Functions Of Hrm Influencing Strategy Of Firms Business Essay

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A business is an organization involved in the trade of goods and services. As the study has shown in the history that transaction of goods and services were carried out in old days to. The only thing that has changed is the approach in carrying out the business with the quick modernization of the world; business has become a very vast and complex subject. Management i.e. managing of people to fulfill a desired goal, has become an important part of any business as it has been seen in the case of Rourkela steel plant which was initially a loss making organization, but the enthusiasm and hard work of its employees transformed it into a profit making organization. Hence, we can say that people working in the organization makes or break an organization.

This has lead to the evolution of HRM as a very important part of business. The view of this course work is to scrutinize the alliances between strategy and HRM. The attempt explores the switch and developing role of HRM in rendering a corporate and strategic dimension to an organization.

Definition of HRM

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. HRM can also be performed by line managers.

HRM is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.Hence, maintaining a balance with the requirement and supply of human resource is the main objective of HRM.

Definition of strategy

Glueck (2011) defined the strategy has, "unified, comprehensive and integrated plan designed to ensure that the basic objective of the enterprise are achieved".

Therefore, strategy can be said as the programmed plan formulated by the business relating how the business will function to improve its performance by evaluating competitors' action. And also to formulate a specific action that the company must take to improve its competitive advantage.

Importance of strategy

Strategic Human Resource Management is normally performed to help companies and organizations best meet the needs and expectations of their employees while promoting and working towards achieving  the  company goals.

Strategic Human Resource Management also deals with any aspects of the enterprises that affect the employees, including employee hiring and firing, employee pay, their benefits, training, and administration issues of the employees.

Strategic Human Resource Management also provides work the incentives to employees, safety information, sick leaves and catering for vacation issues of the employees.

Strategic Human Resource Management is also concerned with the proactive management of an organization's workforce or employees. Strategic human resource management requires thinking ahead leading and also putting up ways for a company to better meet its employee's needs and vice versa for the employees. Strategic human resource management influences the way in which things are done in the organization including training, hiring and firing employees.With the unfamiliar rate of change occurring in the world, the organization has become much more nimble and agile to compete then ever. Hence strategy has become even more important than it was before. The importance's of strategy are as follows:

Retaining of customers: The intense competition has made customer retention as an important aspect of any business. Therefore effective business strategy should be programmed relating to customer service and to develop proper customer follow up plan to make sure that the products are working properly.

Resources: A good business strategy is necessary for the utilization of the company's resource efficiently. A proper utilization of the resource will give the company a competitive advantage over the competitors. Without proper business strategy the resource will be utilized inefficiently which will in turn leads to loss of customers hence reduce market share which will cost the company money.

Expansion of the company: Expansion is one of the most important way by which a company can maintain edge on its competitors. But it needs a very sound business strategy to explore the opportunities outside the normal business practices. Hence, strategy plays a very important role in expansion of any business.

Functions of HRM influencing strategy of a firm:

Managerial function

Planning: predetermining the course of action is called planning. Planning is not as easy as one might think because it requires a concerted effort. It is one of the part of strategic planning process, HR planning should take into consideration the influence of environment on the organization. The HR planning should reflect the trends and issues affecting the human resource of the organization. Planning is a process that has to be commenced from somewhere and completed for a purpose. It involves gathering information that would enable managers and supervisors make sound decisions. The information obtained is also utilized to make better actions for achieving the objectives of the Organization. The government law relating to employment, health and safety of the employee, industrial relations etc should be properly integrated with the HRM strategy of the organization.

Organizing: carrying out the determined the course of action is called organizing. It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals Once the strategy of a firm is framed, a proper course of action is to be determined so as to fulfill the desired goal of a firm. Hence the influence of organizing in a firm strategy cannot be neglected.

Directing: directing is the next logical function after planning and organizing. It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning and organizing are the mere preparations for doing the work. As the plan framed must be executed properly. If the business strategy of the firm is not been executed properly, then it will be of no use to the organization. Therefore directing plays a very important role in the business strategy of the firm.

Controlling: controlling is verifying the performance in order to know if there is conformity in the work performed by the employee. It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards.  Therefore once the strategy framed and implemented, there should be a regular verification and comparison of the work done along with business plans and strategy.

Operational Functions:

Employment: employing people having this required skill, knowledge and intelligence to do the job is concerned with employment. Determining what kind of skill, knowledge and intelligence required is the role of strategy. It has many sub functions and they are as follows

Job analysis: it deals with the process of collecting information relating to the various aspect of the job. The preparation of the job description, job requirement and specification is also a part of job analysis.

Human resource planning: It deals with the process of calculating and supplying of human resource required in the organization. It also takes steps in changing, molding and developing the standard of the existing employee working in the organization.

Recruitment: The process of searching and stimulating the prospective candidate to apply for the job in an organization is called recruitment. It also deals with maintaining a balance between the internal and external source.

Selection: It deals with the process of ascertaining the skill, knowledge, experience etc with a view to understand the candidate's suitability to a job. The decision of the line manager is taken into consideration while appointing or rejecting a candidate.

Placement: It deals with the process of providing the appointed candidate with the right kind of job that will suit his skills and qualifications and also fulfilling the requirement of the organization as well.

Induction and orientation: It is the process of rehabilitating a new employee into the organization by making him acquainting with the rules and regulations, culture, policy. Objectives etc of the company.

Learning and development:

A accurate learning and development plan in the organization is very important for enhancing the environment of the work place. Learning and development not only helps the company to grow and prosper but also to reach their full potential. With the increase in challenge and competition, employee retention has become a very important aspect for the business to run successfully. But maintenance of employee will be of no use if the employee are not on the same track as that of the company and fails to grow along with the company. Thus learning and development plays an integral part in that growth process. Many a times learning and development activity is done by having face to face conversation with the employee to get an idea on which area they need to improve on. But most of the time it is done along with the need of the company. Suppose if a company installs new computer software, then it becomes the need for the company to provide necessary training to its employee so that they can use it properly for the fulfillment of the companies goal

Performance appraisal system:

The activities and/or processes embraced by an organization in anticipation of improving employee performance, and therefore, organizational performance The method of evaluating an employee's working behavior by taking into consideration the aspect of the job performed within the organization. The main aim of performance appraisal is to evaluate the work done by an employee and the contribution made by him over a period of time towards achieving a goal of organization. Measuring the negative and positive performance of an employee, so as to have better control over the work done by an employee and its operation is the objective of performance appraisal system. There can be merits and demerits of performance appraisal system as well. As sometimes by evaluating the strength and weakness can create many issues for the employee working in the organization which might create demonization and lack of enthusiasm to work in the employee. Whereas it can have some positive impact as well. The achievement of these organizational performance goals depends on the performance of the individual organizational members Performance appraisal system facilitates in taking decision regarding the allocation of rewards, promotions or demotions of employee, and sometimes in making decisions relating to the transfer of employees. The performance appraisal helps manager in taking decision in relating to the development of the employees. In addition to all the above mentioned points performance appraisal can improve the communication system in the organization which in turn bring satisfaction to the employee and improve employee commitment as well.

Self managed teams and high performance working practices

Self managed teams: It is a small group of employee where the member determine the plan of action of those groups which works under no supervision. Hence, they carry on their day to day function accordingly to their own plan of action. Employee working environment can be well organized with the use of self manage team. The reason why the self manage team has become so well known in the business world is because it brings with itself the sense of involvement and also the sense of independence in the firm. Infact, it is empowering the employee to work with more freedom in carrying out there function.


Traditional work group


Self directed team


Take directions


Take initiative


Seek individual rewards


Focus on team contribution


Focus on blame


Concentration on solution






Stop at present goals


Continually improve and innovate


Demand more resource


Work with what they have


React to emergency


Take step to prevent emergency


Spend money to improve quality


Save money by improving quality

Table 1: Differences between traditional work groups and self-managed teams

Source: Elmuti (1997:235)

If self managed teams method is implemented properly then it can result in reduction of cost by assisting a better and faster way of taking decision which will in turn improve the method of pricing, resulting in an increase in the market share. As individual gets involve in taking and implementing of decision, therefore it will provide greater satisfaction to the employee. There can be two different types of self managed teams, one is the work teams and other one is a problem solving teams. A problem solving teams are temporary in nature; basically it works as a task force whereas work teams which is widely used by many companies in USA are formed for permanent purpose. When the involvement of an employee to an organization is evaluated in the same way as the individual efforts and their contributions to the organization are recognized. Then this can be a win-win situation. It can be loss-win situation if the employees idea and innovation are implemented in the organization but the employee does not get any benefit from it either financially or non financially. On the other hand for the organization it can be a loss win situation, if the employee does not make use of the freedom provided to them by manipulating their independence in getting involved to unproductive activities.

High performance working practices:

High performance working practices refer to the engagement and empowering the existing work force to produce high quality of goods and services. The main aim of high performance working practices is to differentiate the product and service provided by an organization with that of its competitors. Therefore it offers in customizing the product and service according to the needs of an individual customer. There should be a proper control and coordination from top and throughout the firm, so as to create momentum in the organization. The customer follow up plan should be well maintain in high performance working practices, as it will help the organization in renewing and improving the quality of service offer to the customer. It is very important to have a proper alignment between the performance operation with that of the objectives of the organization to create sense of trust, involvement & commitment in the working of the organization. Maintaining a good relation ship based on trust and commitment with in as well as outside the organization is one of the most important functions of high performance working practices.

Definition of SHRM:

Appleby & Mavin (2000) explains that, "Human resources are the efforts, skills & capabilities that people contribute to an employing organization with enable it to continue in existence. Although difficult to define, SHRM is generally perceived as a distinctive approach to managing people which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce."

Strategic human resource management can be defined as the linking 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. In an organization SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding persona.

Implementation of strategy in an organization:

Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. Organizational structure allocates special value developing tasks and roles to the employees and states how these tasks and roles can be correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of competitive advantage. But, organizational structure is not sufficient in itself to motivate the employees.

An organizational control system is also required. This control system equips managers with motivational incentives for employees as well as feedback on employees and organizational performance. Organizational culture refers to the specialized collection of values, attitudes, norms and beliefs shared by organizational members and groups

P & n is an energy trading company which deal with the trading of the surplus power available from the state power utilities, independent power producers and the other entire source including the power exchanging. Therefore the most important activity of this trading limited company is to ensure the reliable electricity supply in the economy. It acts as a bridge by linking the supply power generating unit and deficit power needing unit. Scenario: There is a vacancy for the energy manager in the company so there was a need to carry out the job analysis process

Job Analysis:

He should be able to provide developing strategic plan.

He should perform site audit.

He should be able to perform energy and sustainability accounting analysis.

He should improve energy efficiency and sustainability.

He should always communicate with the other employees

Recruitment and selection:

The P & N energy trading limited company has carried out the recruitment and selection process by advertising and conducting interview but still they do not get the suitable candidate for the job.

Learning and development:

The company has carried out a massive learning and development activity just to help the employee working in the organization to grow and also to find if they have someone working within the organization who is capable for the post of energy manager.

Self manage team:

The company has divided the employee of the whole organization into small groups. The company has given them the freedom of independence as well as target which is needed to be fulfilled. These small groups are working independently without any supervision to fulfill the company's goal.

High performance working practices:

The company is very focused in high performance working practices for which the management has the special order to hire people have the right skill and right attitude to do the job. This is the reason why even after conducting interviews for 3 days they have still not selected any one for the job, as they don't want to compromise on the quality.

Performance appraisal system:

The company has a very well maintained and well organized performance appraisal system plan in place. That's the reason why they have dismissed the energy manager from the post. As it was very clear his performance appraisal that he was not performing his job properly according to the guidelines of the company.

HR lacks alignment with the strategy

It has been noticed in the working of the P & N energy trading limited company that there is no proper alignment of the organization, Hr policy and its strategic planning process. Hence HR needs to take comprehensive approach that will align HR actions with the entire organizational strategy. A proper integration of HR with the strategy of the organization will help the company to achieve competitive advantage, as the main aim of HR is management of human capital, which is the major subset of the organization strategy.

HR lacks alignment with the strategy

It has been noticed in the working of the P & N energy trading limited company that there is no proper alignment of the organization, Hr policy and its strategic planning process. Hence HR needs to take comprehensive approach that will align HR actions with the entire organizational strategy. A proper integration of HR with the strategy of the organization will help the company to achieve competitive advantage, as the main aim of HR is management of human capital, which is the major subset of the organization strategy.

Solution: Aligning HR with organizational strategy

HR needs to expand its traditional administrative role so as to make a significant impact on the organizational value creation. HR first needs to be organized properly before aligning it with the strategy. It has to make sure that the human capital of the company should effectively get align with the strategy chosen by the organization, by adapting a new perspective of HR.

Conclusion: The aim of this assignment was to get a clear idea about the functioning og HRM with relation to that of strategy of the organization. The assignment defines the different function of HRM that influence strategy in an organization. The system of performance appraisal is also being explained in the assignment along with the system of self manage teams and high performance working practices at last, I have taken an example of P&N energy trading limited company and explained how the company has applied the different function of HRM like job analysis, recruitment and selection etc into practices. It has been shown that there was no proper connection of the company's HR practices with that of the strategy. Therefore a solution is been provided to support the HR policies of the company with its strategy.