products and services – in step 8 we looked at the efficiency of HR
processes. In the end, we want HR processes to be effective. Measuring the impact of our products
and services on the relevant business outcomes through analytics helps to adapt and improve what
we do in HR. This is done through HR analytics.

Conclusion

There is only very little information about how to build an HR strategy on the internet. Although this
medium mostly covers digital HR and HR transformations, for both the HR strategy is the starting
point. I hope this article has taught you where you should start when you want to define and
implement an HR strategy.
Creating an HR strategy takes time. Just as executing on the strategy takes time. But when your
strategy is well-defined, it can create a tremendous benefit by aligning HR’s activities with the goals
of the organization.

FAQ

What is a Human Resource Strategy?

A Human Resource strategy is a business’s overall plan for managing its human capital to align it with
its business activities. It sets the direction for all the key areas of HR.

How to create an HR Strategy?

A very useful model is the standard causal model of HRM, one of the key HR models. It shows where
HR strategy originates from and how it influences HR execution and business performance.

What is a Human Resources mission statement?

The result of an HR strategy is often an HR mission statement. The HR mission statement helps to
clearly define where the organization wants to go.

Types of HR strategies

Because all organizations are different, all HR strategies are different. According to Armstrong and
Long (1994) and Armstrong and Baron(2002) revealed many variations. Some strategies are simply
very general declarations of intent; others go into much more detail. But two basic types of HR
strategies can be identified: 1) overarching strategies; and 2) specific strategies relating to the
different aspects of human resource management.

Overarching HR strategies

Overarching strategies describe the general intentions of the organization about how people should
be managed and developed, what steps should be taken to ensure that HRM processes the
organization can attract and retain the people it needs, and ensure so far as possible that employees
are committed, motivated and engaged. They are likely to be expressed as broad-brush statements
of aims and purpose that set the scene for more specific strategies. They are concerned with overall
organizational effectiveness – achieving human resource advantage by, as Boxall and Purcell (2003)
explain, employing ‘better people in organizations with better process’, developing high
performance work systems and generally creating a great place to work.

Examples of overarching HR strategy statements.

AEGON

‘The Human Resources Integrated Approach aims to ensure that from whatever angle staff now look
at the elements of pay management, performance, career development and reward, they are
consistent and linked.’

B&Q

‘Enhance employee commitment and minimize the loss of B&Q’s best people. Position B&Q as one
of the best employers in the UK.’

EGG

‘The major factor influencing HR strategy was the need to attract, maintain and retain the right
people to deliver it. The aim was to introduce a system that complemented the business, that
reflected the way we wanted to treat our customers – treating our people the same. What we would
do for our customers we would also do for our people. We wanted to make an impact on the culture
– the way people do business.’ (HR Director)

GlaxoSmithKline

‘We want GSK to be a place where the best people do their best work.’

An insurance company

‘Without the people in this business we don’t have anything to deliver. We are driven to getting the
people issues right in order to deliver the strategy. To a great extent it’s the people that create and
implement the strategy on behalf of the organization. We put people very much at the front of our
strategic thought process. If we have the right people, the right training, the right qualifications and
the right sort of culture then we can deliver our strategy. We cannot do it otherwise.’ (Chief
Executive)

Lands’ End
‘Based on the principle that staff who are enjoying themselves, are being supported and developed,
and who feel fulfilled and respected at work, will provide the best service to customers.’

Pilkington Optronics

‘The business strategy defines what has to be done to achieve success and that HR strategy must
complement it, bearing in mind that one of the critical success factors for the company is its ability
to attract and retain the best people. HR strategy must be in line with what is best in industry.’

A public utility

‘The only HR strategy you really need is the tangible expression of values and the implementation of
values… unless you get the human resource values right you can forget all the rest’. (Managing
Director)

Azam manufacturing company

‘The HR strategy is to stimulate changes on a broad front aimed ultimately at achieving competitive
advantage through the efforts of our people. In an industry of fast followers, those who learn
quickest will be the winners.’ (HR Director)

A retail stores group

‘The biggest challenge will be to maintain (our) competitive advantage and to do that we need to
maintain and continue to attract very high calibre people. The key differentiator on anything any
company does is fundamentally the people, and I think that people tend to forget that they are the
most important asset. Money is easy to get hold of, good people are not. All we do in terms of
training and manpower planning is directly linked to business improvement.’ (Managing Director)

Specific HR strategies

Specific HR strategies set out what the organization intends to do in areas such as:

Talent management – how the organization intends to ‘win the war for talent’.

Continuous improvement – providing for focused and continuous incremental innovation sustained
over a period of time.
Knowledge management – creating, acquiring, capturing, sharing and using knowledge to enhance
learning and performance.

Resourcing – attracting and retaining high quality people.

Learning and developing – providing an environment in which employees are encouraged to learn
and develop.

Reward – defining what the organization wants to do in the longer term to develop and implement
reward policies, practices and processes that will further the achievement of its business goals and
meet the needs of its stakeholders.

Employee relations – defining the intentions of the organization about what needs to be done and
what needs to be changed in the ways in which the organization manages its relationships with
employees and their trade unions.

The following are some examples of specific HR strategies.

The Children’s Society

Implement the rewards strategy of the Society to support the corporate plan and secure the
recruitment, retention and motivation of staff to deliver its business objectives.

Manage the development of the human resources information system to secure productivity
improvements in administrative processes.

! Introduce improved performance management processes for managers and staff of the Society.

Overview of IVRCL

IVRCL Infrastructures and projects Ltd commenced operation in 1990 and established itself as a
premier EPCC & LSTK service provider with front end engineering capabilities. Commencing
operations with building construction as class-I construction firm in 1987, IVRCL forayed into various
social infrastructure sectors like water management, roads and high way, bridges, power
transmission lines with attendant engineering capabilities and was graded as one of the developer
companies by state and central government.

By virtue of its presence in core sector activity, IVRCL has redefined the Quality of life in its many
facts. This has come through its commitments, care and concern for societal issues and largely by
way of experience, having built upon brick by brick in its track record of a decade and a half.

IVRCL, is today, reckoned as a leader in Infrastructure builds and development providing one-stop
turnkey solutions on a cost-effective basis. IVRCL has been rated as “The Fastest Growing
Construction Company”. Firmly entrenched in the core sector activity of infrastructure leading to
nation building, IVRCL stands out for its pioneering work in providing complete water solutions
including water transmission, treatment and waste management. The company’s other
infrastructure activity includes roads and highways, bridges and transmission lines with attendant
engineering capabilities.

HR STRETEGIES AT IVRTL INCLUDES THE FOLLOWING

Recruitment &selection

IVRCL recruitment and selection strategy is to retain staff of the highest calibre appropriate to job
requirements and to organization standards of efficiency, competence, professionalism and
integrity. The recruitment and selection decision is of prime importance as the vehicle for obtaining
the best possible person-to-job fit, which will when aggregated, contribute significantly towards the
company’s effectiveness. It is also becoming increasingly important, as the Company evolves and
changes, that new recruits show willingness to learn, and have the adaptability and ability to work as
part of a team. The Recruitment & Selection procedure should help managers to ensure that these
criteria are addressed.

The Company Recruitment and Selection strategy has to:

Be fair and consistent;

Be non-discriminatory on the grounds of sex, race, age, religion or disability;

Conform to statutory regulations and agreed best practices.

Strategy objectives

The strategy objectives is to meet Manpower requirements of the Organization in terms of approved
Manpower Plan in additional to that to fulfil requirements of competent HR in terms of requisite
capabilities, skills, qualifications, aptitude, merit and suitability with a view to fulfil Organization’s
objectives .However to attract, select and retain the best talent available keeping in view the
changing needs of the organization. Nevertheless to ensure an objective and reliable systems of
selection. Hand in hand to ensure placement of right man at the right job at the right time and finally
to provide suitable induction points for intake and thereby achieve the desirable level of
qualification, skill and age mix as required strengthening the Human Resource of the Organization.

Developing HR Strategies

Image

STEPS TO BUILD UP HR STRATEGY

Step 1: Get the ‘big picture’

Understand your business strategy.

• Highlight the key driving forces of your business. What are they? e.g. technology, distribution,
competition, the markets.

• What are the implications of the driving forces for the people side of your business?

• What is the fundamental people contribution to bottom line business performance?

Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.

Do not be put off by negative reactions to the words or references to idealistic statements – it is the
actual process of thinking through the issues in a formal and explicit manner that is important.

• What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the business.

• Consider the current skill and capability issues.

Vigorously research the external business and market environment. High light the opportunities and
threats relating to the people side of the business.

• What impact will/ might they have on business performance?

• Consider skill shortages?

• The impact of new technology on staffing levels?

From this analysis you then need to review the capability of your personnel department. Complete a
SWOT analysis of the department – consider in detail the department’s current areas of operation,
the service levels and competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization’s COPS (culture, organization, people, HR systems)

• Consider: Where you are now? Where do you want to be?

• What gaps exists between the reality of where you are now and where you want to be?

Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and COPS Analysis

• Identify the critical people issues namely those people issues that you must address. Those which
have a key impact on the delivery of your business strategy.

• Prioritize the critical people issues. What will happen if you fail to address them?

Remember you are trying to identify where you should be focusing your efforts and resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate, elaborate and create –
don’t go for the obvious. This is an important step as frequently people jump for the known rather
than challenge existing assumptions about the way things have been done in the past. Think about
the consequences of taking various courses of action.

Consider the mix of HR systems needed to address the issues. Do you need to improve
communications, training or pay?

What are the implications for the business and the personnel function?

Once you have worked through the process it should then be possible to translate the action plan
into broad objectives. These will need to be broken down into the specialist HR Systems areas of:

• employee training and development

• management development

• organization development

• performance appraisal

• employee reward

• employee selection and recruitment

• manpower planning

• communication

Develop your action plan around the critical issues. Set targets and dates for the accomplishment of
the key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure that the objectives set
are mutually supportive so that the reward and payment systems are integrated with employee
training and career development plans.

Implimenting HR Strategies
Step one: align with business needs
Every HR strategy has to support business efforts, so the
first step is to align both strategies. Business strategies will
more than likely focus on external goals to bring in revenue
while the HR strategy will look at what is needed for the
business to reach these goals. Put simply, if your people
aren’t looked after, you won’t achieve anything. You need
to be 100% clear on the business goals to be able to create
an effective HR strategy – people need clarity to know what
they’re working towards and can feel motivated and
rewarded by having a clear focus. Be clear about what you
want from your people and how they fit into your overall
goals.

Step two: plan, prepare and measure

Once you’ve nailed down what your HR strategy needs to

focus on, the next thing you should do is develop it to
include goals, measures and capabilities. This will allow you
to plan and prepare for the year ahead. Firstly, look at the
goals your team can achieve. If you want to keep clients and
customers happy to keep their business then employee
retention is key – and using your HR strategy to look after
individuals is important. In general, it’s a good idea to not
overwhelm resources by trying to complete too many goals
at once. Spread major goals throughout the year and
include checkpoints periodically to help you stay on track.

Step three: communicate to stakeholders

From growing the company to implementing new

technology, the HR department is responsible for
communicating new ideas to the wider business and
ensuring people can apply them. When new initiatives are
introduced, clear and informative communication is key for
the business to welcome any change. If fact, no matter the
size of the business, the majority of employees need to be
on board for any change to take place. It’s best to promote
all your communication to managers first. With manager
buy-in, any challenges or controversial changes within the
business can be better resolved with support from
stakeholders.

Step four: promote collaboration

As well as having good communication, it’s important to
ensure teams have contributed to the cause. Collaboration
is an important part of HR strategy and one that has a big
impact on the wider business. HR can act as the glue that
binds teams together through effective work processes or
even social, cultural and team bonding efforts.

Step five: create measures

Without measures, how will you know if the strategy is

successful? The content of your HR strategy will determine
what measures you need to implement. Some metrics can
be obvious, such as revenue, sales targets or employment
goals, but others can be more variable. If your strategy is to
improve your environmental impact, you may want to
consider the energy used to monitor how eco-friendly
you’re being. Or, if your strategy is to improve employee
retention or happiness you could look at staff turnover or
absence rates.
Step six: assessment

To help you stay on track and ensure you’re still aligned to

business goals, it’s important to assess progress regularly.
As well as noting down what worked well, look back at how
you got to each stage and whether any challenges needed
to be addressed. This way you can foresee any potential
future problems and resolve them before they even
happen.

Do remember

With these steps, you’ll be able to implement and manage

your HR strategy. The important thing to remember is that
clear communication to the wider business is vital for the
strategy to be a success. A successful HR strategy will
influence the whole business and contribute towards wider
goals by looking after the people you need to deliver them.
Evaluating Your HR Function
By Lori KleimanOn December 7, 20160 Comments
1

The field of Human Resources is evolving and being

embraced in even the smallest of organizations today. With
the onslaught of legal issues facing the employment
relationship, all enterprises need to be sure they have an
understanding of human resources. The new overtime
ruling is only the beginning of the changes we see on the
landscape of employee management.

Business executives must understand what their entity

needs, what compliance is necessary, and how that can be
best embraced within their operation. Through
presentations and HR speaking with a variety of business
leaders, I have developed six steps to evaluate your HR
function and move forward with a human resource function
that supports the overall operation.
Step One: Evaluate what does HR look like today? HR
started as an administrative function that grew out of the
studies of management in the 1950’s. We know that
employees are more productive when their manager is
paying attention to them. Today HR should exist to impact
and grow your business with a focus on positive employee
interactions.

Step Two: Gather data. Who in your organization is

responsible for budget items that impact employees. Ask
for feedback from vendors that interact with your team
such as your payroll provider, benefits consultant etc. Talk
to employees, who is their go-to person for information?

Step Three: Separate the basics of HR from your strategic

needs. A vast majority of the HR function is administrative.
These are actions that are easily outsourced, or conducted
through enhanced technology. Be sure that your HR
function is embracing technology, and spending their
valuable time on initiatives that will drive the business
results you are looking for. Setting goals for human
resources operations will help determine the fit in your
organization.

Step Four: Consider the team. Selecting or evaluating the

person responsible for HR should be very strategic. In
smaller organizations, we see HR reporting to finance or
operations. In others, HR is handled by an office manager or
other administrative person. Human Resources is best
served when it reports directly to the CEO, only then can
the focus be solely on the overall operation.

Step Five: Set an expectation for Human Resources to be a

business partner that will impact corporate goals. Invite HR
to critical meetings so they can understand the equipment
required for future production, new markets you are
entering etc. It is only with the business knowledge that HR
can create programs that will add to the attainment of
corporate goals.

Step Six: Make Changes. If HR is not adding to the business

success, take a hard look at the people in the HR function. If
you just can’t see the value, consider outsourcing the
function. There are options, but one of them should not be
complacency with a department that is draining resources
and not adding value. Great human resource team
members will make a direct impact to your bottom line –
get one today!
Human Resources Roles
Human Resources Roles

What are the key roles of human resources? In this article,

we will list the 18 key Human Resources roles. In addition,
we will go over these roles and explain how doing them
right will create benefits for both the people and the
organization.

Background of Human Resource Roles

For a long time, Human Resources Management (HRM) has
been viewed as a cost to be minimized. This fit into the
traditional view of HRM as a caretaker for the business.
Employees needed to be managed at (preferably) low cost.
In line with this, HR was seen as a potential source for
efficiency gains (Becker & Gerhart, 1996).

This meant in practice that if companies were able to save

time and money managing their personnel, they would save
money. There wasn’t much focus on the effectiveness of HR.

But if you don’t see an HR department as something that

adds value, why would you focus on the value that it
added?
In the late nineties, this idea started to change. Research
indicated that HR decisions could influence organizational
performance. This research was done by assessing the
sophistication of the HR architecture and relating it to
business performance.

The following figure, by Huselid and Becker (1995) shows

this impact. As the HR architecture becomes more
sophisticated, the market value per employee increases.

Once we know that HR practices increase organizational

performance, the next question is: What are the key roles
for HR? And (how) do these roles lead to superior
performance? That’s what we will explore in the remainder
of this article.

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Organizational development is a critical process that should
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metrics will help you manage your organization’s ability to
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18 Key Human Resources Roles
The roles we will list in this article are all high-performance
work practices. This means that HR adds value if these
practices, or roles, are realized. The roles are based on an
updated version of Becker & Gerhart‘s summary of decades
of HR research. Let’s go over them one by one.

1. Attracting candidates
When hiring an external candidate, attracting prospective
employees is crucial. This happens through employer
branding, in which the company promotes itself in the job
market. This can be measured through the selection ratio,
which is the ratio of candidates hired divided by the total
number of candidates. It is up to HR to make sure that
sufficient eligible candidates are attracted and eventually
the right people are hired.
Hiring the right people involves employment testing, also
known as selecting, another key Human Resources role.

2. Selecting Candidates
Selecting is the responsibility of HR to test how suitable
candidates are for a job. Although this is something that is
often outsourced to professional testing-providers, the
process should be managed by HR.

While vendors will try to sell you all kinds of assessments

(of course), scientific literature shows that only a few are
truly effective. These include IQ tests, work test,
conscientiousness tests, the structured interview, and
assessment by colleagues.

You will find a brief overview of these measures below. For

a full overview, check Schmidt & Hunter’s 1998 paper with a
full overview of personnel measures.

3. Hiring from Within and from Outside

Hiring is one of the key Human Resources roles. An
important distinction is that between hiring from outside
vs. hiring from within. Through employee training and
smart succession planning, companies can create a so-called
talent pipeline.

Internal hiring is preferred as it enables a company to fill

jobs with internal talent that already knows the company
and is ready for a challenge. A lot of companies can improve
their internal hiring practices. If the right talent isn’t
available internally, HR needs to hire external talent.

4. Performance Appraisals
Employees are tested to make sure that they will perform
to the best of their ability in their new role. Performance
appraisal also called performance review or evaluation is a
method to evaluate the job performance of the employee.
In most companies, this is an annual or bi-annual event.

These appraisals facilitate communication between

employee and manager, enhance the employee’s focus,
help in setting professional and personal goals, improves
performance, and help in determining training needs.
Although the performance appraisal cycle is something that
a lot of employees and managers are unhappy with, it still is
a very effective tool to improve results when done right.

Although it seems to be in fashion, getting rid of appraisals

is not the solution. Increasingly, companies are opting to go
for more continuous feedback as an alternative, which may
have some merit. However, an official moment to review
performance is still widely considered a best practice and
one of the key roles for HR.

5. Compensation
Fair compensation is a key Human Resource Management
role. Work is not done for free – it is governed by a legal
contract and by a social contract between the worker and
the employee. Both contracts need to be managed.
Compensation that is perceived as fair will motivate
employees to do their best and to stay with the company. In
our article on HR best practices, we explain compensation in
a lot more detail.

6. Employee Benefit Management

Employees work for more than just pay. Creating the right
benefits for employees is crucial in retaining key talent.
We know from the literature that at a certain point extra
pay doesn’t make employees happier. However, the right
benefits might. Common benefits are extra holidays, a
learning and development budget, extra paternity leave, a
childcare budget, et cetera.

The easiest way to select the right benefits for your

employees is to just ask them. Some employees value
learning and development, others look for extra pension
plans, and a third group may want company-organized
childcare.

By accommodating these needs, HR can create tremendous

value for individual employees that leads to increased
motivation, satisfaction, productivity, and retention.

7. Learning & Development

Learning and development activities as well as high-impact
leadership development contribute to building relevant
skills within the workforce. This involves upskilling the
workforce in skills that align with organizational goals and
the changing context of people’s jobs. Learning and
development activities often align with employees’ personal
development plans as well as with the core capabilities that
the organization is building.

Activities include formal training, enabling on-the-job

learning, job rotation to provide people with broader work
experience, and providing challenging assignments (e.g., in
problem solving groups) that help solve organizational
issues while also contributing to individual learning.

8. Promotions
In line with hiring from within, setting rules for promotion is
also one of the responsibilities of HR. Promotions are
usually based on merit and/or seniority. They are part of an
effective succession planning and are a great way to retain
top performers who are eager to learn and develop
themselves.

It is up to HR to put in place procedures that enable the

internal movement of talent through promotions.
Promotions should not be handed purely based on current
performance but should also account for predicted future
performance.
This is illustrated by the Peter Principle, which states that
people tend to rise to their “level of incompetence”. This
relates to the idea that good performers will always be
promoted until they reach a function in which they stop
being good performers. They then have become
incompetent in their new function and will be stuck there
for the rest of their career.

9. Problem-Solving Groups
Problem-Solving Groups, also known as quality circles, are
teams of employees who are actively involved in problem-
solving. Groups are composed of volunteers that meet a
few hours every week or two to look at productivity and
quality problems. These groups have a special type of
leader or facilitator. HR can help in the creation of these
groups, ensure optimum team composition, and plays a role
in facilitating these teams to make an impact.

10. Total Quality Management

Total Quality Management (TQM) is a more structured
approach to quality circles. TQM is an organization-wide
effort to create a climate in which employees continuously
improve their ability to provide products and services that
customers will find valuable. Here HR is one of the co-
owners of this process, especially when it comes to people
practices.

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11. Information Sharing
HR has a central place in sharing information with
employees. This can be via a simple newsletter to keep
everyone up to date with the latest. It also entails work
safety procedures, announcements of layoffs, mergers, or
acquisitions, or any other impactful event that is relevant
for employees.
Clear, transparent, and timely information sharing is crucial
in building and maintaining support and successful
organizational change.

Another key aspect of information sharing is internal

knowledge sharing.

This is often referred to as know-how (experience), know-

what (knowledge), and know-who (finding the person to
help solve the problem). These three elements are crucial to
solving problems quickly and effectively.

HR has a key role in facilitating this as well, especially in

large organizations.

12. Organizational Development

Organizational development revolves around interventions
to make the organization more effective. Techniques
include job analysis and job design but also macro-level
activities such as organizational change and organizational
design processes.
The most tangible OD process in HR is arguably job analysis.
Whenever a new job is created (or when an old job opens
up), the first step to hiring the right person is to define what
the ‘right person’ should look like. This is done in the job
analysis.

Job design is similar to job analysis. Any job should have a

variety of skills and tasks. In addition, a job should be
significant and the holder of the job should have a degree of
autonomy.

Job design is related to job rotation, job enlargement (giving

more responsibilities to the employee), and job enrichment
(increasing the employee’s autonomy over their work).

Organizational change and design are macro-level

interventions that will affect the entire organization. Here
again, the OD or organizational effectiveness unit will
provide key input and design HR interventions that will help
to achieve the change and build a more effective
organization. This is another key HR role.

13. Survey Management

The annual engagement survey is one of the most
recognizable HR efforts in an organization. Surveying the
attitudes of employees helps to understand where the
organization is at, what the attitudes of employees are, and
how productivity can be improved through better people
management. We explain how to measure employee
engagement in this more specialized article.

We believe, however, that HR’s role is broader than simply

putting out attitude surveys. HR should own survey
management in general. All data points collected through
any survey should be aligned before being sent out – and
should be collected in a central database. This will enable
HR to more accurately manage employee attitudes and the
employee’s voice and reduces survey fatigue.

14. Compliance Management

Compliance management includes handling grievance
procedures and conflict resolution.

Grievance procedures have never been more relevant as

shown by the Harvey Weinstein scandal and the #metoo
movement. HR has a crucial role in handling grievance
procedures and spotting, making though decisions, and
resolving issues early on instead of letting them fester for
years. In cases of reported or suspected abuse, theft,
misusing company funds or time, and other unethical
behavior, HR is in the lead to resolve this.

Conflict resolution is another part of compliance

management. Spotting conflicts early on and resolving them
swiftly and effectively pays a tremendous dividend in the
long term. Successfully resolving conflicts is the final key
responsibility of HR.

Best practices are to have predefined structures in place,

communicate everything in writing, and, if possible, apply
mediation to solve problems in an amicable way.

15. Business Partnering

Another key role for HR is business partnering. HR is a
partner of the business and helps by providing tactical and
strategic advice. According to Ulrich et al., 2017, “HR
professionals need to be an equal partner in setting the
direction for the organization and getting it moving in the
right direction”.
Becoming a successful business partner requires a strategic
mindset, understanding the internal business and external
business context, as well as being a trusted advisor of line
managers and senior management.

16. Data & Analytics Management

Data management is one of the latest HR roles to be added.
It encompasses the ability to make data-driven decisions,
characterized by the ability to read, understand, create, and
communicate data and information and influence decision
making.

This role involves the ability to work with metrics and KPIs,
the ability to conduct data analysis (also known as people
analytics) and create dashboards, and translate these
insights into actions.

17. HR Technology Management

Technology management is also a newer role. Emerging in
the ’90s, it is aimed at enabling efficient HR practices and
realizing the HR strategy through technology. Also known as
digital HR, it is enabling a better employee journey and
helps to integrate HR practices.
For example, the applicant tracking system can now connect
with the company’s learning management system (LMS). As
soon as the new hire starts their LMS, it prompts the
courses that the person should work on to be better in the
new role they just started. This helps to greatly increase
HR’s impact.

18. Change Management

Last but not least, there is change management. In today’s
globalized and competitive environment, organizations are
in a constant state of flux. Managing this constant change is
key to being competitive in today’s landscape.

Of specific interest is organizational culture. Shaping a

desirable culture that enables the organization to reach its
goals has never been more important. Here again, HR plays
a crucial role in defining the culture, enabling leadership to
lead by example, reinforcing the culture through people
practices like performance management, and by featuring
and rewarding exemplary behavior.

==========
This brings us to the end of the overview with the 18 most
commonly recognized Human Resources roles. When
managed well, these high performing work practices will
lead to motivated employees and superior organizational
performance. This is what good Human Resource
Management is all about: creating organizational value
through engaged employees.

It goes without saying that these HR roles should align with

each other. It is hard to hire the right people if you do not
compensate them fairly. Or, you will run a big risk if you
have a grievance procedure but can’t effectively resolve
conflicts.

The greatest value will be created by bundling these roles

into a streamlined whole.

To create a better overview of these roles, we have included

an infographic. It shows the three categories of Human
Resources Roles: Traditional HR responsibilities, production
optimization, and managing employee attitudes.

Responsibilities of HR Professionals
7 Responsibilities of HR Professionals

In the past, business leaders have often thought of human

resource (HR) specialists as the professionals that ensure
that all staff members comply with organizational policies.
The role of the human resource specialists has also typically
been associated with administrative duties, such as
gathering, filing and storing paperwork, and they have
traditionally worked in establishing and enforcing company
regulations. In part, this is because the human resource role
frequently originated from administrative or finance
departments. This is logical, as responsibilities such as
payroll, hiring and benefits lie in the scope of those business
units.

Also read: The Role Of HR Analytics In Workforce Planning

Today, the HR executive role is shifting to align with more

forward-thinking practices. Modern human resource
executives must contribute ideas and lead organizations in
advancing corporate objectives. Additionally, HR executives
must grow and change in parallel with their respective
organizations. This is especially vital, as large enterprises
grow nimbler and consumer-centric. The following 7
passages reveal a few of the relatively newer
responsibilities of human resources executives in the
modern work environment.

Responsibility 1: Participate in Planning and Development

In the modern marketplace, human resource executives
serve as strategic partners. They participate in the
identification, development and execution of corporate
objectives. In this capacity, HR executives align the work of
their business unit to achieve company goals. The
participation in company planning allows human resource
leaders to gain a profound understanding of the
organizational activities needed to aid in the sustainable
growth of the enterprise.

Responsibility 2: Provide Employees With Career Assistance

Periodically, human resource leaders conduct staff member
evaluations. Today, HR professionals take an active role in
helping employees advance their careers. Instead of simply
grading employees on a checklist of performance points,
modern human resource specialists help workers identify
areas for improvement and develop specific action steps.
By helping employees with career development, modern HR
professionals gain deeper insight into available human
capital and the availability of internal candidates for
potential role succession. This helps organizations gain a
marked advantage in filling future roles and meeting
forthcoming market demands.

Responsibility 3: Find and Recruit Employees That Advance

Company Objectives
Today’s human resource executives do more than post ads
and interview job candidates to fill open positions. Modern
HR executives formulate employer brands designed to
attract the right job candidates.

In this responsibility, human resource leaders work to

promote their respective firms as highly favorable
workplaces. HR executives often earn this kind of accolade
for organizations by creating a positive culture and
providing satisfactory compensation and benefits as ways
to attract ideal work candidates.

Responsibility 4: Serve as Leaders of Change

Modern human resource leaders frequently lead change
initiatives for their organizations. As a result, current HR
executives yield strong project management skills in their
corporate toolboxes. The professionals are skilled at helping
organizational stakeholders make the connection between
change initiatives and strategic needs, minimizing change
resistance and employee unrest.

Shaping organizational culture, managing staff member

satisfaction and weighing the success of change initiatives
are all a part of the human resource professional’s scope of
responsibility in the modern workplace.

Responsibility 5: Advocate for Employees

While fulfilling their roles as employee advocates, HR
executives play an integral part in the success of
organizations. In this regard, human resource professionals
contribute to building a work environment where
employees feel satisfied and motivated.

To promote this outcome, HR leaders deploy effective

practices such as employee empowerment, goal setting and
open communication, resulting in a positive culture that
leads to the workforce delivering better consumer
experiences.
Responsibility 6: Provide Support for Domestic Violence
Victims
The Centers for Disease Control (CDC) forecasts that
domestic violence can affect 1 in 4 women and 1 in 7 men in
the United States. The issue has grown so prevalent that
employers can no longer afford to think of domestic
violence as a matter best left to the local authorities. As a
result, today’s HR professionals encourage those who’ve
experienced domestic violence to seek help in the
workplace.

To encourage this, human resource professionals promote

an organizational culture where staff members do not feel
intimidated or ashamed to approach to HR employees with
domestic violence concerns.

Responsibility 7: Ensure No Cyberbullying At Work

Traditionally, workplace intimidation took place solely in
the office. Today, however, the connectivity of the Internet
extends the influence of bullies to victims’ personal
workstations and homes, an activity called cyberbullying.
Employees and supervisors know that this can happen in
the workplace, yet dealing with office cyberbullying may
prove challenging. Despite this, contemporary human
resource executives strive to eliminate this kind of negative
activity in the workplace.

Modern HR professionals are leaders in their organizations.

The specialists sponsor the organizational mission, vision,
values and goals among staff members, and they monitor
and adjust organizational activities to ensure the success of
various initiatives. Human resource specialists contribute to
enterprises by managing the most important asset of any
organization, the people who complete the daily tasks that
result in productive outcomes. Their work aids in the global
success of their organizations.

Challenges of Strategic Human Resource Management

Strategic Human Resource Management (SHRM) can be

defined as a link between human resources and the
strategic goals and objectives of the business. Most
importantly, the aim of that is to improve business
performance and to develop an organizational culture that
will foster innovation, flexibility and competitive advantage.
In other words, the HR function is seen as a strategic
partner helping the company to implement and formulate
strategies as well as reach its goals and flourish. The main
activities of HR department include selecting and recruiting
the right people for the job roles, training and rewarding
them.

Very often SHRM is being confused with HRM. SHRM has

more of a long-term orientation towards objectives. It
doesn’t focus on internal human resource issues; the
attention is focused more on addressing and solving
problems that have an effect on management programs in a
long run. In other words, SHRM focuses on occurring
obstacles outside of human resources and tires to increase
employee productivity. Therefore the key actions of SHRM
manager are to identify main HR areas where strategies
could be implemented in the long run in order to improve
overall employee motivation and productivity.

SHRM is implemented with an aid of strategies. As all the

organisations are different so are the strategies but they set
out the same idea – what the organisation intends to do
about its human resource management policies and
practices and how they should be integrated with the
business strategy as well as each other. The strategies could
be identified as being of two types: 1) high-performance
working (overall strategies); and 2) strategies relating to the
different aspects of HRM such as learning and development
(specific strategies). A good HR strategy is the one that
achieves what it sets to achieve and is satisfying business
needs as well as employees.

Developing of HR strategies one of the key areas of SHRM.

It can be a difficult task as there is no ‘right way’ of
developing them. The process can even be just as important
as the contents of the strategies. Furthermore,
implementing HR strategies with the business strategies is
also a very complicated process. The integration can be
achieved in two ways:

Vertical fit integration – integrating business and HR

strategies. Vertical fit is about matching the HR measures
with the strategy pursued by the company. In order to
enhance an overall performance, the company needs to
create or acquire the optimal package of human resources.
Generally speaking, vertical fit is considered to be a critical
step towards attaining the organisational goals with an aid
of human resource activities.
Horizontal fit integration – bundling. Horizontal fit refers to
the congruence among the various HRM practices among
themselves. There are three factors that influence
horizontal fit: HR policy, options of HR policy, and the
budget of HRM. In other words, horizontal fit is concerned
about the composition and arrangement of the HRM
system, and the organisational policies toward HRM
matters in order to achieve a high level of fit among
independent HR practices.
In brief, both types of fit make quite a significant
contribution to the competitiveness of a business and it is
important to arrange a variety of HR practices in a
systematic way. If properly implemented, the set of these
practices can have a very positive impact on company’s
performance.

Implementation of HR strategies is not easy. First of all, they

have to be ‘translated’ from abstractions into programmes
that would clearly state objectives and deliverables. Even
then the implementation is not easy, as there are other
barriers obstructing it. Naming only a few, the barriers
could be:

Employees tendency to only accept initiatives relevant to

their own areas;
Long-serving employees tendency to cling to the status quo;
Not all the employees understand complex or ambiguous
initiatives or perceive them differently, especially in large,
diverse organisations;
The initiatives are sometimes seen as a threat;
The extent to which senior management is trusted, etc.
These kind of barriers may occur when not enough
attention is being paid to practical implementation
problems. Here the role of a line manager is very important
as well as the need to have established supporting
processes for the initiative. In order to overcome these
barriers it is essential to formulate the strategy well, make
sure there is a support for the strategy, assess barriers,
prepare action plans, etc. The main idea behind all that,
however, is that there is a gap between what the strategy
says and what actually happens to it in practice.

Challenges of Strategic Human Resource Management

It is important to identify what consequences SHRM has on
the performance of business. In other words, as HRM is
concerned with the people implications of the company,
how can it change the vision of the organisations future and
how can it help to fulfill the mission.
The key role of strategic HR management is already known
and there are some issues that HR strategy may address:

Structure. The success of the company depends a lot on

whether there is a proper management structure in place.
Team-working. By withdrawing old traditional hierarchies a
background of creating a team building is created. In a lot of
cases, the less layers there are between the workers and
director there are, the more harmonized is the working
environment. Also the communication between staff is
easier and more effective. In addition to that, it could have
far-reaching effects on flexibility and performance and to
achieving a better coordination of business.
Performance. This strategy is based on an analysis of the
critical success factors and the performance levels reached
in relation to them. The performance can be improved by
taking the steps to improve training, development,
reorganization, the development of performance
management processes, business process re-engineering,
etc. A lot of companies have already adopted performance
management processes in which the emphasis is on
performance improvement and development and not
reward. This scheme brings new priorities of involvement,
teamwork and self-development.
Quality and customer care. The aim of most companies is to
achieve the competitive advantage. The competitive
advantage is often measured by customer satisfaction and
hence loyalty and retention. Innovation and cost reduction
is still important but the main focus of attention should be
the customers because if they reject the product due to it
not meeting their expectations then everything else looses
the sense. Therefore the strategy for quality should be built
into the business strategy.
Achieving a complete integration of HR and business
strategies is quite complicated. Partly the reason for that is
that in the past HR manager in the company was not
considered to be a part of a general management team.
Furthermore, the personnel advice was not a part of
strategic direction. However, in today’s modern business HR
is indispensable.

Related Posts:
Strategic Human Resources Planning (SHRP) Process
Necessity for Alignment between Corporate Strategy and
HR Strategy
Human Resource Audit
Harvard Framework for Human Resource Management
Significance of Human Resources in International Business
Arena
Human Resource Management (HRM) Best Practices
The Art of Managing Human Resources in an Organization
The Role of Human Resource Management in Organizations
The Strategic Role of Human Resource Management
Best Fit and Best Practice Approaches in Strategic HRM
Human Resource Management
HRM Concepts, HRM Functions, Human Resource Concepts,
Human Resource Strategies, Modern HRM
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