Strategic Human resources Management

Week 2
Learning objectives

 Characteristics of human resource management

 The strategic nature of HRM
 People as ‘human capital’
 HRM as a management-driven activity
 Focus on business values
 HRM and personnel management
CHARACTERISTICS OF HRM

 The characteristics of the HRM concept are that it is:

 diverse.
 strategic, with an emphasis on integration.
 commitment-orientated
 based on the belief that people should be treated as assets (human capital);
 Individualistic rather than collective, in its approach to employee relations;
 A management-driven activity – the delivery of HRM is a line management
responsibility.
 Focused on business values.

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CHARACTERISTICS OF HRM

 HRM stresses the need to gain the commitment – the ‘hearts and
minds’ – of employees through involvement, communications and
other methods of developing a high-commitment, high-trust
organization. Attention is also drawn to the key role of
organizational culture.

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The strategic nature of HRM

 Perhaps the most significant feature of HRM is the importance attached to

strategic integration, which flows from top management’s vision and
leadership, and which requires the full commitment of people to it.

 The ability of the organization to integrate HRM issues into its strategic plans,
to ensure that the various aspects of HRM cohere, and to provide for line
managers to incorporate an HRM perspective into their decision making.

 HRM is a stress on the integration of HR policies both with one another and
with business planning more generally.

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The commitment-orientated nature of
HRM
 The new HRM model is composed of policies that promote mutuality – mutual
goals, mutual influence, mutual respect, mutual rewards, mutual
responsibility.

 The theory is that policies of mutuality will elicit commitment which in turn
will yield both better economic performance and greater human
development.
 One of the HRM policy goals was the achievement of high commitment –
‘behavioural commitment to pursue agreed goals, and attitudinal
commitment reflected in a strong identification with the enterprise.

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People as ‘human capital’

The notion that people should be regarded as assets rather than variable costs, in
other words treated as human capital, was originally advanced by Beer et al (1984).
HRM philosophy.
human resources are valuable and a source of competitive advantage.

‘People and their collective skills, abilities and experience, coupled with their
ability to deploy these in the interests of the employing organization, are now
recognized as making a significant contribution to organizational success and as
constituting a significant source of competitive advantage.

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Competitive Advantage through People

 Core Competencies
 Integrated knowledge sets within an organization that distinguish it from its
competitors and deliver value to customers.
 Sustained competitive advantage through people is achieved if these human
resources:
1. Are valuable.
2. Are rare and unavailable to competitors.
3. Are difficult to imitate.
4. Are organized for synergy.

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How SHRM can contribute in achieving
competitive advantage?
 SHRM is an important element of achieving the competitive edge in
terms of quality, cost and flexibility. Either processual or systemic,
SHRM puts human at the center. When we say ‘human’, it does not
necessarily mean the employees, but embracing also those people
whom the organizations does business with. Through them, sustainable
competitive advantage, or the achievement of value-creating strategies
that direct and indirect rivals could not implement, could be achieved.
 The sustainable competitive advantage potential of human resources is
central on the premises that human resources are valuable, rare,
inimitable and non-substitutable. 
Focus on business values

 Focus on business values The concept of HRM has been largely based on a
management- and business orientated philosophy. It is concerned with the total interests
of the organization.

 The interests of the members of the organization are recognized but subordinated to
those of the enterprise: hence the importance attached to strategic integration and
strong cultures, which flow from top management’s vision and leadership, and which
require people who will be committed to the strategy, who will be adaptable to change
and who will fit the culture.

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Recognizing the importance of moral
and social values
The emphasis may be on the business case for HRM, but there is a growing body of
opinion that there is more to HRM than that.
While HRM does need to support commercial outcomes (often called “the business case”),
it also exists to serve organizational needs for social legitimacy.

The yardstick of human resource outcomes is not just economic rationality – a stakeholder
perspective is required, ie develop and maintain sustainable relationships with all the
relevant stakeholders, not just customers and shareholders.

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Recognizing the importance of moral
and social values (Cont’d)
 HR profession ‘has always had a special professional responsibility to balance
the needs of the firm with the needs, aspirations and interests of the
workforce and the values and standards society expects to be upheld at work.

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HRM and vs Personnel Management

 HRM as it is a process of making the right effective and efficient use of human
resources to achieve organizational goals.
 HRM is concerned with the people dimension in management. Since every
organization is made up of people, acquiring their services,
developing their skills, motivating them to higher levels of performance and
ensuring that they continue to maintain their commitment to the organization
are essential to achieving organizational objectives.

 This is true, regardless of the type of organization-government, business,

education, health, recreation, or social action”.

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HRM and vs Personnel Management

Human Resource Management is that specialized and organized branch of management

which is concerned with the acquisition, maintenance, development, utilization and
coordination of people at work, in such a manner that they will give their best to the
enterprise. It refers to a systematic function of planning for the human resource needs and
demands, selection, training, compensation, and performance appraisal, to meet those
requirements.

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HRM and vs Personnel Management
HRM and vs Personnel Management

 Personnel Management
 Personnel management is concerned with the obtaining and maintaining of a
satisfactory and a satisfied workforce.”
 personal management is focused on attaining and sustaining a group of
employees who are happy and content with the organization, its management
in order to work well and give the organization their best performance to
achieve organizational goals.

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HRM and vs Personnel Management

Definition of Personnel Management

 Personnel Management is a part of management that deals with the recruitment, hiring,
staffing, development, and compensation of the workforce and their relation with the
organization to achieve the organizational objectives. The primary functions of the
personnel management are divided  into two categories:
 Operative Functions: The activities that are concerned with procurement, development,
compensation, job evaluation, employee welfare, utilization, maintenance and collective
bargaining.
 Managerial Function: Planning, Organizing, Directing, Motivation, Control, and
Coordination are the basic managerial activities performed by Personnel Management.

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The differences between HRM vs Personnel
Management

 The main difference between Personnel Management and Human Resource

Management lies in their scope and orientation. While the scope of personnel
management is limited and has an inverted approach, wherein workers are viewed as
tool. Here the behavior of the worker can be manipulated as per the core competencies
of the organization and are replaced when they are worn-out.
 On the other hand, human resource management has a wider scope and considers
employees as the asset to the organization. It promotes mutuality in terms of goals,
responsibility, reward etc. that will help in enhancing the economic performance and
high level of human resource development.

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The differences between HRM vs Personnel
Management(cont’d)
BASIS FOR COMPARISON PERSONNEL HUMAN RESOURCE
MANAGEMENT MANAGEMENT
Meaning The aspect of The branch of
management that is management that focuses
concerned with the work on the most effective use
force and their of the manpower of an
relationship with the entity, to achieve the
entity is known as organizational goals is
Personnel Management. known as Human
Resource Management.
Approach Traditional Modern
Treatment of manpower Machines or Tools Asset
Type of function Routine function Strategic function
Basis of Pay Job Evaluation Performance Evaluation
Management Role Transactional Transformational
The differences between HRM vs Personnel
Management(cont’d)

BASIS FOR COMPARISON PERSONNEL HUMAN RESOURCE

MANAGEMENT MANAGEMENT

Communication Indirect Direct

Labor Management Collective Bargaining Individual Contracts
Contracts
The differences between HRM vs Personnel
Management(cont’d)

BASIS FOR COMPARISON PERSONNEL HUMAN RESOURCE

MANAGEMENT MANAGEMENT

Management Actions Procedure Business needs

Decision Making Slow Fast
Job Design Division of Labor Groups/Teams
Focus Primarily on mundane Treat manpower of the
activities like employee organization as valued
hiring, remunerating, assets, to be valued, used
training, and harmony. and preserved.
Thank You