Strategic Human Resource Management
People have long been considered an integral resource of the organizations. This conception however was formed over a period of time with the management philosophy undergoing various transitions. Traditionally, all the activities concerning the workforce of any organization was referred to as Personnel Management, a term that was evolved in the early 1960s. Personnel Management was more administrative in nature with the managers mostly playing the roles of mediators and catering to the needs of the workforce while performing duties of staffing, payroll and administrative tasks etc.
Personnel management includes tasks that are conventionally more traditional and routine. Furthermore, the management of the workforce was considered as a sideline function of the organization. When it came to motivators, personnel management only took into consideration rewards such as compensation and bonuses etc. Personnel management was actually restrictive in its role as it only catered to the functional aspects of the workforce management. It used to give more importance to the norms, cultures and established practices (Bach, 2009).
With the advent of more resource focused organizations, there was also a change in the management philosophy in terms of putting people first and considering them an integral part of maximizing ‘Return on Investment’ on the
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In contrast to personnel management, human resource management goes beyond the administrative tasks and takes an approach so as to comprehend how the management would make the resources provide maximum contribution to the success of the organization. One of the primary purposes of the human resource management is to enable the work force to reach maximum levels of efficiency. The human resource perspective also took a proactive approach with continuous development of functions and practices to enhance the organization’s workforce.
Unlike personnel management that was only considered the responsibility of the personnel department, human resource management encompasses and involves managers from all divisions of the organization. Furthermore, in terms of motivation human resource management recognized work groups, effective work practices and job creativity as important determinants. The human resource management is rooted in the organization’s vision and mission(Ster & Koster, 2002).
The advent of the 1990s decade gave way to an enhanced approach to management of human resources known as Strategic Human Resource Management. This approach advocates that the management of the human resources of an organization should be aligned with the organization’s strategies which in turn also advocated the direct influence of an organization’s workforce on the execution of the strategies and the achievement of goals. This shift from the resource based view of the human resource to the strategic approach signified the close link between the strategies and the human resource.
As the human resource management advocated the workforce as an integral source of competitive advantage, the strategic human resource management provided an empirical foundation for that by exerting the organization’s performance can be enhanced manifold when the human resource itself is aligned to its strategies for the achievement of goals. Through this approach, the human resource management is also given due importance while the strategies are being formulated and the planning phase as well (Lundy & Cowling, 1996).
This paper is aimed at covering the evolution of Strategic Human Resource Management (SHRM), challenges confronting HR Professionals to perform a more strategic role for contributing towards organizational success. A Historical Perspective. During the industrial revolution in the later half of 18th Century, the philosophy of ‘managing people’ was evolved through an evolutionary process as with increased mechanization and productivity, a need was felt for optimum utilization of people involved in production activities.
This philosophy developed into “Personnel Management (PM)” and was replaced by Human Resource Management (HRM). The evolution of HRM can be traced back to the 1960s in the USA. Some researchers strongly believe and argue that substantially HRM is merely a new name of PM (Armstrong & Fowler 1987), except for emphasizing the need to treat people as a key resource instead of merely “Managing People”. The major distinction being the manner in which PM ignored strategy while HRM embraced it.
(Gal braith and Nathanson, 1978, Tichy, etal. 1982 & Guest 1993). Over the years, the belief that HRM, being a dependent variable to the overall organizational strategy (independent variable) resulted in the concept of Strategic Human Resource Management (SHRM). SHRM is all about aligning human resource employment and activities with the overall organizational strategy for realization of its goals and objectives.
The strategic direction of a business entity is decided by defining its mission/goals and in depth study of its external and internal environment to determine threats/opportunities and weaknesses/strengths respectively. In such a complex business environment, aligning Human Resource Management with Strategic Management is easier said than done. While deciding a strategic business direction in an ever increasing competitive environment, an organization has to find answers to ‘Where to compete? How to compete?
And With what to compete. ’ The earlier two relate to product & market while the third relates to the skills and abilities of its human resource besides technological resources/fixed assets. Any miscalculation in arriving at correct decisions with regard to these questions will have serious repercussions. HRM professionals can assist in strategic decision by identifying skills needed by its human resource for the selected strategy, if required skills and expertise is available or could be developed/acquired in the human resource.
Otherwise, the strategic managers would need to have a relook and reevaluation of its strategy. Organizational resources, which must be used effectively for successful business operation, include (1) Technology and fixed assets used to manufacture a product or deliver a service (2) Financial resources at its disposal and (3) the skills and talent of its human resource. An ideal strategic plan should encompass and all these resources integrating these with the overall vision/mission of the organization.