Othm Level 07 Icbt - Lesson - 1

STRATEGIC HUMAN RESOURCE
MANAGEMENT
AMILA THIRIMANNE
MBA(UK) SPEC HRM,PG DIP(COL),EDM(COL),ABE(UK),MSLIM,READING FOR PHD (COL).
LEARNING OUTCOMES
• Critically justify the importance of human resource management in

organizations.
• Assess the role and purpose of the strategic human resource management
function and activities in an organization.
• Evaluate how human resource management is related to other functional
areas.
OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

UNDERSTAND THE ROLE OF
MANAGEMENT OF HUMAN
RESOURCES.

HUMAN RESOURCE MANAGEMENT
• “HRM is the function performed in organizations that

facilitates the most effective use of people to
achieve organizational and individual goals.”

• “Human resource or manpower management
effectively describes the process of planning and
directing the application, development and utilisation of
human resources in employment”
- Dale Yoder
HUMAN
RESOURCE • “The personnel function is concerned with the
MANAGEMENT procurement, development, compensation, integration
and maintenance of the personnel of an organisation
for the purpose of contributing towards the
accomplishment of that organisation’s major goals or
objectives” – Flippo

FOUR DESCRIPTIONS OF THE HRM FUNCTION:
1.It is action-oriented
2.It is people-oriented
3.It is globally-oriented
4.It is future-oriented

1. It helps the organisation to identify correctly its manpower needs
2. It ensures that the organisation does not suffer from either surplus or
shortage of manpower
IMPORTANCE 3. It facilitates the selection of the right man for the right job
OF HRM 4. It focuses attention on the development of the skill of every

individual in order to make him up-to-date
5. It recognises the need for the appraisal of the employees

performance
6. It considers the need to provide incentives to the employees

performing well

IMPORTANCE OF HRM
7. It gives utmost 8. It emphasizes the 9. It provides scope

importance to need for good human for collective
securing a favourable relations in every bargaining
employee attitude workplace

1. To make an optimum utilisation of the human resource of the organisation
2. To ensure that the organisation has the required number staff
3. To establish and maintain a sound organisation structure

OBJECTIVES 4. To reconcile personal and organisational goals
OF HRM 5. To provide scope for the development of personnel
6. To ensure that the employees have higher job satisfaction
7. To provide scope for participation in decision-making

DIFFERENCE B/W PERSONNEL MGT & HRM
1. Personnel management is a traditional approach of managing people in the

organization. Human resource management is a modern approach
of managing people and their strengths in the organization.
2. Personnel management focuses on personnel administration, employee welfare and

labor relation. Human resource management focuses on acquisition, development,
motivation and maintenance of human resources in the organization.
3. Personnel management assumes people as a input for achieving desired output.

Human resource management assumes people as an important and valuable resource
for achieving desired output.
DIFFERENCE B/W PERSONNEL MGT & HRM
4. Under personnel management, personnel function is undertaken for employee's

satisfaction. Under human resource management, administrative function is undertaken
for goal achievement.
5. Under personnel management, job design is done on the basis of division of labour.
Under human resource management, job design function is done on the basis of group
work/team work.
6. Under personnel management, employees are provided with less training and
development opportunities. Under human resource management, employees are
provided with more training and development opportunities.
• 7. In personnel management, decisions are made by
the top management as per the rules and regulation of
the organization. In human resource management,
decisions are made collectively after considering
DIFFERENCE employee's participation, authority, decentralization,
competitive environment etc.
B/W
PERSONNEL • 8. Personnel management focuses on increased
MGT & HRM production and satisfied employees.
Human resource management focuses on effectiveness,
culture, productivity and employee's participation.

NATURE / SCOPE OF HRM
Control Acquisition
HR Audit HR Planning
HR Accounting Recruitment, Selection
HR Information System Placement.
Human
Resource
Maintenance Management Development
Remuneration Training, Career
Development, Organisation
Motivation
Development, Internal
Health & Safety Mobility.
Social Security
Industrial
OTHM LEVEL 7 DIPLOMA INRelations
STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION
Performance Appraisal
• Environment comprises all those forces which have their
bearing on the functioning of various activities including
human resource activities. Environment scanning helps HR
manager become proactive to the environment which is
ENVIRONMENT characterised by change and intense competition.
OF HRM
• Two types of environments:
1. Internal environment
2. External environment

1. INTERNAL ENVIRONMENT
These are the forces internal to an organisation. Internal forces have
profound influence on HR functions. The internal environment of HRM
consists
a. Unions
b. Organisational Culture & Conflict
c. Professional Bodies

1. EXTERNAL ENVIRONMENT
External environment includes forces like economic, political, technological,
demographic etc. these exert considerable influence on HRM. The
external environment of HRM consists
a. Economic
b. Political
c. Technological
d. Demographic

Take any multinational or local organization as an
example discuss how current environment will influence to
organization sustainability…… 30 Min (Group
Discussion)

STRATEGIC HRM
Strategic human resource management is to ensure that human resource
management is fully integrated into strategic planning, that HRM policies
cohere both across policy areas and across hierarchies and that HRM
policies are accepted and used by line managers as part of their every
day work.
According to Donald F. Harvey, “Strategic management is that set of

managerial decisions and actions that determine the long-term
performance of a corporation. It includes environmental scanning,
strategy formulation, strategy implementation and evaluation and control.
STRATEGIC IMPORTANCE OF HRM
The increased strategic importance of HRM means that:
Human resource specialists must show that they contribute to the goals and mission of the firm
The actions, language, and performance of the HRM function must be:
● Measured
● Precisely communicated
● Evaluated

HR AS A STRATEGIC PARTNER
• HR executives must
understand complex
organizational design
• Sharp deviation from
what has traditionally
been an administrative
type role for HR
OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF
SPECIFICATION
STRATEGIC ACTIVITIES CEOS WANT FROM HR
• Make workforce strategies integral to company strategies and goals

• Leverage HR’s role in major change initiatives
• Earn the right to a seat at the corporate table
• Understand finance and profits
• Help line managers achieve their goals

SPECIFICATION
HUMAN CAPITAL METRICS
Measures of HR
performance

SPECIFICATION
EXAMPLES OF HR METRICS
• Time to fill open positions

• HR headcount ratios
• Administrative cost per employee
• Turnover cost
• Training return on investment
• Cost per employee for HR administration ranges
PEOPLE MANAGEMENT – SRI LANKAN SCENARIO
• In the 50’s there was a strong belief that employees were recruited not to
question ‘why’ but only ‘to do and die’. In the 60s, terms like manpower, staff
and personnel came to be used and instead of controlling the employees, it
became more and more acceptable to manage personnel as it was felt that the
productivity of the workers could be improved, if they were organized for the
work. While hierarchy, status, authority, responsibility and accountability are
structural concepts, in the Sri Lankan context, emotions, feelings, empathetic
perceptions, impressions influenced people more than anything else.

• Berkely Investments is a reputed finance company having
15 branches in different part of the country. In the home
office there are more than 200 employees. This company has
a performance rating under which the employees are rated
CASE STUDIES: at six months intervals by a committee of two executives.
PERFORMANCE Graphic scales have been used as means of appraisal. The

qualities considered are responsibility, initiative, and interest
APPRAISAL in work, leadership potential, co-operative attitude and
POLICIES community activity. After the performance is evaluated, the
ratings are discussed with the concerned employees by their
immediate boss who counsels them. The ratings aroused to
influence promotions and salary adjustments the employees
and also as a criterion for assigning further rating for them.

PERFORMANCE APPRAISAL POLICIES
• Recently three employees of the company called on the company’s president to express their
dissatisfaction with the ratings they had received. Their scores and composite ratings had been
discussed with them. Because their ratings were comparatively low, they had been denied
annual increments in salary. Approximately, two thirds of all the employees received such
increments. The aggrieved employees argued that their ratings did not accurately represent
their qualifications or performance. They insisted that “community activity” was not actually a
part of their job and that what they do off the job is none of the company’s business. They
expressed their opinion that employees should organize union and insist that salary increase be
automatic.

PERFORMANCE APPRAISAL POLICIES – 30 MIN
The threat of a union caused concern to the officers of the company. This
particular experience convinced the top officers that ratings may represent a
serious hazard to satisfactory relationship with employees. Even the chief
executive finds that performance appraisal is a dangerous source of friction and
its hazards outweigh its values; so it should be discontinued altogether.
Questions:
1. How far do you agree with the management that performance appraisal
should be discontinued?
2. If you were the HR manager, how would you tackle the situation?
3. What modifications would you suggest in the performance appraisal system
of the company

Environment of Human Resource Management
Unions EXTERNAL ENVIRONMENT Society
Technology
INTERNAL ENVIRONMENT
Legal Considerations Marketing Operations
Unanticipated Events
Human
Resource
1
Management
Economy
Other
Shareholders
Finance Safety and Functional
Health Areas
Customers Competition Labor Market

LABOR MARKET
• Potential employees located

within geographic area from
which employees are recruited
• Always changing

SPECIFICATION
LEGAL CONSIDERATIONS
• Federal, state and

local legislation
• Court decisions
• Presidential
executive orders
SPECIFICATION
SOCIETY
• No longer content to accept, without question, the actions
of business
• Ethics - Discipline dealing with what is good and bad, or
right and wrong, or with moral duty and obligation
• Social responsibility - Implied, enforced or felt obligation
of managers to serve or protect interests of groups other
than themselves

SPECIFICATION
UNIONS
• Group of employees who

have joined together for
purpose of dealing
collectively with their
employer
• Become a third party when
dealing with the company
SPECIFICATION
SHAREHOLDERS
• Owners of corporation
• Because they have invested money in
firm, they may at times challenge
programs considered by management to
be beneficial to organization

SPECIFICATION
COMPETITION
• Firms may face intense competition

in both their product or service
and labor markets
• Must maintain a supply of
competent employees
• Bidding war often results

SPECIFICATION
CUSTOMERS
• People who actually use firm’s goods

and services
• Management has task of ensuring its
employment practices do not antagonize
members of market it serves
• Workforce should be capable of
providing top-quality goods and
services
SPECIFICATION
TECHNOLOGY
• The world has never before seen technological
changes occur as rapidly as they are today.
• Created new roles for HR professionals
• Additional pressures on them to keep abreast of
technology

SPECIFICATION
ECONOMY
• In general, when economy is booming,

it is often more difficult to recruit
qualified workers.
• When a downturn is experienced,
more applicants are typically
available.

SPECIFICATION
UNANTICIPATED EVENTS
• Occurrences in the external environment that could

not be foreseen
• Every disaster, whether manmade or by nature,
requires a tremendous amount of adjustment with
regard to human resource management
SPECIFICATION
CYBERWORK
• Possibility of never-ending workday

• BlackBerrys, cell phones, text
messaging, and e-mail create endless
possibilities for communication
• Some workers believe their employer
wants them available 24/7

SPECIFICATION
HR’S CHANGING ROLE: QUESTIONS THAT ARE
BEING ASKED
• Can some HR tasks be performed more efficiently by line
managers or outside vendors?
• Can some HR tasks be centralized or eliminated altogether?
• Can technology perform tasks that were previously done by HR
personnel?
• Many HR departments continue to get smaller

SPECIFICATION
HR’S CHANGING ROLE:
WHO PERFORMS HUMAN
RESOURCE MANAGEMENT TASKS?
• Human Resource Managers

• HR Outsourcing
• HR Shared Service Centers
• Professional Employer Organization (Employee Leasing)
• Line Managers
SPECIFICATION
HUMAN RESOURCE MANAGER
• Acts in advisory or staff capacity

• Works with other managers to help them deal with
human resource matters
• Today HR departments continue to get smaller
because others are accomplishing certain functions

SPECIFICATION
HR OUTSOURCING
• Transfers responsibility
to an external provider
• Market for HR
outsourcing is growing
dramatically
SPECIFICATION
WAYS HR OUTSOURCING IS DONE
• Discrete services
• Multi-process services
• Total HR outsourcing

SPECIFICATION
DISCRETE SERVICES
• One element of business process or single set of

high-volume repetitive functions is outsourced to a
third-party
• Large majority of companies outsource transactional
HR activities, such as 401(k) administration
SPECIFICATION
MULTI-PROCESS SERVICES
• Complete outsourcing of
one or more human
resource processes
• Example: Procter &
Gamble outsourced entire
training operations
SPECIFICATION
TOTAL HR OUTSOURCING
• Transfer majority of HR services to third party

• Example: Whirlpool Corporation signed 10-year
deal to outsource HR business processes for 68,000
employees to Convergys Corporation

SPECIFICATION
HR SHARED SERVICE CENTERS
(SSCS)
Takes routine, transaction-based

activities that are dispersed and
consolidates them in one location

SPECIFICATION
PROFESSIONAL EMPLOYER
ORGANIZATION (EMPLOYEE LEASING)
Company that leases

employees to other
businesses.

SPECIFICATION
PROFESSIONAL EMPLOYER ORGANIZATION
(CONT.)
• Company releases its employees who are then hired by PEO
• PEO pays the employees
• PEO is the employees’ legal employer and has the rights to hire, fire,
discipline, and reassign an employee
• Charges a fee of from 1 to 4 percent of the customer’s gross wages

SPECIFICATION
LINE MANAGERS PERFORMING
HR TASKS
• Involved with human resources by

nature of their jobs
• Line managers are now performing
some duties typically done by HR

SPECIFICATION
FUNCTIONS OF HRM
HRM FUNCTIONS
Managerial Functions Operative Functions
Planning Organising Directing Controlling
Procurement Compensation Maintenance
Development Integration
A. Procurement B. Development
1. Job Analysis 1. Training

2. Human Resource Planning 2. Executive development
3. Recruitment 3. Career planning &
4. Selection development
5. Placement 4. Succession Planning
6. Induction and Orientation 5. Human Resource
7. Internal Mobility Development

C. Motivation & Compensation D. Maintenance
1. Job Design 1. Health

2. Work Scheduling 2. Safety
3. Motivation 3. Employee welfare
4. Job Evaluation 4. Social security measures
5. Performance appraisal
6. Compensation
administration
7. Incentives & benefits

E. Integration Function
1. Grievance redressal
2. Discipline
3. Teams and teamwork
4. Collective bargaining
5. Employee participation &
empowerment
6. Trade unions
7. Employers Association
8. Industrial relations
E. Integration Function
1. Grievance redressal
2. Discipline
3. Teams and teamwork
4. Collective bargaining
5. Employee participation &
empowerment
6. Trade unions
7. Employers Association
8. Industrial relations
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STRATEGIC HUMAN RESOURCE

• Critically justify the importance of human resource management in

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

• “HRM is the function performed in organizations that

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OF HRM 4. It focuses attention on the development of the skill of every

5. It recognises the need for the appraisal of the employees

6. It considers the need to provide incentives to the employees

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

7. It gives utmost 8. It emphasizes the 9. It provides scope

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

2. To ensure that the organisation has the required number staff

3. To establish and maintain a sound organisation structure

6. To ensure that the employees have higher job satisfaction

7. To provide scope for participation in decision-making

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

1. Personnel management is a traditional approach of managing people in the

2. Personnel management focuses on personnel administration, employee welfare and

3. Personnel management assumes people as a input for achieving desired output.

4. Under personnel management, personnel function is undertaken for employee's

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

According to Donald F. Harvey, “Strategic management is that set of

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

• Make workforce strategies integral to company strategies and goals

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Time to fill open positions

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

PERFORMANCE Graphic scales have been used as means of appraisal. The

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF SPECIFICATION

Unions EXTERNAL ENVIRONMENT Society

Legal Considerations Marketing Operations

Customers Competition Labor Market

• Potential employees located

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Federal, state and

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Group of employees who

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Firms may face intense competition

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• People who actually use firm’s goods

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• In general, when economy is booming,

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Occurrences in the external environment that could

• Possibility of never-ending workday

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• Human Resource Managers

• Acts in advisory or staff capacity

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

OTHM LEVEL 7 DIPLOMA IN STRATEGIC MANAGEMENT AND LEADERSHIP | RQF

• One element of business process or single set of