Human Resource Strategy
Human resources is a very important and sole source of the economic system and therefore it must be of highest quality. In this era of globalization, it is important for a company to be successful; the company requires tapping the potential of the people with basic scholastic abilities, communication skills, diverse and high level expertise and increasing acceptance of various cultures. The way a company goes about obtaining success depends heavily on human resource strategy. Human resources planning, recruitment and selection are the basic tasks that occur within this structure.
Recruitment and selection depend upon, first, having a completely objective system for selecting candidates from the pool of applications. This involves creating the correct job announcement and then selecting candidates according to education, experience and suitability for the job. These functions are planned before the actual recruitment takes place. Selection is also a part of this process as HRM are responsible for selecting the correct policies as well as candidates. With the globalization, integration of the markets is increasing worldwide.
The international system is becoming multi-layered and multidimensional and major powers are supporting the new international economic order. Organizations are increasingly looking at human resources as a unique asset that can provide a sustained competitive advantage. The changes in business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and never ending changes that organizations are undergoing, have led to the increased importance of managing human resources.
In this scenario, the human resource that is highly administrative and lacks strategic integration fails to provide the required competitive advantage for survival and thus losing its relevance. Organizations that have achieved operational excellence and are aligned with business strategic goals had noticeable financial returns. Firms employing HR practices according to the strategy are regarded to have better conceptual performance.
Five key factors, the external environment, and the business strategy that affects and is affected by the strategic HRM (SHRM) process, the internal environment-the organizational context within with the strategic HRM operates, SHRM comprising the HR strategy and the individual HRM practices, and the outcomes of the process of SHRM. The strategy formulation process is influenced by a number of external and internal factors. The strategic formulation of the organizations has an impact of the interrelated factors like technological, economical, socio-cultural and political environment.
Competitive strategy is influenced by economic conditions, industry structure, competitive advantage, product/market scope and the distinct competence. The labor market, skills, and values, economic conditions and the cultures at large influence the human resource strategy formulation. The key external stakeholders like the government, media, environmentalists, local community organizations and consumer advocates who can influence the strategy formulation. The internal factors include organizational culture, dominant coalition, internal stakeholders like the employees and the management, HR department and its expertise.
Competition, government regulations, technology, market trends and economic conditions are key external environmental variables and culture, structure, politics, employee skills and past strategy are key internal variables. External factors like technology changes, political, social and economic climate influence the HR strategy formulation in organizations. Internal factors like the structure, culture, internal politics, business direction and business outcomes interact with the external environment in the process of HRM. A number of organizational factors influence the SHRM process.
A few general factors are identified to be barriers to the effective SHRM. The major one is that the top management does not perceive it important to include HR department in the decision making process. The three significant barriers to HR playing a more proactive role are the lack of basic economic literacy among the HR professionals, lack of comfort among the HR professionals to take risks and HR professionals who do not demonstrate courage of conviction about their principles. As most of the HR interventions or practices have long-term implications, short-term oriented actions can hamper effective HRM.
The inability of the HR managers to think strategically is another factor. Lack of appreciation for HRM as a function, lack of cooperation from the line managers and their unreliability in handling HR function in their respective departments, increasing focus on quantifying results, the feeling of risk on investing heavily on the human resource, complementing organizational performance, inability of the HR practices to change according to the business needs and the disincentives related to the changes associated with the SHRM.
Implementation of SHRM may involve drastic changes in the work practices and other HR processes and hence may affect lot of employees. Bringing about change is a difficult process and people who have faced negative consequences of an unsuccessful effort to change may obstruct the change processes of the future. The process of SHRM is divided into three stages. The first stage is that of formulating of business strategy and translating it into HRM strategic objectives. HR strategy evolves from the HRM strategic objectives.
The second stage is that of implementing HRM systems based on the HR strategy. The final stage is that of evaluating the effectiveness and strategic integration of the HRM systems. The process of SHRM is dynamic and the three stages are closely interlinked. The formulation stage provides the ground for the happening of the effective HRM. The organization recognizes HR department as a business partner and provides it with avenues for being a proactive partner. The external and organizational contexts influence the strategy formulation.
The external context is characterized by the factors like product market situation, nature and extent of competition, labor market situation including demography of the available work force, government policies and laws, economic situation and forecasts, industry perspective and external stake holders like suppliers and competitors. The organizational context refers to the organizational situation that is represented through various departments. Inputs from functional areas are taken to formulate business strategy.
The head of the HR department plays a key role in representing the organization in terms of HR related issues. The organizational contexts that he represents are the competencies, structural features with their advantages and limitations, policies and practices that are followed, cultural factors and people management issues. An important factor in the success of strategy implementation is the availability of required competencies in the human resources. The structural features look into the structure of the organization in terms of features that set limitations for strategic implementation.
During strategy formulation, the head of the HR department should be able to appraise the top management about the various policies and practices that are followed and the changes that are necessary for effective implementation of the business strategy. The people management issues look into various employee-related factors that affect the productivity at work place and their impact on a business strategy formulation. The HR head should also be able to contribute in terms of certain changes in the external environment. HRM strategic objectives are identified according to business strategy.
The business strategy may be based on any of the generic strategies like cost reduction, innovation, or quality enhancement. The implementation stage is that of implementing various HRM systems based on the HR strategy. Various HRM systems like recruitment and selection, performance management, compensation, training and development, career management, need to be aligned with the HR strategy. Implementation stage also includes initiating interventions required for organizational development or effectiveness and managing change during processes like restructuring or mergers.
Automating HRM practices and outsourcing some HRM practices can contribute to more effective functioning of the HR department. Automation of the HRM practices through human information systems, also improves HR department’s capability to collect and provide information needed for strategy formulation. HR department plays a key role in the implementation stage. The final stage deals with the evaluation of the effectiveness of the HRM systems and their strategic integration. The evaluation stage includes various surveys and evaluation processes.
In the evaluation, defining and measuring goal achievements or outcomes of various HRM practices and activities is the first step. Performance reviews and associated actions are part of this stage. The information collected and analyzed on the evaluation metrics provide feedback for making necessary changes in the implementation process. The enablers/deterrents in the formulation stage of the process include structural factors, that is the absence or presence of HR representative and the organizational policies regarding such representation play a significant role.
Cultural factors like importance given to HR issues in general and top management support for HR department and HR related issues help the HR representative in taking an active role. The critical factor, the individual factors related to the HR representative in the strategy formulation team. The competency of the HR representative in his or her own field and his or her own ability to represent efficiently are important factors. Interpersonal dynamics can play a major role in the representation process.
The contextual factors related to the people management issues. Such scenario would force the top management to take note of HR issues even if these issues are generally neglected at other times. In the second stage the structural the organization of the HR department and the various organizational policies regarding the roles to be played by the HR department are included. The cultural factors include the HR philosophy and the internal branding of HR. Operational issues include flexibility of HRM systems, competency of HR personnel.
The last category of factors that influence strategic implementation is the environmental factor. In the third stage the factors that influence this stage may be categorized into structural, operational and behavioral factors. The structural factors include the scope of evaluation, and the feedback processes. The operational factors are the availability of the required data, proper measurement techniques, required analytical skill, and technological support for the data collection and analysis. The behavioral factors include the purported use of the evaluation results.
Human resource management and human resource strategy are slightly different in nature. Human resources come to occupy a central role in the strategic planning of many companies. A strategic plan is necessary for a company to succeed because, without it, the business is likely to meander from decision to decision without any sense of priorities or goals as to where it is going. An analogy would be that a company without a strategic plan is like an explorer without a map: the explorer may get somewhere interesting, but it will be an accident.
With a map the likelihood of finding his way, and perhaps of discovering new places of interest increases. Similarly, a company without a strategic plan may become accidentally successful, but it much more likely to achieve success, and to maintain its profitability, if it has a plan in place. A company with a strategic plan will know how it has got to current success and thus may be able to continue on this path in the future. Human resource strategic management needs to be long-term in nature.
A case study of the bullying and harassment in the workplace will illustrate this process. Companies must introduce sensitivity training in which employees are trained regarding the effects of bullying and harassment: what they may see as a game may in fact have severe consequences upon the target of their attentions. This is clearly a long-term type of human resource management which produces an environment in which bullying and harassment is not a socially acceptable form of activity within the workplace is perhaps the most effective method of dealing with them.
Laws are essentially used as the place of last resort, and will come into play when a company’s culture has failed to produce an environment in which bullying is unlikely. Human resource management plays dual role: nurturer and enforcer, can often lead to an ambivalent attitude towards HRM from both employees and management. The employee can turn to HRM when faced with problems regarding benefits etc in a quotidian sense, but she must also remember that the HRM’s bottom line is its representation of the company’s policy, which may not always be concomitant with the employee’s best interest.
One of the best forms of HRM makes the company and the employee’s best interests as synchronous as possible, thereby ensuring a smooth relationship between all parties that make up a business. The manager does not merely need to analyze in an inward sense, but also needs to be able to communicate his/her findings to subordinates and superiors. This leads to the influencing function of human resource management. This aspect of management relies upon what are popularly known as “people skills”.
These are perhaps inherently difficult to learn, based as they are on intuition, instinct and knowledge of human nature. However, certain aspects of group dynamics and motivation can be learned, at least in a theoretical sense. How to apply this theory to individual situations is of course another matter. The massive range of benefits and services that HRM may offer complicate the “one size fits all” philosophy that occurred in the past. Different types of benefits will be utilized by different employees at various periods in their careers.
The task of HRM is to identify these needs before they occur and react accordingly. One of the most important facets of influencing is managing the delicate balance between giving employees specific, clearly defined tasks and enabling them to use their own imaginations. Such an organization is always ready to change when the opportunity arises: it is not stuck in a paradigm paralysis in which change is virtually impossible. A great example of successful human resource strategy success is the Wal-Mart Corporation. Wal-Mart is one of the biggest companies in the world.
Wal-Mart’s culture was characterized by an orientation towards best value at lowest prices and consumer care. According to analysts, the most important factor for company’s success is culture. The success of Wal-Mart has been attributed to its strong cultural base, a kind of cult- like culture that is shared by all great companies, to the extent that people working at Wal-mart are referred to as Wal-Martians. Americans were not offered with health insurance, the policies are among the fastest growing health-insurance offerings in the work place. Wal-mart is one major company that offers insurance to its employees.
Importance was stressed on the welfare of the employee to project the image of social responsibility. Human resource management needs to take into account both its vital day-to-day function but also to meet long term-strategic roles. Human resources occupies a unique place within most companies’ hierarchies. It represents the interests of management and yet also those of the workers. In many ways it is a conduit between the two different sections of the company. The manner in which it succeeds (or fails) in this mediating role is a large determinant of a company’s success.
Businesses make money through providing customers or clients with products or services that they desire. Human resource managers play a vital role in constantly evaluating these assumptions, seeing when they are correct and when they reach the point at which they need to be changed. These assumptions are an essential part of the strategic plan and interpreting them is the most basic, and most profound aspect of a manager’s function.
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