Strategic Human

Resource Management
Human Resource Management (HRM)
Meaning:
Human Resource Management is a management function concerned with hiring,
motivating, and maintaining workforce in an organization. Human resource management
deals with issues related to employees such as hiring, training, development, compensation,
motivation, communication, and administration.
Definition:
According to Armstrong (1997), Human Resource Management can be defined as “a
strategic approach to acquiring, developing, managing, motivating and gaining the
commitment of the organization's key resource – the people who work in and for it.”
• Pervasive Function:
HRM is practiced at all levels of management and applies to all kinds of organizations,
even to non-profit organizations.
• Result Oriented:
It aims at achieving organizational objectives through the optimum utilization of human
resources.
• Tactful Approach:
HRM deals with the people who are distinct from one another; thus the manager needs to
apply diverse strategies and tactics at different point of time and in different situations.
• People-Centric:
Human resource management is concerned majorly with the employees working in an
organization.
• Integrative Action:
It focusses on maintaining cordial relations among the employees at different levels and
also addresses employee grievances.
• Continuous Process:
HRM is an ongoing process of procurement, development and redirection of personnel
towards the organizational goals. It cannot be completed in a day, a week or a month.
• Societal Objectives:
HRM is essential to comply with the laws of the society such as labor law or
reservation system. It is obligatory for any organization to fulfil its ethical and social
responsibilities which can be done only through HRM.
• Organizational Objectives:
In an organization, human resource management is not an independent unit, but it is a
department which aims at facilitating the other departments of the organisation to
function smoothly.
• Functional Objectives:
HRM ensures that every department is supplemented with the employees possessing
the required set of skills and talent, at the desired cost. It also provides for the optimum
utilisation of the human capital.
• Personal Objectives:
To ensure employee’s long-term association with the organisation and to enhance
employee’s commitment and contribution towards the organisation, HRM helps the
employees to reach their personal goals.
Managerial Functions:
Human resource management is essential at all levels of an organization. The top
management is responsible for forming strategies and giving directions for the successful
application of such plans. In the process, they perform the following functions:

• Planning: Firstly, the management must be aware of the vacant positions or workforce
requirement of the organization. Then, they need to formulate the strategies for
meeting the requirements.
• Organizing: The manager has to establish a framework for the operative functions,
bringing together the human resources and physical resources available with the
organization.
• Directing: Once the framework is ready, the manager instructs and guides the team to
work accordingly, to meet the organizational objective.
• Controlling: The management predefines the standard for performance, and later
analyses the results based on such criteria through performance appraisal and job
analysis. The management has to take corrective measures if necessary.
Operative Functions
The operative functions are those which are taken on the departmental level or middle level and mainly
concerned about the execution of the plans and strategies formulated at the managerial level. To know
more about the different operative functions, read below:

• Procurement: The acquisition of human resource is the primary function of a manager. It involves the
estimation of personnel requirement, recruitment and selection of suitable candidates, placement and
orientation of the workforce in the right position.
• Development: To develop the required skills and talent within the employees, the managers have to use
various training techniques.
• Compensation: Compensation in the form of remuneration, given to employees instead of their services
to the organization should be adequate and fair. The employees are liable to get other benefits such as a
bonus or incentives.
• Integration: Integration means making the new employees familiar with the organization and to their
task or process. It introduces them to the organizational environment and their colleagues.
• Maintenance: The most important of all is the retention of the employees which requires providing
them with various benefits and facilities like PF, life insurance, accidental insurance, health insurance,
pension, gratuity, allowances and taking other health and safety measures.
• Fulfil the Human Resource Requirement:
Human resource management fills in the gap between the vacancies in the organisation and
the suitable candidates for such positions.

• Employee Retention:
HRM not only functions to acquire the manpower but also concentrates on the maintenance
and retention of the human capital.

• Enhance the Quality of Work Life:

It focusses on the continuous enhancement of the job facilities, hence improving the quality
of employee’s work life.

• Redressing Grievance and Conflict:

HRM addresses the problems among employees or with the management since it is
essential for any organisation to resolve its internal conflicts and grievances to ensure a sound
and co-operative work environment.
• Achieving Organizational Goals:
To reach the set objectives and targets on time, it is necessary to direct the employee’s
efforts towards the organizational goals. All this is possible only through the practice of
human resource management.

• Long-term Existence in the Market:

As we all know that employees are the inevitable part of any organization, therefore to
survive in the competition, it is imperative that the organization brings HRM into
functioning.

• Developing Team Spirit and Feeling of Belongingness:

It brings together the different employees as a team to accomplish the goals of the
organization. HRM also make the employees feel valuable to the organization.

• Employee Satisfaction and Welfare:

HRM works for the welfare, safety and security of the organization. It is majorly
concerned about the level of satisfaction derived by an employee from his job.
Strategic Management
Meaning:
Strategic Management is a stream of decisions and actions which lead to the development
of an effective strategy or strategies to help achieve corporate objectives. The Strategic
Management process is the way in which strategists determine objectives and make
strategic decisions. Strategic Management can be found in various types of organizations,
business, service, cooperative, government, and the like.
Definition:
According to Jemison – Strategic management is the process by which general managers of
complex organisations develop and use a strategy to co-align their organisation’s
competence and the opportunities and constraints in the environment.
Objectives:
1. To exploit and create new and different opportunities for tomorrow.

2. To provide the conceptual frameworks that will help a manager understand the key
relationships among actions, context, and performance.

3. To put an organisation into a competitive position.

4. To sustain and improve that position by the deployment and acquisition of appropriate
resources and by monitoring and responding to environmental changes.

5. To monitor and respond to the demands of key stakeholders.

6. To find, attract, and keep customers.

7. To ensure that the company is meeting the needs and wants of its customers, which is a
cornerstone in providing the quality product or service that customers really want.
8. To sustain a competitive position.

9. To utilize the company’s strengths and take full advantage of its competitor’s
weaknesses.

10. To understand the various concepts involved like strategy, policies, plans and
programmes.

11. To have knowledge about environment—how it affects the functioning of an

organization.

12. To determine the mission, objectives and strategies of a firm and to visualize how
the implementation of strategies can take place.

13. To find the solutions of problems in real-life business.

14. To develop analytical ability to identify threats and opportunities present in the
environment.
Nature
1. Strategic Management as a Process:
Strategic management is basically a process. It has emerged out of management in
other fields where the concept of management is taken as a process for achieving
certain objectives of the organization. Thus, strategic management involves
establishing a framework to perform various processes. The concept of strategic
management must embody all general management principles and practices devoted to
strategy formulation and implementation in the organization.

2. Top Management Function:

Strategic management is basically top management function. Thus, in order to
ensure effective top management function, it is necessary that a distinction should be
made between strategic management and operational management which emphasizes
day-to-day operations in the organization, so that top management can focus more
attention on the strategic aspect rather than emphasizing on operational management.
3. General Management Approach:

Strategic management has general management approach. This approach has

three characteristics – (i) This approach uses system frame of reference in dealing
with wholeness of an organization. In this dealing, the emphasis is put on identifying
tendencies of various phenomena in the organization and relationships among these
tendencies, (ii) Decision criteria are based on overall betterment of the organization
as a whole, not the criteria used by functional specialists, (iii) Attempt is made to
achieve organizational equilibrium and generation of synergy. This may be even
suboptimal for some departments or units of the organization.

4. Relating Organization to Environment:

The focus of strategic management is on relating the organization to its external

environment. This emphasizes that there is continuous interaction between the
organization and its environment taking an open systems approach. Thus, the
organization must create adequate channel through which external information will
pass to various points in the organization.
5. Long-Term Issues:

Strategic management deals primarily with long-term issues of the organization that may or
may not have an immediate effect. For example, investment in research and development
(R&D) may yield no immediate effect in terms of new product development. However, this
investment may lead to development of new products and, therefore, enhanced profits.

6. Flexibility:

Strategic management has flexibility. This flexibility is required because strategic

management works in the context of environment which is quite dynamic. As a result,
many strategic actions planned maybe either left, postponed, or changed in the light of
environmental requirements.

7. Innovation:

Strategic management puts emphasis on innovation which is the process of introducing new
things or new ways of working. Innovation is achieved through new strategic actions which
are quite different from the previous actions. Innovation is required to face environmental
challenges effectively.
Importance
i. It helps the organization to be more proactive instead of reactive in shaping its future.
Organizations are able to analyze and take action instead of being mere spectators.

ii. It provides framework for all the major business decisions of an enterprise such as – decisions
on businesses, products, and markets, manufacturing facilities, investments and organizational
structure.

iii. It seeks to prepare the corporation to face the future and acts as a pathfinder to various
business opportunities. Organizations are enabled to identify the available opportunities and
identify ways and means to reach them.

iv. It helps organizations to avoid costly mistakes in product market choices or investments.

v. It helps organizations to evolve certain core competencies and competitive advantages that
assist in their fight for survival and growth.
vi. Strategic management looks at the threats present in the external environment and
thus companies can either work to get rid of them or else neutralizes the threats in such a
way that they become an opportunity for their success.

vii. It also adds to the reputation of the organizations because of the consistency that
results from organizational success.
Levels:
In a multi-business enterprise, having several SBUs, there would be three levels of
strategy, viz., – corporate strategy, SBU strategy and functional strategy. In enterprises
which do not have SBUs, there will be only two levels of strategy, i.e., corporate
strategy and functional strategies.

1. Corporate Strategy:

Corporate strategy is the long-term strategy encompassing the entire organisation.

Corporate strategy addresses fundamental questions such as what is the purpose of the
enterprise, what business/businesses it wants to be in (portfolio strategy) and how to
expand/get into such business/businesses (for example – by establishing greenfield
enterprises or by M&As).

Corporate strategy is formulated by the top level corporate management (board of

directors, CEO, and chiefs of functional areas).
2. SBU Strategy:

SBU-level strategy, sometimes called Business Strategy or Competitive Strategy, is

concerned with decisions pertaining to the product mix, market segments and
maneuvering competitive advantages for the SBU.

While corporate strategy decides the business portfolio (i.e., the types of business), the
competitive strategy decides the strategy/strategies to succeed in the chosen
business/businesses.

3. Functional Strategies:

Functional-level strategies are strategies for different functional areas like production,
finance, personnel, marketing, etc. In other words, “functional-level strategic
management is the management of relatively narrow areas of activity, which are of vital,
pervasive, or continuing importance to the total organization.”

Functional-level strategy is the responsibility of functional area heads.

Benefits
1. Strategic management helps to envision an organisation’s future, formulate mission
and make objectives clear. This is clear from the fact that determination of mission
and objectives is the first step in the strategic management process.

2. The articulation of the mission and objectives and the formulation of a strategy for
their accomplishment help people in the organisation understand what the
organisation stands for, what is the development path charted out, what are the
planned results over a period of time, etc.

3. It makes people realise what are they working for, what is expected of each SBU,
division, functional department and, to some extent, individuals.

4. Strategic management facilitates better delegation, coordination, monitoring,

performance evaluation and control.
5. The identification of the strengths and weaknesses may help an organisation to take
measures to overcome/minimise the weaknesses and reinforce the strengths.

6. The SWOT analysis, which is a part of the strategic management, helps a company
to adopt suitable strategies for exploiting opportunities and combating threats. It will
also help the company to drop those businesses where it would not be successful or
which do not meet the objectives.

7. A company with strategic management will be constantly monitoring the

environment and making modifications of the strategy as and when required so that
the plans are made more realistic and effective.

8. Strategic management would enable a company to meet competition more

effectively.
Limitations:
1. Strategic management is based on certain premises and if the premises do not hold
valid, the strategy or plans based on them would not be realistic or effective. These
points to the need for exercising due diligence in premising and to the importance of
strategic control, particularly premise control.

2. SWOT analysis has a very important role in strategic management. Obviously, if

the SWOT analysis is not right, the strategy based on it may go awry. SWOT analysis
is an exercise which requires lot of expertise and information. When these two are
lacking, the utility of the SWOT analysis is questionable and it could even lead to
formulation of wrong or ineffective strategies.

3. Strategic management is a means to achieve the mission and objectives of the

organization. Hence, any lack of realism or other limitation of the mission/objectives
would naturally get reflected in the strategy.
4. One of the criticisms against strategic management is that it sometimes makes the
organization over-ambitious and the resultant failure to reach the goals cause frustration.
Unrealistic strategies may land companies in severe problems.

5. Another criticism advanced against strategic management is that it makes the future
vision tunneled that several opportunities may be overlooked. Against this criticism, it may
be argued that the strategy is formulated after scanning all the opportunities. Further, a
good strategic management also envisages modification of the strategy when changes in
the environment call for it.

6. Yet another criticism which is very akin to the above is that it makes the whole approach
very rigid. Against this, it may be pointed out that a good strategic management system
provides for required flexibility and modifications. Strategic control and contingency
planning impart the plans some amount of adaptability to the unforeseen developments.