In order to remain in business, business owners and organisations need to take proactive steps all the time to ensure that their businesses remain at a competitive edge, hence the need to strategically manage the human resources of the organisation to ensure overall success of the business.
Human resource management (HRM) is a strategic, integrated and coherent approach to the
employment, development and well-being of the people working in organisations (Armstrong, 2009).
However, Strategic Human Resource Management (SHRM) is a proactive management of the employees of a company or organisation. Strategic human resource management includes typical human resource components such as hiring, discipline, and payroll, and also involves working with employees in a collaborative manner to boost retention, improve the quality of the work experience, and maximize the mutual benefit of employment for both the employee and the employer. (BusinessDictionary.com)
This article will look at different models of strategic HRM, the importance of strategic HRM, an analysis of an HRM framework, the HRM process and the development of strategies as well as an assessment of the roles in strategic HRM.
Models of strategic HRM
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Although there is some acceptance of the idea that strategic HRM should support the strategic direction of the business, there is no agreement on the best way of doing this. Two normative models epitomise the relationship between labour management and organisational strategy. The first is explored in the best practice or universal school. The second approach, where integration between strategic HRM and organisational strategy is an essential feature, is explored in the contingency and configurational schools (Porter, Bingham and Simmonds 2008).
Comparison of Universalistic and Contingency models of HRM
There is an existence of best human resource management practices and all organisations should adopt these best practices.
There are not best practices but for effectiveness, an organisation's HR policies must be consistent with other aspects of the organisation.
A universal relationship exists between individual 'best' practices and the organisation's performance.
The main contingency factor is the organisation's strategy, or the internal and external environment which is described as 'vertical fit'.
One single practice leads to a greater organisational performance. They do not consider either synergetic interdependence relationships or integration mechanisms.
Many contingent works focus on a single practice i.e. a single practice is dependable on the other to achieve the goal of the organisation.
REASONS FOR THE IMPORTANCE OF HRM IN ORGANISATIONS
The human resources remains the most important asset of any organisation and the overall importance of human resource management is to ensure that the organisation is able to achieve success through its entire workforce in order to ensure a successful business.
In the area of strategy, the HR department improves the organisation's bottom line with its knowledge of how human capital affects the success of the organisational as a whole. Leaders with expertise in HR strategic management participate in corporate decision-making that underlies current staffing assessments and projections for future workforce needs based on business demand. It enables the organisation to strategically deal with HR issues which in-turn enables employees to work effectively in order to achieve the organisation's goals and objectives.
Human resource managements allow organisations to prioritize their organisational and business strategies hence attracting and retaining and the development of competent employees.
Another reason of HRM in organisation also lies in its importance as a Legal requirement. The HR department of organisations ensures compliance with employment laws. They complete paperwork necessary for documenting that employees are eligible to work in the U.K.
The employment laws also states that employers have an obligation to provide safe working conditions for their entire workforce. Hence, workplace safety and risk management specialists from the HR area manage compliance with U.K. Health and Safety at Work Act 1974 by maintaining accurate work logs and records, and developing programs that reduce the number of workplace injuries and fatalities. Workplace safety specialists also engage employees in promoting awareness and safe handling of dangerous equipment and hazardous chemicals.
The purpose of the HRM framework is to ensure the adoption and implementation of a fair and transparent process which in-turn will retain the valuable skills and experiences of employees within the organisation. It ensures that effective consultation takes place with employees and their representatives on how these processes will be applied, ensuring effective outcomes for employees, customers and all stakeholders.
Harvard framework of HRM
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Harvard framework is a strategic map to guide all managers in their relations with employees and concentrates on the human or soft aspect of HRM. It was developed by Beer et al in 1984.
This framework is based on the belief that the problems of historical personnel management can only be solved when general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise, and of what HRM policies and practices may achieve those goals. Without either a central philosophy or a strategic vision - which can be provided only by general managers - HRM is likely to remain a set of independent activities, each guided by its own practice tradition. (Armstrong, 2009)
The Harvard model outlines four HR policy areas as follows:
Human resource flows - recruitment, selection, placement, promotion, appraisal and assessment, promotion, termination
Reward systems - pay systems, motivation
Employee influence - delegated levels of authority, responsibility, power
Work systems - work design and alignment of people.
Which in turn lead to the 'four C's' or HR policies that have to be achieved:
HRM PROCESS AND STRATEGY DEVELOPMENT
HR processes are the basis for the management of customer's satisfaction with Human Resources. Customers feel comfortable and their level of satisfaction increases when there is an understanding of the HR processes, how they are connected and how they interact.
In order to achieve continuous customer satisfaction these processes needs to be measured and regularly monitored to identify any gaps in the processes and improve on it for the benefit of the all stakeholders.
The HRM processes consist of the following basic areas:
Planning (strategic HR planning, job design)
Attracting (recruitment and selection)
Attracting applicants from which to begin the selection process. This can either be from internal or external sources. Recruitment is about finding and engaging the people the organisation needs to make up its workforce. Team meetings, notice boards, intranet are methods of sourcing for people internally, and radio/TV adverts, local newspaper adverts, posters, job centre plus recruitment agencies are methods of external recruitment.
Selection is assessing the suitability of potential employees and predicting which applicant will be able to carry out a job role successfully. It is characterised by the competence, experience, qualifications, education and training of the applicant.
Developing (induction, orientation, training of the work-force, career development, talent management, leadership development, performance appraisal)
Training the employee in order to acquire the needed skills for the job.
Talent management is the process of identifying, developing, recruiting, retaining and deploying talented people with special gifts, abilities which enable them to perform effectively
Retaining (compensation, benefits)
HR strategy development
HR strategies set out what the organisation intends to do about its human resource management policies and practices and how they should be integrated with the business strategy and each other (Armstrong, 2009). Strategy development is about choosing the most appropriate course of action for the realisation of organisational goals and objectives, in order to achieve the organisational vision.
The process of developing HR strategies involves the following steps:
Conduct a SWOT analysis of your organization. Determine the Strengths, Weaknesses, Opportunities and Threats/risks that affect the business and organization, focusing on the strengths and weaknesses of the workforce. The current skills of the workforce should also be taken into consideration in order to identify where skills and/or education levels may be improved.
After the SWOT analysis, take a look at the organisation's overall performance against target(s) for the previous year(s) in order to find out what how well the organisation has done or what problems, issues and/or challenges were faced. Afterwards identify factors that could be responsible for any change that has taken place.
Set quantitative targets by drawing up SMART objectives for the future. SMART objectives are specific, measurable, attainable, realistic and timely.
Develop an action plan for implementing the HR strategy. Create a timeline for the successful completion of key objectives. As long as the strategy is detailed and also depending on how big the organisation is, options may be made available for heads of departments to choose how best to deal with issues at a departmental level.
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Introduce and communicate the action plan to your organisation as the overall success of the strategy lies in proper implementation. Organise meetings, discussion and training sessions for senior management to raise awareness and reinforce the importance of their acceptance of the HR strategy plan letting them know how they will benefit from the plan on a personal level.
ASSESSMENT OF ROLES IN STRATEGIC HRM
The role of human resource managers in strategic HRM is kind of bi-dimensional as they are responsible for the development of strategic solutions that promote departmental and organisational success, and also manage the functional aspects of human resources.
Creating a work environment free from unnecessary hazards is a strategic role of every human resources manager. Strategic development for workplace safety entails risk management and mitigating potential losses from on-the-job injuries and fatalities. Workers' compensation insurance is an area in which a strategic plan helps lower company expense for insurance coverage. Reducing accidents through training employees on the proper use of complex machinery and equipment is one of the functional tasks associated with creating a safe work environment.
Compensation and Benefits
The compensation and benefits structure partly determines the company's business reputation and image. Decisions made by human resources managers pay scales and employee benefits can impact employee satisfaction, as well as the organisation's ability to recruit talented workers. Job evaluation, labour market conditions, workforce shortages and budget constraints are factors that HR managers consider in a strategic plan for pay and benefits.
Human resources managers' strategic role with respect to employee training and development prepares the workforce for future positions within the company. Succession planning, promotion-from-within policies and performance evaluation factor into the human resources manager's role. Training and development motivate employees, and in some cases, improve employee retention.
Recruitment and Selection
Employee recruitment and selection is also a part of employee relations though it is a separate discipline itself. Therefore, a human resources manager's strategic role is to combine elements of employee relations into the employer's recruitment and selection strategy.
The sustainance of an employee relations program is an important element of human resource strategy. It includes salaries, benefits, health and safety, training and employee development. The strategic role of a human resources manager in this regard is to determine how to identify and resolve workplace issues that may jeopardize productivity, performance and working relationships. They develop tools such as employee opinion surveys and action plans, monitor compliance with labour and employment laws, address employee concerns, and provide training and guidance to supervisors and managers.
In conclusion, the development of effective human resource strategies is vital to the prolonged existence and success of a business. In time past, personnel management was concerned only with the processing of applications, payrolls and staff benefits but human resources strategy today involves executive leadership teams consulting with human resources experts to develop complementary goals for human resources and the overall business.