Strategic Human Resources Management Practices In Business

“Strategic human resource management is to ensure that human resource management is fully integrated into strategic planning that human resource policies cohere both across hierarchies and that HRM policies are accepted and used by line managers as a part of their every day work”

“Integrating human resource management strategies and systems to achieve the overall mission, strategies, and success of the firm while meeting the needs of employees and other stakeholders. “

Source: Herman Schwind, Hari Das and Terry Wagar, Human Resource Management: A Strategic Approach.

Strategic HRM has four meanings:

The use of planning.

A coherent approach to the design and management of personnel systems based on an employment policy and manpower strategy and often underpinned by a ‘philosophy’.

Matching HRM activities and policies to some explicit business strategy.

Seeing the people of the organization as a ‘strategic resource’ for the achievement of ‘competitive advantage’.

HUMAN RESOURCE PLANNING:

According to Terry L. Leap and Michael D.crino

“Human resource planning is a process of determining and assuming that organization will have an adequate number of qualified persons, available at the proper times, performing jobs which meet the needs of enterprise and which provide satisfaction for the individual involved”.

Overall we can say HRP is a process of anticipating and making provision for the flow of people into, within, and out of an organization.

STRATEGIC HUMAN RESOURCE PLANNING:

Strategic HR planning is an important component of strategic HR management. It links HR management directly to the strategic plan of your organization. Based on the strategic plan, an organization can develop a strategic HR plan that will allow making HR management decisions now to support the future direction of the organization.

A comprehensive HR Strategy will also support other specific strategic objectives undertaken by the marketing, financial, operational and technology departments. An HR strategy planning provides overall direction for the way in which HR activities will be developed and managed to gain competitive advantage in an organizational performance. The HR planning enables the organization to implement policies that enhance the skills and competencies of the people

Strategic human resource planning consists of a number of objectives, but all the objectives must be closely aligned to overall business goals in order to be effective. Even a large human resources department is not a revenue-generating section of the organization. Therefore, human resources executives must demonstrate the employer’s return on investment through strategic activities. Strategic activities are forward-thinking processes that support business growth through recognition of the value of human capital .

Strategic HR Planning Today

In these times of great economic changes, the importance of human resource planning is more apparent than ever. A short-sighted lay-off, intended to temporarily reduce overhead, can result in much heavier long-term costs. Organizations have to spend more money and time for recruiting & training new employees if they couldn’t retain the old experience, skilled employees in right time.

In the recent scenario of globalization and faster communication, a smart human resources plan encourages the organization to keep a longer view of things and retain talent so that, once this economic upheaval has calmed down, it’ll have a committed team intact.

The overall purpose of strategic HR planning is to:

Ensure adequate human resources to meet the strategic goals and operational plans of your organization – the right people with the right skills at the right time

Keep up with social, economic, legislative and technological trends that impact on human resources in your area and in the sector

Remain flexible so that your organization can manage change if the future is different than anticipated

STRATEGIC HUMAN RESOURCE PLANNING PROCESS:

The strategic HR planning process has the following steps,

Mission , Vision & Value

Strategic Analysis

Strategic Formulation

Strategic Implementation

Strategic Evaluation & Assessment

A. Mission, Vision & Value

Mission

The basic purpose of the organization as well as its scope of operations.

Strategic Vision

A statement about where the company is going and what it can become in the future; clarifies the long-term direction of the company and its strategic intent.

Core Values

The strong and enduring beliefs and principles that the company uses as a foundation for its decisions.

B. Strategic Analysis

It deals with scanning Internal and external environment as well as competencies (i.e. knowledge, skills & abilities) of the organization and forecasting human resource demand accordingly. The following will define these terms broadly.

External environments

The major external forces influencing the organization as follows ,

Economic factors: general and regional conditions

Competitive trends: new processes, services, and innovations

Technological changes: robotics and office automation

Political and legislative issues: laws and administrative rulings

Social concerns: child care and educational priorities

Demographic trends: age, composition, and literacy

Internal environment

The Internal environment consists of the followings,

Core Competencies : Integral knowledge, competitive advantages through people

Organisational culture: The culture and quality of work life in an organization.

The human capital architecture of the firm: core knowledge workers, traditional job-based employees, contract based employees, partners etc.

Human Resource Forecasting

This is a critical element of planning especially in strategic human resource planning which deal with mostly long term HR strategy of the organization. We can say this can be of as following,

Demand for Human capital

Demand forecasting of employees has both qualitative and quantitative approach. The qualitatively we can use management forecasting or Delphi techniques where as quantitative we can use trend analysis to study the demand.

Supply of Human Capital

Forecasting the Supply of human capital can be done through obtaining the Staffing Charts which shows graphical representations of all organizational jobs, along with the numbers of employees currently occupying those jobs and future employment requirements, with the information from the personnel files of employees and their replacement & succession planning details and their individual development plans.

Gap Analysis

This is a tool that helps an organization to compare its actual performance with its potential performance. I strategic human resource planning it means the study of the gasp between the demand and supply of competencies of human capital with reference to the business objectives and strategies. This can be of Performance – Gap Analysis ,Training & Development – Gap Analysis ,Skills – Gap Analysis Or Competence – Gap Analysis.

C. Strategic Formulation

In this stage HR professionals need to develop a logical & practical course of action to use the strengths of the organization to capitalize on opportunities, counteract threats, and remove internal weaknesses. These action plans has to be formulated in all levels of a business organization i.e. corporate strategy, business strategy and functional strategy.

Corporate strategies deal with the policies and procedures involved in mergers or acquisition, business alliances, joint venture or any future intent for growth and diversification.

Business level strategy deals with value creation for the organization as well as keeping an eye on low cost productivity and overall efficiency to make it competitive and profitable.

Functional strategy plays a vital role. The HR professional has to align the business objectives and the HR initiatives, policies and practices both internally and externally.

Some of the examples are Training & Development Strategy, recruitment strategy, IR strategies, Retention strategy etc.

D. Strategic Implementation

This stage is the time to take actions on all the strategies and plans made.

First , we have to balance the demand and supply of human capital by forecasting business activities or trends and also by maintaining a record of all the applicants of past, present and future.

Secondly, as per above plan out the attrition /retention strategies, downsizing or lay off techniques have to be made.

Then need to work on the training & development of employees with other reward, incentive or welfare practices.

E. Strategic Evaluation & Assessment

Now we need to assess the HR function, the work force with comparing the organization’s processes and practices with those of other companies. Here the HR professional has to take the help of few metrics or mapping or scorecard techniques for the evaluation.

In addition, the HR strategy can add value is by ensuring that, in all its other plans, the organization takes account of and plans for changes in the wider environment, which are likely to have a major impact on the organization

HR PROFESSIONALS AND THE MODERN BUSINESS ORGANISATIONS

In the modern context, Strategic human resource planning is a planning about the nature of the present & future work demand & labor supply for both short term & long term that serves to achieve the strategy objective of the firm.

The role of human resource management is changing & is changing very fast, to help companies achieve their goals. HRM has gone through many phases – from hiring & firing to relationship building, from there to legislation role, & now its role is shifting from protector & screener to strategic partner & as a change agent.

Today, to create value and deliver better results, HR professionals have begin not by focusing on the work activities or work of HR but by defining the deliverables of that work. So as the planning is not to set goals but also to make sure to achieve them.

According to Richard Chang, author of The Passion Plan at Work, HRM focuses mainly on HR Research and Information Systems, Union/Labor Relations, Employee Assistance, and Employee Compensation/Benefits where as Human Resource Development, according to Chang, includes Career Development (helping individuals align their career planning), Organizational Development (helping groups initiate and manage change), and Training and Development (designing / developing, and delivering training to ensure people are equipped to do their jobs).

But SHRP as a part of SHRM involves both area and creates an overlap between them in today’s HR functions.

Mostly all of the HR leaders and professionals in large international organizations are participating in SHRP by giving strong contribution in decision making and strategic teams. But in small and medium size companies there is a lack of contribution of HR professionals due to their non-involvement in organizational or functional strategic planning and the stereotypical negative views of HR functions. Most of the Top management teams till now consider HR functions as a compliance function or more of a consultative service and HR professionals are involve d in implementing a strategy only after the strategy is decided.

To gain its position in the strategic decision team, HR have to

Know and understand the business strategies, processes & its objectives

Understand how the various organizational components interact and the process of business and what the long-term implications of HR decisions are. The impact of HR decisions must be thoroughly researched and analyzed before changes are implemented.

Understand the five major non-HR components of any business: finance, marketing, sales, operations and accounting.

Align HR strategy to organization’s Mission Statement and objectives. Strategies can range from functional strategy and capability strategy to results strategy.

HR professional face lot difficulties while applying the SHRP in reality. As various functional stages they face different challenges. So they have to overcome them as follows ,

Selection & Staffing:

If HR knows in the firsthand the clear direction and requirement of the company, it will easy to place right people at right place in right time which will save both time and money of the organization. But in many organizations only few leaders have that access. The HR officers are not aware of this. So to cope of with the pace of today globalization and expansion of business all level of professionals has to be well versed with these requirements.

Training & Development:

Training and development are most important in view of the strategic growth process of a company. So the knowledge , skill and competence of employees has to be accessed strictly by HR professionals without any interference of the higher authority or being biased by any sort of favoritism. In reality this is not 100% successful yet because of lack of HR interest and also lack of tools to evaluate these. If HR people can be equipped with all the new tools & techniques to perform these tasks they would be able to speak instantly to any issues, and possibly provide input that could help a company achieve its goals faster.

Organizational Development & Change Management:

In long term strategy always change has a critical role in different processes of the workplace. Each department is known to these changes of their related departments. if these will be timely intimated to the HR departments , they will be able to take care of the organizational development issues with unique solution and make sure of t he positive impact of the change on overall process. this is only possible when there will be proper chart or data available with proper maintenance for which HR department has to take necessary required steps.

CONCLUSION

The ultimate goal of strategic planning is the identification of opportunities along with some risks by aligning objectives and activities of an organization with proper allocation of available resource to produce the desired profit for it.

In these processes HR has & should play an important role at every step for successful achievement of the various strategies & plantings process which will also increase the value of HR professionals and HR functions globally.

So we can conclude on that HR is not only for employee welfare or personnel management or any compliance issues but also deserve a strong position in t he strategy making process with the top management.

If organizations take HR professionals and their suggestion during strategy planning process , it will gain more than as expected by adopting a suitable SHRP to the organizations strategies and goals.

Especially , at this stage of rapid globalization where demand of specific skilled persons in and from different locations aremore required to help the organizations to gain a huge amount of profit in less time and optimum utilization of resources, SHRP and the participation of HR managers to create strategies along with the top management is most necessary step to do for further progress in business.