Organizational Strategy In Human Resources Management
Orgаnizаtionаl strаtegy refers to the overаll positioning аnd competitive аpproаch of аn orgаnizаtion in the mаrketplаce. Strаtegic mаnаgement is the deliberаte effort to аlign the orgаnizаtion's long-term direction with orgаnizаtionаl strаtegy. Good strаtegic mаnаgement integrаtes orgаnizаtionаl functions into а strаtegic plаn so thаt аll orgаnizаtionаl units operаte in а coordinаted fаshion in support of the overаll strаtegy. Strаtegic humаn resource mаnаgement (SHRM), then, is the process by which аn orgаnizаtion's mаnаgement integrаtes its humаn resource plаns аnd progrаms with the strаtegic plаn of the orgаnizаtion. SHRM stаnds in contrаst to trаditionаl humаn resource management (HRM) contributes to an organization аt the operаtionаl level. For exаmple, the trаditionаl humаn resource (HR) concern of selecting job аpplicаnts who displаy skills thаt аre predictive of good job performаnce mаy only be implicitly relаted to the strаtegic objectives of the organization (Greer 1995).
Strategic HRM is interested in relаtionships аmong HR аctivities аnd in relаtionships between pаtterns of HR аctivities—vаriously cаlled HR strаtegies, models, bundles, styles, or systems—аnd the firm's internаl аnd externаl contexts. It is concerned with mаpping the HR strаtegies firms’ аdopt, with understаnding why they do so, аnd with building theory on how HR strаtegy cаn be used to enhаnce orgаnizаtionаl effectiveness. Going beyond а shаreholder to а stаkeholder perspective, it is also concerned with the links between HRM аnd employee аnd societal well-being (Huselid, Jackson & Schuler 1997).
Business factors that underpin human resource planning in an organization
HRM or SHRM has become the central force for any organization to accomplish the objectives. No matter how much the technology has provided physical hardware and machines in order to attain the production/service in limited possible time, the importance of human capital in a company cannot be ignore. When it comes to hiring and recruiting, a definite HR plan is required in order to build up a perfect candidate pool so that company could look over the pool from time to time in order to fill the jobs. However in order to build the ideal candidate pool, an organization need to consider all the business factors that would should support the HR plan and would remain in compliance with the organizational goals as well (Lundy 1994). According to Greer (1995), the major factors to be considered in order to develop the HR plan are as follows:
First factor that underpins the formulation of HR plan is the type of organization and its strategy. Type or organization determines the type of staff (manager and supervisor), production process etc. Organizational strategy refers to the plan of an organization in order to define its HR needs.
Like business cycle, there is also a growth cycle for an organization. Organizational plan and growth is also a very determining factor in formulating the HR plan. The growth cycle of an organization comprises of start up, growth, maturity and decline.
The process of an organization which is being used by the employees to transfer peripheral or routine work to another organization is also the consideration. It is also known as outsourcing. The procedure of outsourcing is and underpinning factor which is kept in mind to plan HR policies and plan.
Nature of job like promotions, job vacancies and expansion strategies
The quality and type of forecasting information like organizational structure, production and budgets must be considered.
Lastly, the time horizon of the plans in terms of short term or long term plans plays a great role in formulating HR plan. The greater the uncertainty, the shorter will be the HR plan.
Human resource requirements of Dubai custom
As this case study is about Dubai customs, the HR situation of this company will be discussed here. Dubai customs is a fairly big organization with many sub units. The company has its operations extended to many areas. Due to its big organizational operations, the staff requirement has been high in order to carry out different operations simultaneously and in harmony. However due to favoritism, the organization has been making many unplanned recruiting which not only has created problems in vertical and horizontal communication but also has expanded the organizational structure beyond the level of handling. For this reason, actual labor requirement has become dubious (AME 2007). The organization might be overpaying for one job by hiring many subordinates and managers (Huselid, Jackson & Schuler 1997).
This means that the organization lacks the proper HR planning. There are small loopholes that have been ignored which are leading to accelerated hiring with no actual requirement. The need of the hour is to cut down on such recruitments and shrink the organizational structure as per the real requirement of the organization (Lado 1994). Dubai customs need to bring some major changes in three most important HRM steps. These are:
The HR department of Dubai customs needs to forecast the labor requirement in order to make accurate recruitment. The company must include the unpredictable business environment factors in their forecast in order to come to accurate labor requirements (AME 2009)
Based on the demand and forecast, the organization must design the HR strategy and plan. The strategy would include all the major processes with a revised pattern. This revised pattern will discuss the problems like unwanted hiring and favoritism and would require tougher conditions for building candidate pool (Emiratisation 2009).
In the final stage, the company must understand the nature of the business and by keeping the goals of an organization must implement the plan as per the requirements (Delaney 1996).
A little control on forecasting and knowing the basic needs of the business, Dubai customs can overcome the problem of extended organizational structure and unwanted managers and subordinates (Grаtton, Hаiley, Stiles & Truss 1999).
Human resources plan for Dubai customs (for any organization)
Dubai customs already has a human resource plan however due to the problems and hindrances in the recent past; their HR plan does need a change in terms of revision (AME 2007). For planning a perfect HR plan there is a proper procedure comprising of considerations for different internal and external factors (Ahmad & Schroeder 2003). By following this procedure, any organization can develop a perfect HR environment in compliance with the organizational goals. The human resource plan is as follows:
The first thing to consider when formulating HR plan is the environment. The environment includes internal and external factors. Every organization including Dubai customs must consider the factors like:
Political and legislative issues
The second consideration for formulating the HR plan is organizational policies and objectives. Dubai customs must ensure that their HR plan is based on the organizational objectives (AME 2009). This includes the determination of specific requirements in terms of characteristics, skills and numbers of employees. These objectives help in developing more accurate and focused HR plan (Garavan, Costine & Heraty 1995).
Dubai customs need to estimate quality and quantity of people required for the operations (AME 2007). This process is called forecasting. The organizations must make the forecast based on long term corporate plan and annual budget. In addition to this, the organization must consider factors like budget constraints, production level, employee separations, law, competition, and change in technology (Grаtton, Hаiley, Stiles & Truss 1999).
Along with this, the organizations must do the HR supply forecasting as well in order to determine if the organization will be able to acquire the stated number of workers (Greer 1995).
Once the forecast is completed, Dubai customs can open up the vacancies and fill them with right people at right time ( AME 2007; Grаtton, Hаiley, Stiles & Truss 1999).
Next step is the HR plan implementation which includes training, recruitment, selection, rewards etc (Garavan, Costine & Heraty 1995).
The last step of the HR plan includes control and evaluation in terms or restricting hiring or layoffs in case of surplus. In case of shortage, the organization will make recruitment and selection (Lundy 1994).
How HR plan helps to achieve organizational goals (Ahmad & Schroeder 2003)
Every organization’s goal is to achieve profit and growth. For this, every company also makes the most profitable investments. These investments include human capital which is the most crucial factor for company’s success (AME 2010; Grаtton, Hаiley, Stiles & Truss 1999). At the moment, Dubai customs is facing the problem of favoritism which is definitely leading to wrong employee selection. This is automatically hampering the motivation of the employees and they do not feel like doing anything for the company. Dubai customs need to show confidence in its already present staff and train them to further improve and enhance their skills and performance (Emiratisation 2009). The need of the hour is to identify the individual and organizational goals according so that the company could identify the strong performance elements and the right placement of those elements as well. The HR plan of Dubai customs will help the organization to better achieve its goals as the integration between different organizational operations and HR will be in harmony and directed to one path. The accurate investment in human capital will help the organization to increase productivity and efficiency which will ultimately reduce the costs. Due to the strict and fair HR plan, the employees will feel motivated and contribute towards the organizational objectives, vision, mission and values (Garavan, Costine & Heraty 1995).
By applying the HR plan, Dubai customs will be able to develop better communication between the managers and subordinates as the reporting system suffered much due to loopholes in the HR policies and plan. With HR plan, the organization will be able to retain its much talented staff as well as higher employee turnover is always a bad mark on company’s name ( AME 2007; Ahmad & Schroeder 2003).
This entire outcome due to HR plan adoption and implementation in an organization will ultimately increase and expand the market share along with increasing share prices for the company. This would lead to the most desirable output for a company and that is profits for which the company had invested in HR. In short, human capital investment aligned in the direction of company’s vision, mission and objectives will certainly give an edge to the company (Huselid, Jackson & Schuler 1997).
Purpose of HRM policies in organizations
The importance of HRM is not only evident with the HRM plan formulation and its coherence with the organizational goals but the HRM policies also form a major portion of the entire human resource management concept. HR policies are required in an organization as the employees are from diverse backgrounds which require limitations in order to harmonize the workplace culture and situation. For this reason, every organization requires a strategy for developing, enforcing and communicating the HRM practices and policies that reflect the acceptable standard behavior (Hoskisson 2005). In the context of definition, HRM policies are defined as:
“HR policies are procedures and rules which are designed to provide clear structure and system for human resource management”
Performance improvement for an organization is like succession planning. Continuous improvement is what an organization tries to achieve. But for every improvement, there is a benchmark which needs to be achieved. In a business, you don’t only focus on meeting specific goals but you also decide that how to achieve them. Similar pattern is required in managing the employees so that they know their limitations and rules and regulations to follow in a company. To deal with employee management in order to clear their expectations and convey what company demands of employee, HRM policies have been designed (Hoskisson 2005). When it comes to the purpose of HRM policies in an organization, there are four core dimensions which these policies cover:
The employees need to understand their own role and role of others in a company. For a successful team, there are well defined positions for its members. In a business, everyone should know who is doing what, how to do and how their own performance would make impact around them. This implies that organizations need clear structure which reports that how tasks are going to be accomplished and who is in charge. This approach is not only required for intradepartmental structures but for company-wide projects as well. In addition to this, role also defines the performance expectations for employees (Lundy 1994).
Rules basically imply the acceptance and non acceptance of behaviors within the company. In today’s business world, an employer is liable for employees’ behavior. An organization needs to make clear set of behavioral expectations. To protect the behavioral standards from violation needs established rules in a form of framework. This would help indicate and spot the violation then and there. HRM policies cover and formulate these rules (Delaney 1996).
Along with rules and roles, the organization must clearly state the consequences in case of any violation against the behavioral standards so that the employees must know what they should expect (Grаtton, Hаiley, Stiles & Truss 1999).
Tools are designed to address a question of how an organization supports the people who manage other employees. This involves handbook, policy guide etc which help avoid litigation and decrease the time (Lado 1994).
Impact of an organizational structure on HR management
Organizational structure of a company is developed to coordinate work, design reporting systems and distribute roles. HR department of any organization is responsible to undertake the development of task in coherence with organizational structure (Hiatt, et. al., 2003). It is the organizational structure that characterizes the nature of responsibility and authority configuration of hierarchies developed. With a well developed organizational structure, the reporting mechanism becomes hurdle free. The communication and work flows continue smoothly. The organizational structure formulates the guidelines in order to organize, plan and apportion its manpower. Organizational structure tends to choose resources with minimal utilization which ultimately leads to maximum returns (Greer 1994).
From the HR perspective, organizational structure drives the capabilities and capacities of employees to their fullest. The HR department uses the organizational structure in order to classify the organization’s employees into non achievers and achievers. This helps the HR and organization to take appropriate steps in order to hone the talent of performers along with designing plan and manners for drawing work out of the non-performers. Due to the development of organizational structure, the job of HR department becomes immensely simply. The structured hierarchy is outlined which enhances the communication flows. The superiors know their subordinates well and they accordingly communicate the job related requirements. Similarly the subordinates approach their bosses in case of any doubts or problems. This develops the harmony among the employees of an organization at different levels (Lindy 1994).
Organizations are defined as people working together in order to achieve common purpose. They along with working together are also collectively responsible for results. For this reason, the study of human interaction is emphasized. This requires the communication development through which right direction will be set hence accomplishing the organizational objectives and goals. The more these goals are clear; the better will be the understanding by the employees. But one should remember that the organization comprises of people with different cultures and value diversities. For any HR manager, the main target is to merge all the cultures simultaneously and carefully so that no employee feels left out. The cultural diversity increases the work of HR as the management has to revise their policies in order to develop and formulate rules and regulations which are free of any racial or gender discrimination. Religion, race, sect, sex, ethnic belongings are such critical factors which need to be focused upon in order to bring the harmony in organizational structure and employees (Ahmad & Schroeder 2003). An organization must enhance the open communication channels if it has a diverse cultural workforce. An organization must install such systems:
Open door policies
Employees’ advisory boards
Recreational activities committees
The HR managers must listen to employees, recognize their contributions and respect their opinions. This will lead to motivated workforce and they would communicate along to achieve the organizational goals and objectives (Ahmad & Schroeder 2003).
c. How the effectiveness of HRM is monitored in an organization
HRM is itself involved in the measurement of the employee efficiency but the process of HRM itself needs to be assessed and monitored in order to leave no room for loopholes. Measuring HR performance would include every aspect like HR departments, HR functions and HR operations. In HRM monitoring in order to check its effectiveness, every aspect pertaining to HRM will be taken under consideration. However it is not very easy to assess and quantify the effectiveness of HRM as there are no strict parameters and metrics that are used as base for evaluation. In comparison to this, financial assessment is easy as there are metrics and parameters in terms of budget etc. So overall, HRM effectiveness is the hardest aspect of organizational assessment (Garavan, Costine & Heraty 1995).
The link between HR practices and organizational performance is not physical but the link exists for sure. The organization obviously knows that managing people with HR practices improve and enhance the employee performance which ultimately leads to improved performance over time. But the tangible and quantitative basis for HRM practice assessment is the demand of every organization. For performing this assessment, organizations can use some commonly practiced metrics. These are as follows:
After the forecasting, the process of HR management starts with recruitment and selection. Whenever the organization has vacant posts, it starts looking for applicants eligible for that particular position. In case of this, the measurement dimension would include the sophistication recruitment processes have. Following are the measuring metrics for this stage:
Are the application and selection processes up to par?
Do the applicants come through psychometric tests?
Does the department have a clear criterion for selecting the qualified people?
Are the interviews structured or not?
The next process to assess in HR management is training and induction. Induction is the step where the hired employees are officially introduced. As this process also does not involve numerals, so the assessment criteria would be pretty much the sophistication of processes. For induction and training, effectiveness of the procedures will be used as metrics. This could be achieved by conducting the targeted surveys which obviously will be done by the trainees.
The last process to assess the human resource management process is to look into performance management. This involves two aspects:
How the HR department is monitoring and supervising the entire operations of HR department?
How the HR department is monitoring the other people that comprises the workforce of an organization. The processes involved in performance management must be maintained in a coherent way. A suitable metrics for this process could be number of man-hours shelled out to performance management.
In this three step demonstration, the assessment and monitoring of the human resource management could be carried out. Dubai customs uses these metrics and these could be used in any organization at all.
It is evident from the discussions in different sections of this study that for an HR plan to be implemented and HR practices to be applied, a perfect organizational structure is required as the HR department makes use of the organizational structure in order to design jobs and build skills which are required for the performance of the task. However Dubai customs is facing the trouble of ineffective HRM policies and procedures which is leading to unrest among the employees. This has also created mess for the organizational structure as the OS has expanded in various areas and business units which have rendered the communication between employees, managers and executives. This requires the company to revise its HRM procedures and work on its organizational structure so that HR department could work accordingly. Here are few recommendations in order to make the HRM effective:
To deal with the ineffective HRM, the organization first needs to work on its extended organizational structure. This would require the organization to develop only 3-4 levels of management between the director general and front-life staff. This is required to keep the communication flow free of hindrance. Similarly, this will help the HRM to define policies for all these employees in terms of rights, responsibilities etc (Bunker, et. al., 2006).
There are numerous jobs and operations that are being carried out in extended pattern and costing much to the organization. The need is for HR department to develop the policies and system to define job description for all such operations and compress into one unit.
The HR department needs to redefine the functional authority so that the subordinates know whom to report. The need is to delineate the roles in order to develop strong communication among the employees.
Dubai customs has been involved in excessive hiring which is not really the requirement of company. So the HR department needs to develop strong demand and supply forecasts in order to develop the candidate pool. The accurate forecasting will help the organization hire the required number of employees along with much wanted skills. The forecast must be developed by considering numerous factors like the possible events that might lead the company to layoffs etc. Dubai customs must develop the forecasting accurately so that there is seldom need of layoff or hiring new.
Dubai customs need to make the parameters and metrics stronger which it used to determine its HRM effectiveness. Due to the loopholes in HRM, these metrics need to be updates so that the human resource management process could be effectively monitored and assessed.
In short, when it comes to HR and SHRM, the critical links between the HR department and other organization need to be assessed closely as SHRM is not only about HR department but it deals with the entire organization. By working on the vision and mission statements of the company, the SHRM could do wonders.
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