The link between human resources and business strategy

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All elements of the business strategy have implications for human resources , as illustrated in the table below. The challenge for management is to identify and respond to these HR challenges:

Examples of Key Strategy Issues

Possible Human Resource Implications

What markets should the business compete in?

What expertise is required in these markets? Do existing management and employees have the right experience and skills

Where should the business be located to compete optimally?

Where do we need our people? How many do we need?

How can we achieve improvements in our unit production costs to remain competitive?

How productive is the workforce currently? How does this compare with competitors? What investment in the workforce (e.g. training, recruitment) and their equipment is required to achieve the desired improvement in productivity?

How can the business effect cultural change?

What are the current values of the workforce. How can the prevailing culture be influenced/changed to help implement a change programme?

How can the business respond to rapid technological change in its markets?

What technological skills does the business currently possess? What additional skills are needed to respond to technological change? Can these skills be acquired through training or do they need to be recruited?

An important part of HRM is the HUMAN RESOURCES PLAN. The purpose of this plan is to analyse the strategic requirements of the business in terms of manpower -and then to find a way of meeting the require demand for labour . This is the subject of a separate revision note.

The role of human resource management

According to Gratton (2000), the role of human resources management is;

To play an active part in the progress,

To act as a facilitator,

To encourage participation of all team members in the brainstorming and visioning session,

To act as an advocate for employees to ensure that their voice and concern are heard,

To bring the skill of systemic thinking to mapping the relationships, and to have the breadth of business expriencelead the analysis of the map ( it is critical that the human resource professional understand how the core people processes work and is familiar with the other levers),

To ensure that the plans for behavioural changes are given sufficient time and resources to take place,

To strive for alignment between the people processes and the goals of the business to create a shared sense of meaning,

Equal participator in the corporate strategy process,

Facilitator of human resource management strategy as integral part of corporate strategy,

Performance consultants,

Advisor to top management ,

Change agent ,

Facilitator of stake holder management ,

Counsellor to staff,

System and process designer,

Compliance manager,

Leader of people,


While discovering the appropriated competencies for an orgnation is probably not an inimitable source of compititve advantage,the capability to integrate that knowledge effectively throughout the entire hr system may well be. This requires that HFR managers think systematically about their area rather than functionally and tractically. It is this infrastructure of an aligned HR system that creates what strategy scholers refer to as casual ambiguity, making it difficult for other firms to imitate even if they can being with the same competency model.

A number of firms believes they are in an environment where employees with the type of competencies they need are in short supply. At the same time, it is critical to the success of any people

Based strategy to attract and retain the the very best people. Becoming an employer of choice requires an aligned human resources system. It is very easy to provide attractive compensation and benefit levels. The challenge is to also structure a human resource system that selects , devlope , and produce, a level of performance that can justify those investments. If apllied within a high performance work system, an employer of choice strategy can add considerable value. It is important to structure an environment characterized by the following goals,

Achieving long-term business success,

Ensuring that the organizations employee feel valued,

Ensuring a sense of pride of association with the company,

Instilling a sense of camaraderie,

Ensuring the each employee has the opportunity to reach his/her highest potential personally and professionally,

Generating a sense of excitement and fun.

Now we going to look the role human resources in the new economy

Seven thousand year ago , the agriculture revolution saw the hunter-gatherer in most civilisation become a planter -harvester. An incessantaly mobile human society was thereby converted into one invested in heard and homested. Two hundred years ago the industrial revolution converted that well refined agriculture society into one dominated by the dictates of industrial production. Now we face another such majore revolution - the conversation of the world into dingle, technology integrated, around the clock community. Our present revolution has developed in response to our need for ever more efficient production in a world with a too little capital resources to meet the need of an explosively growing population. It has been made possible, like other societal revolution, by a stream of inventions and innovations instant worldwide telecommunications, computers and processors , automation of machinery, a global economy and trading system, and the tumbling of majore political boundaries.

The purpose of this study was to develop a model defining the role human resources management and the human resources professional within the new economy. The model was derived from the following literature: Brooking (1996) ,Browne(2000), Browning and Reiss (2001) , Cascio (1998), Cogburn (2001), Gabbai (2000), Gates(1999), Gratton (2000), Grulke (1999), Rosan (2000), Schwarts (2000), Stewart (1998), Sveiby (2001), Witzel (2000), Winter(1999), and others. This model consists of two components, namely a table indentifying the changes and shifts in paradigm, and a schematic diagram explaining human resources managements position in the new economy, its role and functions, and the new concepts that organizations need to address and embrace to be successful.

Employee Motivation

The manager plays the most important role in successful employee motivation. Learn more about the manager's role in a workplace that fosters high employee morale and positive employee motivation. Learn more about employee motivation and its relationship to management.

The bottom lines for employee retention

Managers who retain staff start by communicating clear expectations to the employee. They share their picture of what constitutes success for the employee in both the expected deliverables from and the performance of their job. These managers provide frequent feedback and make the employee feel valued. When an employee completes an exchange with a manager who retains staff, he or she feels empowered, enabled, and confident in their ability to get the job done. Employee complaints about managers and supervisors center on these areas. Employees leave managers who fail to: (1) provide clarity about expectation , (2) provide clarity about career development and earning potential.

Building their moral and make their day

You can make their day or break their day. Your choice. No kidding. Other than the decisions individuals make on their own about liking their work, you are the most powerful factor in employee motivation and morale. As a manager or supervisor, your impact on employee motivation is immeasurable. By your words, your body language, and the expression on your face, as a manager, supervisor, or leader, you telegraph your opinion of their value to the people you employ.

Feeling valued by their supervisor in the workplace is key to high employee motivation and morale. Feeling valued ranks right up there for most people with liking the work, competitive pay, opportunities for training and advancement, and feeling "in" on the latest news. Building high employee motivation and morale is both challenging and yet supremely simple. Building high employee motivation and morale requires that you pay attention every day to profoundly meaningful aspects of your impact on life at work.

Motivating a staff in a time of change

In today's turbulent, often chaotic, environment, commercial success depends on employees using their full talents. Yet in spite of the myriad of available theories and practices, managers often view motivation as something of a mystery. In part this is because individuals are motivated by different things and in different ways. In addition, these are times when delayering and the flattening of hierarchies can create insecurity and lower staff morale. Moreover, more staff than ever before are working part time or on limited-term contracts, and these employees are often especially hard to motivate.

Self esteem

People who have high self-esteem are more likely to continuously improve the work environment. They are willing to take intelligent risks because they have confidence in their ideas and competence. They work willingly on teams because they are confident about their ability to contribute. Nathaniel Branden, author of The Psychology of [email protected], says, "Self-esteem has two essential components:

Self-efficacy: Confidence in the ability to cope with life's challenges. Self-efficacy leads to a sense of control over one's life.

Self-respect: Experience oneself as deserving of happiness, achievement and love. Self-respect makes possible a sense of community with others.

Self-esteem is a self-reinforcing characteristic. When we have confidence in our ability to think and act effectively, we can persevere when faced with difficult challenges. Result: We succeed more often than we fail. We form more nourishing relationships. We expect more of life and of ourselves."

Money as motivation factor

Motivation and performance are very complex issues affected by many factors. No one factor can guarantee motivation or performance in the absence of other critical factors. Money cannot be effectively substituted for good management. Some people think that money can't be used to motivate employees and that is true for some employees, but for a large percentage of the workforce it does not have to be that way. Studies show almost everyone is motivated by money to some degree, many to a moderate degree, and most to a great degree when compensation is properly designed. Some psychologists would argue that money doesn't change behavior because they do not consider it properly termed a "motivator", but rather they call it a "director" of behavior. This is a semantic argument. The idea is whether money can be used as a tool to change employee behavior in a desirable direction. It is unfortunate that in most companies and for most jobs, pay is a small factor in managing and changing employee behavior. However, inadequate use of incentive plans and problems with compensation design and strategy are usually to blame.

In a survey of over 1500 compensation and productivity professionals by the American Compensation Association and the American Productivity Center various types of compensation or rewards systems that they utilized were rated as having a "Positive" or "Very Positive" impact on performance in 66% to 89% of the companies where the companies used specific techniques such as gain sharing, small group incentives, profit sharing, individual incentives, and lump sum bonuses (source: "People, Performance, and Pay").

Remuneration policy

Here the remuneration policy for human resources is described, it includes


The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold. This is a way for firms to solve the principal-agent problem, by attempting to realign employees interests with those of the firm. Commission rates are generally based upon the achievement of specific targets which have been agreed between management and the salesperson in question. Commissions are intended to create a strong incentive for employees to invest maximum effort into their work. Offering compensation in the form of commission alone is known as straight commission. Compensation may also take the form of commission plus a fixed salary. Industries where commission is commonly paid include car sales, property sales, insurance broking and many other sales jobs. A side effect of commissions is that in some cases, they can result to salespeople resorting to dishonest and fraudulent business practices in order to increase their sales.

Compensation method

In online advertising and internate marketing

Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, Rich Media Ads, Social network advertising, interstitial ads, online classified advertising, advertising networks and e-mail marketing, including e-mail spam.

Internet marketing, also referred to as i-marketing, web-marketing, online-marketing, or e-Marketing, is the marketing of products or services over the Internet. The Internet has brought media to a global audience. The interactive nature of Internet marketing in terms of providing instant response and eliciting responses, is a unique quality of the medium. Internet marketing is sometimes considered to have a broader scope because it not only refers to the Internet, e-mail, and wireless media, but it includes management of digital customer data and electronic customer relationship management (ECRM) systems. Internet marketing ties together creative and technical aspects of the Internet, including: design, development, advertising, and sales.

Executive and Deffered compensation

Executive compensation is the total remuneration or financial compensation a top executive receives within a corporation. This includes a basic salary, any and all bonuses, shares, options, and any other company benefit. Over the past three decades, executive compensation has risen dramatically beyond the rising levels of an average worker's wage. Executive compensation is an important part of corporate governance, and is often determined by a company's board of directors.

Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a date after which that income is actually earned. Examples of deferred compensation includepensions, retirement plans, and stock options. The primary benefit of most deferred compensation is the deferral of tax to the date(s) at which the employee actually receives the income.


A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. From the point of a business, salary can also be viewed as the cost of acquiring human resources for running operations, and is then termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts.


A wage is a compensation, usually financial, received by workers in exchange for their labor. Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees. Compensation is a monetary benefit given to employees in return for the services provided by them.


In recent years, many employers recognized that the success of their business is highly influenced by the professional capacity and motivation of their workforce. Companies must face the challenges of increasing the level of commitment, motivation and job satisfaction among their employees. In this regard, it is important to take into consideration the impact of employees' needs, motives and ambitions and to negotiate more flexible schemes for financial participation, career development opportunities and performance recognition as part of the quality of work agenda.