Human resource management with strategic goals and objectives
The purpose of this study is to determine whether linking of Human Resource Management with strategic goals and objectives by organizations will help to improve business performance and develop organizational cultures. Also this report will look at areas, roles and strategies of HRM and factors that influence organizational cultures. Data used during this study is drawn from both primary and secondary sources and they serve to illustrate this points that have been made. The work concludes with some suggestions as how the difficulties that have been identified in the course of this work could be surrounded by Human Resource managers.
According to Storey (1995) Human Resources Management (HRM) is a great approach to employment management which tries to reach massive advantage through the strategic deployment of a highly committed workforce by using integrated array of culture, structural, and personnel techniques, whereby Personnel Management is a series of activities which enable people of hiring and developing employees in the organisation. It includes: job analysis, personnel needs, recruitment, training etc.
Strategic HRM can be defined as a general approach to the Strategic Management of Human Resources in accordance with the intentions of the organisation on the future direction it wants to take. It is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need (Armstrong, 2002).
According to Hofstede (1984) culture is the collective programming of the mind which distinguishes the members of one category of people from another. It may be identified as ways of behaving, and ways of understanding, that are shared by a group of people.
II. Human Resource Management in organisations
2.1) Importance of HRM
Organizational psychology describe successful companies as those that consider human capital as their most important asset. For this reason it is necessary to create management team that will deal with managing human capital in order to achieve success of the organization and competitive advantage over rivals. Therefore HR management team is responsible for attracting right talent to their organization, training and motivating and also compensating and developing employees.
2.2) Roles and responsibilities of HRM
HRM have several roles and responsibilities in organisations. HRM is being recognised as strategic partner in quality management, corporate planning, business operations and business profitability. Depending on size of organization HRM in small companies is connected with similar activities to all employees whereas in big and complex organizations HRM activities are separated into departments. In general HRMs responsibility can be distinguished between few Key Results Areas:
- Employment and Recruitment - this area of HRM will be responsible for interviewing, recruiting, testing and coordinating
- Training and Development. Key areas include: orientation, performance management, skills training and productivity enhancement
- Compensation. Main tasks are: job descriptions, job evaluations, executive compensation, incentive pay and wage and salary administration
- Benefits. That will include all areas of benefits relating to profit sharing, stock plans, retirement plans, insurances, vacation leave administration, etc.
- Employee Services where HRM will help be implementing assistance programs, relocation or outplacement services
- Personnel Records. This mainly include all data maintenance in company system
- Employee and Community Relations. This include: labour relations, labour law compliance and discipline, attitude surveys and publications
- Health and Safety. All aspects of safety inspection, wellness, health and test of drugs
- Strategic planning. This wide area will relate to forecasting, planning, international human resources, mergers and acquisitions.
III. Strategy in HRM
According to Chandler (1962) strategy is the determination of the basic long-term goals and objectives of an enterprise and adoption of courses of action and the allocating resources necessary for carrying out these goals. Strategy created by management shows direction for company how to be competitive in relation to organisational rivals.
Concept of competitive advantage primary formulated by Porter describes organization that acquired or developed an attribute or combination of attributes that allows it to outperform its competitors (Porter, 1985). These attributes include:
- Innovation by producing unique products
- Cost leadership by effective planning expenses
- Quality by delivering high quality goods and services
3.1) Strategic planning
Strategic planning by Armstrong (2000) is the process of identifying and executing the organizations strategic plan, by matching the companys capabilities with the demand on its environment. Other words strategic planning is to decide what business you are in now and which ones you want to be in a future. Strategic planning involve five steps: define current business and mission, perform audits for company, formulate new business and mission statements, translate mission into goals and formulate strategies to achieve strategic goals.
Defining the Current Business and Mission
Organizations in order to trade must define products or services that will offer and also choose the terrain that will compete at. It may be certain geographical area or specific recipients.
Mission of the organization states who the company is, what it does and where its headed?
Seiko and Rolex compete at watch market. However Seiko deliver relatively inexpensive but innovative watches. Rolex is known as producer of limited and high-priced quality watches.
Fiat will offer cars for ordinary people whereas Ferrari focuses on wealthy clients.
The School of Technology and Managements mission is to develop and deliver courses of contemporary relevance in the fields of management, business and information technology and to conduct research in associated areas, with a particular focus on small business management. Recipients of those services will be students and managers interested in improving their qualifications in economics related subjects.
BBC mission is to enrich people's lives with programmes and services that inform, educate and entertain.
Barclays Bank mission is to be an innovative, customer focused Group that delivers superb products and services, ensures excellent careers for our people and contributes positively to the communities in which we live and work.
Some organisations do not have clearly defined mission however the sort of product or services that is offering is associated with group of companies offering similar product.
Apple Inc do not have clearly defined mission, however is committed to bring the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.
Perform Internal and External Audits
Position of organization may be analyzed based on external and internal conditions. Common analysis used in this step is SWOT analyses that identifying company Strengths, Weaknesses, Opportunities and Threats.
A Starbucks performed SWOT analysis in order to identify its current market position.
Strengths: global coffee brand build upon reputation for fine products and services
Weakness: majority cafes are located in the home US market what increases business risk
Opportunities: expansion to new global markets such as China and India
Threats: increases of the cost of coffee and dairy products
Formulate new Business and Mission Statements
New Business and Mission Statements are formulated after performing SWOT analysis in order to recognise new products, terrain and how that product or service will differ from its competitors.
Translate the Mission into Strategic Goals
In order to guide managerial action in regards to the new mission, the new goals must be identified in form of improving shareholders value or rates of return, building strong balance sheet etc.
Formulate Strategies to Achieve the Strategic Goals
This introduce the way how organization moves from the position the business is now to the position the business will be in a future. This strategy is usually formulated in form of easily communicated phrase that resonate with employees.
The essence of TESCO strategy is every little helps. Dells strategy is be direct.
3.2) Types of strategies
Corporate strategy relates to organizations with several businesses and engaging three types of strategic planning.
PepsiCo runs several businesses such as Pepsi (beverages), Frito-Lay (snacks) and Pizza Hut (restaurants). In PepsiCo management identify the portfolio of businesses and relation between them.
Competitive strategy identifies ways how to make organization stronger and more competitive towards competitors.
TESCO identifies how can be competitive towards Sainsburys by being closer to customer and offering cheaper products.
Functional strategy recognises different departments in an organization and identifies roles of those departments in order to achieve competitive goals.
Dells Sales Department supports plenty of Web activities. One of Dells strategic goals is to be direct and low-cost computer provider.
3.3) Linking strategies with HRM
Armstrong defined Strategic Human Resource Management (SHRM) as the link of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage (G. Dessler, 2008). In organisations SHRM responsibilities will be related to different processes as recruitment, selection and rewarding system of employees. SHRM will also look into the way how to achieve organisational strategies through managing people. Major action taken by SHRM will be improving staff motivation and efficiency at minimum cost of employment.
Edgar Schein (1985) defines culture as a set of shared, taken-for-granted assumptions that a group holds and that determines how it perceives, thinks about and reacts to its environment (ACCA, Paper F1 Accountant in Business, 2007). Schein also suggests that the culture of the organization has its beginning taken from beliefs, values and assumptions implemented by founder of this organisation and embedded over time.
Culture can be discussed in many different areas:
- nation, religion or ethnic groups
- social class
- profession and occupation
- men versus woman
- a type of business (e.g. advertising culture)
- an organization (organizational culture)
4.1) Elements of culture
Schein describes three different elements of culture:
- observable behaviour
- values and believes
- Hidden assumptions
The iceberg concept of culture split culture between behaviour and attitudes and professed culture. Behaviour and attitudes is easy to manipulate and emphasize ways how the people act. Professes culture that is difficult to manipulate describe all beliefs and values.
4.2) Organisation culture
Wilkens (1983) defines organisation culture as the collection of traditions, values, policies, beliefs and attitudes that constitute a pervasive context for everything we do and think in organisation (P. Hawkins, 2006). In general organisational culture consists: how formal the organisational structure is, management style, the type of people employed, symbols, legends, corporate myths, attitudes to customer, quality, technology and risk.
Corporate logos and trademarks are examples of symbols that make organisations unique and recognizable on market. Recently most popular brands within global market are: Apple, Sony, Ikea, Nokia, and Toyota.
Microsoft encourages communication between employees by setting aside spaces for the purpose. This is an example of artefacts (ACCA, Paper F1 Accounting in Business, 2007)
4.2.1) Classifying organisation culture
Organisation culture is classified into types:
Role culture where organisation is highly formalised, bound with regulations and paperwork and hierarchy dominate relations
United States Department of Health and human Services issued rules and regulations how to help children recover from different types of disaster.
Power culture have a single power source, which may individual or a corporate group. This type of organisation is able to adapt changes very quickly.
Southern Co. American electric utilities company in which the CEO , David Ratcliffe, made 26,000 employees adopted the same values in form of unquestionable trust, superior performance and total commitment.
Task culture this type of organisational culture will look into building a team where every employee is on the same level and may influence decision the others. At the end, team will be responsible for succession or failure of given task
NASA creates teams of experts in order to execute full task given from beginning to the end or to solve just a part of the problem.
Person culture is focused to serve the interests of the individuals within an organisation.
These organisations are rare and usually small sized with few individuals working and doing all the work themselves
4.2.2) Influences on organisation culture
Various factors can influence on organisational culture:
Founder organisational founder usually set up strong set of values and assumptions that company must follow. Even if he is retired or passed away the values are still important for organisation
Harry Selfridge by opening his department store in 1909 set up few standards to make his business servicing customers better way than competitors. Some of those rules are still valid nowadays. The most famous one is: Customer is always right.
Organisations history. Period of existence of the organisation in the market is reflected by stories, rituals and behaviours of its members within a time.
AIESEC International Students Organisation specialised in students exchange program in order to give them international experience provides vide range of trainings connected with fun education by singing and dancing called AIESECs dances or AIESECs songs.
Leadership and management style. Organisations with strong organisational culture usually recruits and develop managers who easily conform to culture
Google for example successfully mixed management style and strong organisational culture. What Google did was recruiting people with different skills coming from education and work experience what helped employee easier and quicker adopt to organisations culture
The organisations environment in form of nations, regions, occupations and business types that have their own distinctive cultures
4.3) How organisation culture is shaped by HRM?
It is clear that HRM have significant role in shaping organisation culture. In general this can be split into three stages: pre-hire, selection and post-hire stage. Two first stages will relate to job designing and selecting appropriate employee to fit to the organisation. Post-hire stage is very crucial to make selected person work the company way and being as most efficient as possible. This will involve Human Resource Management to constant observation, apprising, training, developing and motivating individual.
By career-orientated appraisal management will not only apprise employee but also match the persons d development work.
Toyota developed system where some employees rotate within factory in order to find the best development work for its employees.
It was pointed out that Google had become too narrow in its recruitment by focusing only on the academic records and graduate ranks of the applicants rather than on experience. Many analysts feel that Google's zero per cent employee turnover rate during the dotcom boom, was a testament to its salubrious organizational culture. But not everyone was convinced that Google had got it right in terms of its work culture. They felt that company's culture was not set to manage its growth. A 12-hour working day had become norm at the company. Google's recruitment process was also criticized by analysts.
Also management may use job rotation to help employee develop more realistic picture of what he is good at and what possible future career move might be the best.
Dow Chemical created career planning and development system for every job at Dow. Employees can review the competencies required for their own jobs and identify their own developmental needs (G. Dessler, 2008).
Coaching and Mentoring Coaching relates to employees contribution into work. If mistakes or errors are minor, by appropriate coaching employee is able to correct them. Mentoring involve senior professionals and management to assist less experienced individuals to improve their performance and career progress.
KPMG made an online mentoring program which includes job-sharing time off, flexible work schedules and community volunteer opportunities with pay and benefits (G. Dessler, 2008).
Dow Chemical Co. has online based mentor system within company enabling employee to seek a mentor or create a list of potential mentors (G. Dessler, 2008)..
Very important influence on shaping organisation culture has also style of managing within organisation or problem solving of some projects. The most common method of problem solving is brainstorming. In relation to HRM, brainstorming not only generates new ideas, but also helps in developing teams and motivation of individuals by involving them in management issues.
One of the Californian organisations, Axion Design with 30 years experience on the market, used brainstorming in order to integrate new employees into company.
Self Directed Team Work (SDTW) is a team created from employees with different skills and talents. Team is working without supervising form managerial side and is trying to cope with certain task. Task considered by SDTW may include different activities from improving work efficiency, product or service quality and also focusing on training and career planning.
Due to introducing SDWT at AT&T quality of services increased by 12%
Federal Express by 13% decreased own service errors
At Johnson & Johnson by implementing SDWT, company reduced its inventory by $6 million
At Shenandoah Life Insurance SDTW increased work efficiency by 33% with reducing employment cost by $200 000 per year
At 3M Hutchinson company increased production 3 times more than before implementing SDTW.
Total Quality Management is example of another management system. The aim of TQM is to push employees to be responsible for improving quality at workplace. Management must ensure that employees are highly skilled, training and development must be provided together with motivational system by rewarding. The characteristics of TQM system will be specified as:
- Friendly atmosphere fostering solving problems
- Employees self motivation
- Trust in regards to staff and managers
Penril DataComm is one of the designers and producers of data communications in Maryland. Before introducing TQM system, defects rate was very high and the company had to rework or scrap 33% of work done. After embarking TQM system organisation decreased 81% in defects and 83% in failures in the first three months of use. Also decreased by 73% in warranty repairs.
The aim of every organisation is to improve constantly business in order to achieve competitive advantage over rivals. Successful achievement of those goals is part of Human Resource Management that has crucial influence on corporate employees and maintaining organisational culture. These are some recommendations that should be considered by organisation:
- In strategic planning process senior management should set up goals for Human Resource Department in relation to recruiting, selecting, training, motivating and rewarding personnel in long term basis. Satisfied employees reduce employment rotation and build cooperate culture within organisation.
- In recruitment process Human Resource Department should clearly specify what require from potential candidate and select the best optimum fit for organisation in mixture of qualifications and experience. Successful applicant should cooperate with already existing employees and be able to adopt corporate lifestyle
- Training and Development as major responsibility of Human Resource Management is important to motivate employees and increase their skills. Highly skilled and motivated employees improve business performance and develop organisational culture
- Methods of managing groups used in order to resolve problem must be optimised and efficient. Self Directed Team Work, if chosen, may bring mentioned before advantages for a company, however appropriate training must be delivered for all members of team what increase decision making process
- In case of Total Quality Management employees take responsibility for improving quality within the organisation. Properly implemented avoids counterproductive organisational infighting, however benefits may not be seen for several years and workers may be resistant to change.
In times of massive competition between organisations people are treated as major asset of the company. Therefore it is very important to set up department in form of Human Resources that will be responsible for attracting, managing, motivating and developing employees for the benefit of the organisation, building corporate rules and behaviours in form of organisational culture.
Nowadays organisation culture became very important aspect of many organisations. It is not only about rules, procedures, behaviours and beliefs but also how organisation organises itself in order to create competitive advantage over rivals.
Writing this report I understood that Human Resource Management and with strategic goals and objectives of any organisation is directly linked with corporate culture. Properly working SHRM significantly shapes morale of employees what improve business performance and foster innovation and flexibility in organisation.
I also understood that blending management style with strong organisation culture is one of the most difficult tasks for managers. Therefore some techniques or managing styles will always bring advantages or disadvantages for different companies. Linking strategies with Human Resource Management and further with corporate culture in organisations require extended knowledge of managers from different departments and constant observation of market in order to develop and be successful with own products and services.
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