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Strategic Human Resource Management in Organizations
Dr. Radhika Kapur
Abstract
The main objective of this research paper is to acquire an understanding of strategic human resource management in organizations. Within the organizations, human resources are regarded as key aspects. It is due to knowledge, competencies and aptitude on the part of human resources that the organizations will be able to enhance their reputation. With the advent of modernization and globalization and with advancements taking place, it is essential for the human resources to upgrade their knowledge and skills from time to time. The concept of strategic human resource management is considered indispensable, as it requires the human resources policies and practices to be linked with the strategic objectives of the organizations. In other words, in order to achieve the desired goals and objectives, it is essential for organizations to ensure that policies and practices formulated are in accordance to the goals and objectives. The main areas that are taken into account in this research paper include, meaning and significance of strategic human resource management, models of strategic management, hierarchy of strategy, human resource strategy models and benefits of strategic management. Keywords: Human Resources, Models, Objectives, Organizations, Resources, Strategic Human Resource Management Strategic human resource management is referred to the managerial process requiring human resources policies and practices to be connected to the strategic objectives of the organization. It is referred to as the process of linking human resource function with the strategic objectives of the organization to improve performance. The term ‘strategy’ derives from the Greek word, strategus, meaning ‘commander in chief’. It was first used in the English language in 1656. The development and usage of the word, suggests that it is composed of stratos army and agein means to lead. In the management context, the word strategy has replaced the more traditional term, i.e. long-term planning, to denote a specific pattern of decisions and actions undertaken by the upper echelon of the organization in order to accomplish the performance goals. The HR researchers and practitioners have focused their attention on some important questions. First, what determines, whether an organization
adopts a strategic approach to HRM and how the HR strategy is formulated. The policies and practices are regarded as essential in making up various kinds of HR strategies (Bratton, n.d.). Strategic management involves the implementation of managerial decisions and actions that determine the long-term performance of the organization. In other words, the human resources need to implement wise and meaningful decisions, which would be beneficial to the organization in long term as well. Strategic management is regarded as the continuous activity that requires a constant adjustment of three major interdependent poles, i.e. values of senior management, environment and resources available (Bratton, n.d.). To ensure the implementation of strategic human resource management takes place in accordance to the goals and objectives of the organization in a well-organized manner, the human resources need to make sure, they up-grade skills and abilities. It is comprehensively understood that they need to work in co-ordination and integration with each other. Apart from these factors. They need to generate awareness in terms of modern, scientific and innovative methods. The implementation of innovative methods in a suitable manner would lead to generation of desired outcomes.
Meaning and Significance of Strategic Human Resource
Management
Strategic human resource management is referred to as the practice of attracting, developing, rewarding and retaining employees. Strategic human resource management has proven to be worthwhile and meaningful to not only employees, but organization as a whole. The HR departments that practice strategic human resource management do not work on an independent basis. It is vital for them to establish interaction with the other departments within the organization. Interaction enables them to acquire an efficient understanding of the goals and create strategies that align with the objectives as well as the goals of the organization. As a result of effective communication, the goals of human resource department reflect and support the goals of rest of the organization. Strategic HRM is seen as a concept, which would render a significant contribution in achieving organizational success. It makes use of knowledge and competencies that have been possessed by the human resources. The human resources not only are required to make use of their knowledge and competencies in the efficient implementation of job duties, but also in reinforcing the structure and functioning of the organization (Unit – I. Introduction to Strategic HRM, n.d.).
organizational goals. The tasks and activities of the members of the organization have to be wholeheartedly dedicated towards the achievement of organizational goals and objectives. Environmental Analysis Environmental analysis is the analysis of the internal and external environmental conditions of the organization. In order to achieve organizational goals and enhance the structure of the organization, it is necessary to conduct SWOT analysis. SWOT is referred to strengths, weaknesses, opportunities and threats. Environmental analysis refers to the internal organizational strengths and weaknesses and organizational opportunities and threats. Strengths are referred to as positive factors that contribute in enhancing the structure of the organization, incurring the feelings of job satisfaction among employees and achievement of organizational goals. These are, training and development programs, infrastructure, amenities, technologies and equipment, and other facilities that would enable human resources to carry out their job duties satisfactorily. Weaknesses are referred to as negative factors that are impediments within the course of implementation of job duties. Some of these include, lack of resources, unawareness regarding various aspects and so forth. Opportunities are referred to as an appropriate or favourable time or occasion. Within an organization, when the individuals are able to exchange views and are able to depict their skills and abilities and enhance their career prospects, it is stated that they obtain opportunities for advancements. Threats are referred to factors, which may impose unfavourable effects upon the individuals. These are referred to as impediments within the course of their advancements. Therefore, it can be stated, within the organizations, individuals need to implement policies and programs to augment strengths and opportunities and alleviate weaknesses and threats. Strategic Formulation Strategic formulation involves senior managers in evaluating the interaction between strategic factors and making strategic choices that guide managers in the achievement of organizational goals. Some of the strategies are formulated at the corporate, business and specific functional levels. The term strategic choice gives rise to the question regarding who makes the decision and why the decision has been made. The notion of strategic choice also draws attention to the strategic management, as a political process, whereby decisions on issues and actions are taken by the ‘power-dominant’ group of managers within the organization. In the political model of strategic management, it is necessary to consider the
distribution of power within the organization. The power lies, how it comes to be there and how the outcome of competing power plays and coalitions with senior management are connected to employee relations. The strategic choice perspective on organizational decision making makes the dialogue on strategy more real and makes provision of important visions into how the employment relationship is managed. When incorporating strategic choice in the theory of organizations, one is recognising the fundamentally political process, in which the restraints and opportunities are functions of the power exercised by decision-makers in the light of philosophical values. Strategy Implementation Strategy implementation is an area of activity that puts emphasis upon the techniques and methods used by the managers to implement strategies. It refers to the tasks and functions that deal with various factors. These include, leadership style, the structure of the organization, the information and control systems, and the management of human resources. The managers and supervisors are required to inculcate leadership skills that would enable the individuals to carry out their tasks and activities in a well-organized manner. They need to guide and lead them in the right direction. The structure of the organization also needs to be enhanced to ensure the members are rendering a good-quality performance and incurring the feeling of job satisfaction. Within the structure of the organization, there should be provision of technologies, facilities, infrastructure and resources, which would contribute efficiently in the achievement of organizational goals. The information and control systems are the ones, which help the individuals to make provision of information to the employees. A control system manages, commands, directs, or regulates the behaviour of other devices or systems by making use of control loops. Management of human resources is regarded as one of the indispensable factors that is necessary for promoting effective growth and development of the organization and employees. Hence, it is necessary to implement strategies and approaches that are regarded as important in efficient management of human resources. When these four factors are taken into consideration, then the model of strategy implementation will be carried out in a suitable manner. Strategy Evaluation Strategy evaluation is an activity that determines to what extent the actual change and performance is compatible with the desired change and performance. When the members of
the marketplace. This level of strategy addresses the question of how do we compete. Business level strategy is guided by upstream, and corporate level strategy. Business unit management must formulate a strategy that is appropriate for own operating situation. In acquiring an efficient understanding of the business level strategy, there are three competitive strategies, which need to be taken into consideration. These include, cost leadership, differentiation and focus. The cost leadership strategy makes an attempt to lead to an increase in the organization’s market share by having the lowest cost unit and price compared with the competitors. The alternative to cost leadership is the differentiation strategy. In this strategy, the managers differentiate between their services and products from those of the competitors in the same industry, by making provision of distinctive levels of service, product or high quality for which the customer is prepared to pay the premium price. With the focus strategy, the managers are prepared to focus upon a specific buyer group or regional market. A market strategy can be narrow or focused. This allows the organizations to make a selection from four generic business-level strategies. These are, low-cost leadership, differentiation, focused differentiation and focused-low cost leadership. Competing organizations within a single industry can make a selection between any one of the four types of strategies and adopt a corresponding combination of structure, culture and processes consistent with the strategy in response to the environment. Functional Level Strategy Functional level strategy pertains to the major functional operations within the business unit, including research and development, marketing, manufacturing, finance and human resources. This strategy level is primarily concerned with maximising resource productivity and addresses the question, i.e. how can business level competitive strategy be supported? In other words, it is vital for the members of the organization to generate awareness in terms of methods and approaches, which would render a significant contribution in achieving organizational goals. The human resource management policies and practices are stated to render an indispensable contribution in the achievement of organizational goals. The three levels of strategies, corporate, business and functional form a hierarchy of strategy within large multidivisional corporations. In different corporations, the specific operation of the hierarchy of strategy might vary between top-down and bottom-up strategic planning. The top-down approach resembles a cascade in which the downstream strategic
decisions are dependent on higher upstream strategic decisions. The bottom-up approach to strategy making recognizes that individuals deep within the organizations might render a significant contribution to strategic planning. Strategic management literature puts emphasis upon the fact that strategies at different levels must be completely integrated. Strategies at different levels need to interrelate. The strategy at the corporate level must build upon the strategies and approaches at the lower level of the hierarchy. However at the same time, all parts of the business are required to work to accommodate the overriding corporate goals. (Bratton, n.d.).
Human Resource Strategy Models
Since the early 1990s, academics have proposed three models to differentiate between ideal types of human resources strategies. These are, control-based model, resource-based model and integrative model. These have been stated as follows: (Bratton, n.d.). Control-based Model The control-based model is based on different types of HR strategies. It is based on the nature of workplace control and more specifically on managerial behaviour to direct and monitor the performance of the employees. According to this perspective, management structures and HR strategies are the techniques to control all tasks and activities within the working environment. In this manner, they are able to bring about improvements in productivity and profitability, therefore, emphasis is put on monitoring and controlling of employee behaviour. The basis of differentiating between human resources strategies has its roots in the study of labour processes by the industrial sociologists. Implicit in this approach to managerial control is that the logic underlying an HR strategy will tend to be consistent with the competitive strategy of the organization. Managers will tend to adopt process-based controls, particularly when means and ends are uncertain. Therefore, it can be stated that control-based model enables the members of the organization to establish control on the implementation of tasks and activities. Resource-based Model The resource-based model is the second approach to the development of typologies of HR strategy. It is grounded in the nature of the reward-effort exchange and more specifically, the degree to which the managers view their human resources as an asset as opposed to the variable cost. When the human resources are able to make use of technologies, materials and
duties satisfactorily and achieve organizational goals, there is a need to focus upon up- gradation of skills and capabilities on a continuous basis. Furthermore, the managers and supervisors need to be aware of the skills, already possessed by the workforce and what are the skills that they need to up-grade. The members of the organization need to make sure, they possess the essential skills and abilities. The organization of training and development programs on a regular basis would render an indispensable contribution in augmenting skills and capabilities of human resources. Forecasting HR Requirements – Forecasting of HR requirements is based on conducting an analysis of factors, which would lead in determining, what HR skills would be required for future. Forecasting HR requirements also enables the individuals to obtain answers to various questions, such as, what jobs would need to be filled? What skills individuals need? Staff required to meet the strategic goals of the organization? Is the organization affecting ones work and ability to retain employees and how is the community evolving or expecting changes taking place in future? One of the major goals of the organizations is to make sure, it augments productivity and profitability in future. Hence, in order to achieve this objective, the human resources are also required to upgrade their skills and abilities. For instance, when the members of the organization make decisions in terms of bringing about modern and innovative methods in tasks and activities, they have to make sure that they augment their understanding in an efficient manner to achieve organizational goals. Gap Analysis – In the gap analysis, one is able to observe where the organization is in the present existence and where it has to be in future. In conducting gap analysis, there are certain aspects, which need to be taken into consideration. These include, number of employees, skills and aptitude, provision of infrastructure, technologies, materials and equipment and the resources, which will be required to achieve desired goals. In this case, one of the important steps that need to be put into operation is, identification of HR processes and practices. The current HR processes and practices are taken into consideration and one has to be aware of measures that need to be put into operation to bring about changes. It is comprehensively understood that with advancements taking place, there is a need to bring about transformations and put into operation, modern, scientific and innovative methods. Therefore, it can be stated that gap analysis contributes in bringing about changes and introducing modern, scientific and pioneering methods in implementation of tasks and functions.
Training and Development – When the individuals get recruited and selected within the organization, they are required to go through training and development programs. In these programs, the trainers make provision of information to them in terms of various aspects of the organization. These include, history, departments, personnel, infrastructure, technologies, civic amenities and facilities, job duties and so forth. In these programs, the trainers are required to make use of modern and innovative teaching and learning methods in the implementation of instruction. Within various organizations, the training methods used are of various types. These include, case studies, vestibule training, lecture methods, role plays and so forth. Within the course of their jobs also the individuals are required to undergo training and development programs to augment their knowledge and understanding in terms of advancements taking place and use of innovative methods. Therefore, it can be stated that training and development programs are regarded as significant in generating the desired outcomes. Restructuring Strategies – Restructuring strategies are the strategies, which are concerned with causing a reduction in staff members, regrouping of tasks to create well- designed jobs and reorganising work groups to carry out tasks and functions in an efficient manner. An organizational restructuring strategies involves redesigning of the operations and management reporting structures. These would address and make corrections to the issues that are responsible for problems and difficulties. As organizations make an entry into new stages, they often need restructuring or reorganization. Making decisions in terms of restructuring strategies will help the members of the organization in achieving organizational goals. It is comprehensively understood that achievement of organizational goals is not a clear and straightforward process. The organizations need to formulate restructuring strategies, which would help in achieving organizational goals as well as in bringing about transformations (6 Strategies for Restructuring Your Business, 2017). Outsourcing Strategies – Outsourcing strategies, functions, processes and activities are normally implemented within the organization. Outsourcing contracts, repurchasing through supply contracts the products or results of certain tasks and activities by the organizations delegated for such activities are not regarded as a new phenomenon. In the past, outsourcing strategies have undergone a profound evaluation, moving from simple forms of production contracts, involving third parties to agreements that entail several strategically important functions. These functions are of various types, i.e. from technological innovation to logistics, customer relations to post-sales services. In the present existence, organizations
Managing Performance – It is vital to manage the performance of the employees in order to generate the desired the outcomes. The strategies that need to be put into operation to manage the performance need to ensure they are able to adequately identify the flaws and inconsistencies and help in alleviating the setbacks, which they are experiencing. Managing performance has to take place on continuous basis. When the employees are making use of modern, scientific and innovative methods in the implementation of job duties, they need to ensure they manage the performance in an appropriate manner. In other words, the employees need to be well-aware in terms of how to make use of modern and pioneering methods. It is the job duty of the supervisors to direct and guide the employees, so they are able to carry out their job duties in a well-organised manner and generate the desired outcomes. Therefore, it can be stated, managing performance is regarded as one of the indispensable benefits of strategic management. Coping with Problems and Challenges – Within the organization, there are occurrence of problems and challenges in number of areas. The members of the organization are required to cope with number of problems and challenges, irrespective of their job duties and responsibilities. The members of the organization are required to generate awareness and augment their understanding in terms of various areas that would facilitate in providing solutions to the problems. For instance, when the members of the organization need to bring about improvements in infrastructure, technologies and equipment, they need to pay adequate attention towards the management of resources. There are three types of resources, which need to be managed, these include, technical, financial and human resources. Management of resources is not regarded as an easy task. In other words, the individuals need to cope with problems and challenges. Therefore, it can be stated, the members need to be aware of methods and strategies, which would enable them to provide solutions to problems and achieve organizational and personal goals.
Conclusion
Strategic human resource management is referred to the managerial process requiring human resources policies and practices to be connected to the strategic objectives of the organization. In order to carry out the job duties in an appropriate manner and achieve the desired goals and objectives, it is necessary for the organization to formulate effective and meaningful strategies. It is the process of establishing connection between human resource function and the strategic objectives of the organization with the primary objective of
bringing about improvement in job performance. In this case, the practices of attracting, developing, rewarding and retaining employees are taken into consideration. The models of strategic management has been classified into five categories, these are mission and goals, environmental analysis, strategic formulation, strategy implementation, and strategy evaluation. Hierarchy of strategy is referred to as different levels of strategy. These are corporate level strategy, business level strategy and functional level strategy. Human resources strategies models are of three types, control-based model, resource-based model and integrative model. Benefits of strategic management are, assessing the current HR capacity, forecasting HR requirements, gap analysis, training and development, restructuring strategies, outsourcing strategies, recruitment and selection, collaboration and integration, managing performance and coping with problems and challenges. Hence, it can be stated, when the members of the organization implement the strategies in an appropriate manner and focus upon the above areas, they are able to identify the benefits of strategic management. Strategic human resource management refers to the human resources that are co-ordinated and consistent with the overall goals and objectives in order to bring about improvements in the job performance of human resources. Furthermore, improvements also take place in the status of the organization. Therefore, it can be stated that implementation of the concept of strategic human resource management in a well-ordered manner would render a significant contribution in leading to effective growth and development of organization and human resources.
