STRATEGIC HUMAN RESOURCE MANAGEMENT

 

HRM Defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives.

MODELS OF HRM

Selection: Matching available human resources to jobs.

Appraisal

Performance Management

Rewards

The reward system is one of the most under-utilized and mishandled managerial tools for driving organizational performance’; it must reward short- as well as long-term achievements, bearing in mind that ‘business must perform in the present to succeed in the future’.

Development

Developing high-quality employees

 

The Harvard model of HRM 

(from Beer et al, 1984)

AIMS OF HRM

The overall purpose of human resource management is to ensure that the organization is able to achieve success through people.  

As per Ulrich and Lake (1990) 

‘HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities.’

Achieving objectives of HRM

Achieving objectives of HRM is concerned with in following areas;

Organizational effectiveness

Distinctive human resource practices shape the core competencies that determine how firms compete. HRM strategies aim to support programmes for improving organizational effectiveness by developing policies in such areas as knowledge management, talent management and generally creating ‘a great place to work’.

Human capital

The human capital of an organization consists of the people who work there and on whom the success of the business depends. Human capital has been defined by Bontis et al (1999) as follows: ‘Human capital represents the human factor in the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character. The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization.’
 

Human capital can be regarded as the prime asset of an organization, and businesses need to invest in that asset to ensure their survival and growth.

HRM aims to ensure that the organization obtains and retains the skilled, committed and well-motivated workforce it needs. This means taking steps to assess and satisfy future people needs and to enhance and develop the inherent capacities of people – their contributions, potential and employ-ability–by providing learning and continuous development opportunities. It involves the operation of ‘rigorous recruitment and selection procedures, performance-contingent incentive compensation systems, and management development and training activities linked to the needs of the business’. It also means engaging in talent management – the process of acquiring and nurturing talent, wherever it is and wherever it is needed, by using a number of interdependent HRM policies and practices in the fields of resourcing, learning and development, performance management and succession planning.

Knowledge management

Knowledge management is ‘any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organizations’. HRM aims to support the development of firm-specific knowledge and skills that are the result of organizational learning processes.

Reward management

HRM aims to enhance motivation, job engagement and commitment by introducing policies and processes that ensure that people are valued and rewarded for what they do and achieve, and for the levels of skill and competence they reach.

Employee relations

The aim is to create a climate in which productive and harmonious relationships can be maintained through partnerships between management and employees and their trade unions.

Meet diverse needs

HRM aims to develop and implement policies that balance and adapt to the needs of its stakeholders and provide for the management of a diverse workforce, taking into account individual and group differences in employment, personal needs, work style and aspirations, and the provision of equal opportunities for all.

Rhetoric and reality

Managements may start with good intentions to do some or all of these things, but the realization of them – ‘theory in use’ – is often very difficult. This arises because of contextual and process problems: other business priorities, short-termism, lack of support from line managers, an inadequate infrastructure of supporting processes, lack of resources, resistance to change and lack of trust.

Strategy

(Concept and Process)

STRATEGY DEFINED

Strategy is about deciding where you want to go and how you mean to get there. A strategy is a declaration of intent: ‘This is what we want to do and this is how we intend to do it.’ Strategies define longer-term goals but they are more concerned with how those goals should be achieved. Strategy is the means to create value. A good strategy is one that works, one that guides purposeful action to deliver the required result.

"Strategy is the direction and scope of an organization over the longer term ideally, which matches its resources to its changing environment, and in particular, to its markets, customers and clients to meet stakeholder expectations".
 

(Johnson and Scholes, 1993)

 

THE CONCEPT OF STRATEGY

The concept of strategy is based on three subsidiary concepts:-

Competitive advantage 

Porter asserts, arises out of a firm creating value for its customers. To achieve it, firms select markets in which they can excel and present a moving target to their competitors by continually improving their position.

Distinctive capabilities

Distinctive capabilities are those characteristics that cannot be replicated by competitors, or can only be imitated with great difficulty.

 

Strategic fit

The concept of strategic fit states that to maximize competitive advantage a firm must match its capabilities and resources to the opportunities available in the external environment.

THE FORMULATION OF STRATEGY

The formulation of corporate strategy can be defined as a process for developing a sense of direction. It has often been described as a logical, step-by-step affair, the outcome of which is a formal written statement that provides a definitive guide to the organization’s long-term intentions. Many people still believe and act as if this were the case, but it is a misrepresentation of reality.

This is not to dismiss completely the ideal of adopting a systematic approach as described below – it has its uses as a means of providing an analytical framework for strategic decision making and a reference point for monitoring the implementation of strategy. But in practice, and for reasons also explained below, the formulation of strategy can never be as rational and linear a process
as some writers describe it or as some managers attempt to make it.

STEPS TO FORMULATE STRATEGY

1. Define the mission.

2. Set objectives.

3. Conduct internal and external environmental scans to assess internal strengths and weaknesses and external opportunities and threats (a SWOT analysis).

4. Analyze existing strategies to determine their relevance in the light of the internal and external appraisal. This may include gap analysis, which will establish the extent to which environmental factors might lead to gaps between what could be achieved if no changes were made and what needs to be achieved. The analysis would also cover resource capability, answering the question: ‘Have we sufficient human or financial resources available now or that can readily be made available in the future to enable us to achieve our objectives?’

5. Define in the light of this analysis the distinctive capabilities of the organization.
 

6. Define the key strategic issues emerging from the previous analysis. These will be concerned with such matters as product-market scope, enhancing shareholder value and resource capability.
 

7. Determine corporate and functional strategies for achieving goals and competitive advantage, taking into account the key strategic issues. These may include business strategies for growth or diversification, or broad generic strategies for innovation, quality or cost leadership; or they could take the form of specific corporate/functional strategies concerned with product-market scope, technological development or human resource development.

8. Prepare integrated strategic plans for implementing strategies.
 

9. Implement the strategies.
 

10. Monitor implementation and revise existing strategies or  develop new strategies as necessary.

Strategic human resource management

(Concept and Process)

STRATEGIC HRM DEFINED

 

"The organization’s intentions and plans on how its business goals should be achieved through people". 

It is based on three propositions: 

first, that human capital is a major source of competitive advantage.

second, that it is people who implement the strategic plan.

and, third, that a systematic approach should be adopted to defining where the organization wants to go and how it should get there.

Strategic HRM is a process that involves the use of overarching
approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another. These strategies define intentions and plans related to overall organizational considerations, such as organizational effectiveness, and to more specific aspects of people management, such as resourcing, learning and development, reward and employee relations.

AIMS OF STRATEGIC HRM

The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. Its objective is to provide a sense of direction in an often turbulent environment so that the business needs of the organization, and the individual and collective needs of its employees can be met by the development and implementation of coherent and practical HR policies and programs.

 

HR Strategies

HR STRATEGIES DEFINED

HR strategies set out what the organization intends to do about its human resource management policies and practices, and how they should be integrated with the business strategy and each other.

The purpose of HR strategies is to guide development and implementation programmes. They provide a means of communicating to all concerned the intentions of the organization about how its human resources will be managed. They enable the organization to measure progress and evaluate outcomes against objectives.

TYPES OF HR STRATEGIES

Overarching HR strategies describe the general intentions of the organization about how people should be managed and developed and what steps should be taken to ensure that 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, which set the scene for more specific 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.