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Business strategy and HRM

The importance of the mutual relationships (integration) between business strategy and HRM is now more and more widely recognized. Researchers in the field (Budhwar 2000) have identified the following reasons for this recognition. Integration: (a) ensures that all resources (human, technical and financial) are given due consideration in setting goals and assessing implementation capabilities; (b) provides a broader range of solutions for solving complex organisational problems;

(c) limits the subordination of strategic considerations to HR preferences and the neglect of HRs as a vital source of organisational competence and competitive advantage. Similarly, the practice of devolvement is also becoming important in the increasingly competitive business environment, which has led to large scale restructuring in organisations. As a result, line managers have been given primary responsibility for HRM. Based on a review of research in the field (Budhwar 2000), the rationale for devolvement is:

(a) it can result in better motivation of employees and more effective control, as line managers are in constant contact with employees; (b) local managers are able to respond more quickly to local problems and conditions; (c) certain issues are too complex for top management to comprehend; (d) it can help to reduce costs; (e) it can help to

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prepare future managers (by allowing middle managers to practise decision making skills). Buhler (1999) states: the most important part of the role change for HR is a change in the perspective of managers throughout the organisation.

Managers must view their HR counterparts as true strategic partners rather than as administrative support appendages to the company. When managers utilize their human resource partners to their full extent, they can realize much higher levels of performance in their own units (Buhler 1999). Failure to take advantage of the human resource department talents and expertise is a failure to fully utilize the resources available to the unit/firm.

While a manager would probably never fail to utilize physical resources available, the same view should be taken of the human resource department services (Buhler 1999). The changing perspective must extend to include all the functions performed by the HR department. Ultimately, managers must view all these functions from a strategic perspective by which they can better meet their own unit objectives. These functions include recruitment, selection, orientation, training, development, job analysis, job design, performance appraisal, compensation and benefits.

Each of these functions can play an integral role in assisting the managers of the firm. The second major change required in strategic perspective is the recognition that all managers in the firm are essentially human resource managers. The responsibilities for human resource activities have been delegated throughout the organisation over a long period of time. Every manager must take the responsibility for effectively and efficiently utilizing all their people. In today’s world, this is no longer the exclusive responsibility of the human resource department.

The human resource professionals must see their role as providing expertise to support the efforts of the line managers of the firm (Buhler 1999). The relationship between line managers and human resource professionals (staff) has been viewed as adversarial in the past. Today, however, the new perspective requires each side perceive the relationship as an interdependent one – a relationship whereby each needs the other. Each of these sides brings a very distinct set of skills and abilities to the table which will complement each other.

This interdependence requires each side learn more about the other’s knowledge. That is, human resource professionals must learn more about the actual business and the external environmental issues which impact it. And the operations managers must learn about the HR issues. This is especially important today as more of the responsibilities for HR functions fall on the shoulders of the line managers. The human resource department is considered a boundary spanning unit. This means this is a department that can provide a critical service to the organisation in scanning the external environment.

The human resource department can specifically gather information concerning the labour market conditions and the general environment for human resources. This is significant information for the firm to integrate into their decision making process if they are to remain competitive and attract or retain the necessary talented employees for their organisation. This external information combined with internal information enables the decision makers to arrive at better informed decisions to remain competitive (Buhler 1999).

With this information, the firm can decide whether to lead, lag or match the competition’s policies with regard to their human resources. Building new capabilities is critical to the future success of organisations. HR must take the lead in helping managers identify the core knowledge, skills and abilities required to support the company’s competitive advantage. Then with the utilization of a well-developed strategic human resource plan, the line managers and human resource professionals can outline recruitment and selection strategies to ensure the necessary people are in place when needed.

The HR department can act as a control mechanism creating consistency across business units to ensure closely aligned strategies that work towards the attainment of corporate objectives. Interactive information systems are providing line managers with the support (in terms of tools and processes) necessary to deliver many of the human resource functions now being delegated to them – traditionally performed by the HR department professionals (Buhler 1999).

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