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Does HRM have a role at the top table? Use examples and case studies. Discuss this question in the view of significance of HRM's historical development and how it is regarded today?
Human resource is concerned with the people dimensionin mangement. Since every organization is made up of people, acquiring their services,developing their skills motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizatioal objectives. This is true, regardless of the type of organizations, government, business, education, health, recreatio n and social actions.(K Aswathappa).In the coming years, organisations have come under increasing pressure to change. Much of this pressure is due to the changes in the economic environment, such as increasing international competitions, slower growth and, in some cases, declining markets, thereby these force companies to cut costs, lower prices and achieve dramatic improvements in productivity (Sparow and Hiltrop, 1997). Many of the organisations have started focusing on the added value of people, processes and structures. Due to these competitive challenges the world of human resource management has under gone great changes as could be imagined in the 21st century. As the functions of the HR is not bound to traditional hire and fire but it serves as the strategic partner at the table with finance, operations and other business centres. The HR department ensures the best output out of their employees. The HRM provides a high return on the business's investment in terms of its people which makes it a highly complex phenomeonon as it is not concerned with management issues only but humans as well.
Impact of HRM on Business:
With the unprecedent and competitive changes incorporated by the organizations and evolutionary changes in HRM from personnel management to strategic management has brought human resource managers join the other leaders at the business decision making table. This demonstrates the importance of Human Capital along with Financial, Product and Customers as the fundamental building blocks of organizational success. A study was conducted by Sibson consulting to better understand how HR leaders can adapt HR policies, practices and behaviors to better support the strategic needs of the business. Interviews and questionnaire data was collected from HR leaders from 35 American and British organizations to date. The findings of the study were as follows:
A Seat at the Table is Available for HR
HR Must Lead the Charge to Improve the Talent Portfolio
HR Must Leverage Total Rewards for Competitive Advantage
HR Must Demonstrate and Measure its Value
Outsourcing and Technology Don't Mean Eliminating HR
The HR Function Must Transform Itself
Some of the other findings of the study are as follows:
Strategic players should understand the organization's business issues and human capital implications.
The HR leaders can change the functions of the organization according to prevailing business needs.
HR leaders are capable of giving the senior leaders an insight and fact based information of the business so that they can make informed decisions regarding human capital investment.
Recruiting and hiring an HR staff on the basis of their business insight, analytical skills.
A key finding of this study is that to attract, develop and retain the right number, type and quality of employees is the influential and critical role of an efficient HR leader.
Study clearly indicates that for Strategic HR organizations total rewards directly impact business results. It enables the company to attract, develop, motivate and retain the right talent and link performance measurement, management and rewards to improve organization return on rewards investments. (Jim Kochanski)
In the figure above it is clear that in the past HRM was involved strategically up to 20% only and the mainly involved in personnel and administrative tasks, now the figures are reverse and the HRM involvement in strategic matters is increasing.(http://www.sibson.com/publications/perspectives/Volume_12_Issue_2/e_article000271649.cfm?x=b11, 0, w)
Innovative HRM practices adopted by India to brace competition
Ashok Som conducted a research over a period of 5 years (1998-2003) in 11 large Indian organizations in 9 industries. According to the study the firms deliberate the role of HRM as strategic partner, employee champion or an administrative expert then the HR players should be fully aware of their roles and responsibilities in carrying out the important decision regarding business issues and company's strategies. They should have an insight of the business plans. The importance of HRM incorporating innovative strategies can be well explained by two examples of service industry and manufacturing industry.
Service industry (Maruti Udyog Ltd)
Maruti Udyog is a leading company of Indian automobile industry, had a joint venture with Suzuki of Japan. It transfigured the automobile industry by its quality services and set high standards.maruti was controlling 84% of the market being the leaders of the market till 1984 faced drastic reduction in its market share due to deregulation in automobile industry in India. There were many competitors in the market both local and foreign like Telco; Hindustan motors where as foreign players like Daewoo, PAL, and Toyota etc. there were drastic changes in the company's structure, to face this intense condition the company adopted new policies and launched new model to different segments of the market. It changed it's focused from production company to customer care, focusing largely on services. Prior to this change when Maruti was leading the market and enjoying large market shares HRM was considered as a "paper pusher" and a "time keeper". HRM department mainly performed the remote tasks and was not involved in any of the strategic decision. Due to change in the leadership a new Managing director was appointed who not only professionalized the HRM department but also hired new professional HR mangers. New initiatives in performance appraisals, competency mapping and job rotations were undertaken. HRM was made responsible for the clarity and transparency in communication within the organization and for negotiations with the Union. Hence the role of the HR Department was reactivated and they were held accountable for defining job profiles, simplifying procedures. As a result the significant improvements implemented by the HRM department, led Maruti to develop excellent teamwork and its compensation system were recognised as the best in the industry. There was a rise in turnover, employee morale, commitment, job satisfaction etc. new HRM strategies helped the company to create its unique competencies that differentiated its products and services and, in turn, drive competitiveness.
Manufacturing industry (Mahindra and Mahindra Ltd.)
The role of HRM at the top table can also be explained with the help of another example in the manufacturing industry. As the role of HRM is just not confined to making and implementing new strategic policies, but motivating the employees to adapt to those changes and changing their mindset is also a critical role of HRM. One such example is the Mahindra Ltd., the flagship company of the Mahindra Group. The company was facing different problems such as manufacturing inefficiencies, low productivity, over stretched production cycle and poor output. The main reason of this low productivity and inefficiency was under productive and excessively unionized labor force. On this changing business environment and government policies made the situation even worse. In 1995 the company incorporated new strategy Business Process Reengineering (BPR), in order to survive), focusing on a total overhaul of the style in which the company was organized. The scheme focused on reformulating the way the company carried out its business, instead of improving or changing procedures. This brought many changes in organizations structure in order to fit the BPR mechanism. The labor union opposed the BPR. Prior to BPR, HRM department was not part of the strategy making process at M&M Ltd. BPR adopted innovative HRM practices, such as group work, that used the "churning effect" to change the traditional mindset of the employees and enforced concrete HRM policies and practices. Furthermore, the company repositioned existing people in key ranks and placed emphasis on training programs. The company also began outsourcing non-core manufacturing activities. After eight years, in 2003 the results of implementing BPR in synergy with new, innovative HRM practices within the organization were spectacular as it allowed the company to maintain steady profits, reduce working capital levels, and rationalize the manufacturing process.
Implications for HR Manager:
The role of people in the implementation of strategic responses has a significant bearing on the success rate. It is therefore imperative for the managers to look at the human issues involved before implementing any strategic responses. The question arises: How can HR managers effectively adopt, implement and maximize HRM practices for valued firm level outcomes? This can be achieved if the members of the HRM personnel have the appropriate human capital or competencies has been suggested as one way to increase the likelihood of effective implementation of HRM practices .The future HR professional will need four basic competencies to become partners in the strategic management process. These include business competence, professional and technical knowledge, integration competence and ability to manage change.
HR professional competence describes the state-of-the-art HR knowledge, expertise and skills relevant for performing excellently within a traditional HR functional department such as recruitment and selection, training, compensation, etc. This competence insures that technical HR knowledge is both present and used within a firm
Business-related competence refers to the amount of business experience HR personnel have had outside the functional HR specialty. These capabilities should facilitate the implementation of HRM policies and practices that fit the unique characteristics of a firm including its size, strategy, structure, and culture .In other words, these competencies will enable the HR staff to know the company's business and understand its economic and financial capabilities necessary for making logical decisions that support the company's strategic plan based on the most accurate information possible.(www.usa.edu.pk/Web/.../globalization%20n%20role%20of%20HRM.pdf)
Human Resource Management: Futuristic Vision
On the basis of the various issues and challenges the following suggestions will be of much help to the philosophy of HRM with regard to its futuristic vision:
The organizations should develop a properly defined recruitment policy that focuses on professional aspect and merit based selection.
While making decisions HR managers should give proper weightage to the employees. This will lead to sense of team spirit, team-work.
Opportunity should be provided for full expression of employees' talents and manifest potentialities.
There should be focus on job rotation so that vision and knowledge of the employees are broadened as well as potentialities of the employees are increased for future job prospects.
The capacities of the employees should be assessed through potential appraisal for performing new roles and responsibilities. It should not be confined to organizational aspects only but the environmental changes of political, economic and social considerations should also be taken into account.
The career of the employees should be planned in such a way that individualizing process and socializing process come together for fusion process and career planning should constitute the part of human resource planning.
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It can be concluded that many companies are grappling effectively with the challenges, and that much innovation is going unobserved. For this, HR needs to play its role as the function of business; it should focus on human capital implications of the business by using real data, drive understanding of the importance and impact of talent management and total rewards, and make better use of people information. Further Human Resource Management should be linked with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility. Transformation does not always require new HR leaders, but it does require leaders who recognize changing business needs and can shift HR's capabilities and priorities accordingly. It is evident from the above examples that whether it is services Industry or manufacturing industry HR M and HR manager have a key role in the entire business and organizations structure. The evolution from personnel and simple administration task t o strategic management and involvement in important policies implementations does make HRM to hold a role at the top table.