Strategic Management is the set of managerial decisions and activities which does the long time performance of any organization (Weelan and Hunger(1995,p-3)). Hill and Jones defined Strategic Human Resource Management as "An action a company takes to attain superior performance". Strategic Management classifies the current and future human resources which are required for an organization and helps in attaining its goals.
Strategic Human Resource Management is process which gives shape and delivery of each strategy. Moreover, Strategic HRM is concerned with taking actions and elaborating how HRM influence the performance of any organization.
The key features of Strategic Human Resource Management are:
Level of organization:- Strategies determines the decisions to get the specific results, follows the major policies and allocate the resources which needs to be formulated first.
Focus:- Strategies are business driven and the main focus is on the effectiveness of the organization. All the employees are viewed as the resources to be managed in tend to get the goals.
How it works or Framework:- Strategies provides frame work which are at all broad, continuously based and integrative. They follow HR goals and all the actions are designed specifically to set into the nature of the organization.
Employees are the most important part of any organization which also known as major assets and this is really important to manage and improve the employees working efficiency and conditions to work.
Hertzberg(1959) suggested in his two factor theory, "The hygiene and motivating factors should be made available to them so that it results in satisfaction of employees". Excellent work condition, rewarding, giving incentives, communicating with each other and also culture of work are included in this two factors theory of Hertzberg(1959). So if employees get competitive advantage. It provides different-2 ways to the organizations to achieve the goals.
Jain(2005) mentioned that the organization who has the ability to attract and retain its employees which are having efficiency to achieve the goals for organization, gets long term competitive advantage. The performance appraisal and giving rewards to the employees are the other practices of Strategic Human Resource Management. The training and development function makes the employees more efficient in performing the tasks to get the organizational goals. In this way, the organization gets more benefits and the financial resources available for training and development function, will be utilized properly. This will be more interesting to see how the UK companies are getting benefits by using HRM practices.
The framework of Strategic Human Resource Management examines the pool of human resources for an organization. Focusing on human resource management practices, skills and employee's behavior towards work and review comes under framework. Strategic HRM includes-
Competency-based managementÂ supports to integration of H R planning with business planning by allowing company to assess the current HR capacity based on the competencies against the capacity that was needed to achieve the vision. Targeted HR strategies, plans and programs to address gaps are then designed, implemented to close the gaps which occur.
These are the strategies and programs which are monitored and evaluated on a basis to ensure that they are moving the org in the desired direction, including closing employee and corrections are made as they required
The following implementation stages are suggested for medium to large org implementing competencies in support of Strategic HR Planning.
Short - Term HR Planning
ï‚§Â Â Establish an architecture and complete dictionary that will support Strategic HR Planning.
ï‚§Â Â For each group to be profiled, define the roles & career streams to help identify current and future HR
ï‚§Â Â Determine how competencies will be integrated with the existing HR Planning and systems (e.g., HR
ï‚§Â Â Build or review HR Planning, and processes to incorporate elements which are determined in Stage 1st.
ï‚§Â Â Train managers and / or facilitate corporate are required HR Planning process.
ï‚§Â Â Continuous Monitoring and improving the processes, tools and systems that support HR Planning.
The above example can explain the whole framework of Strategic Human Resource Management following as-
FedEx is the biggest courier company of UK who provides fast and reliable deliveries. The entire organization is based on just one philosophy that is "People First". According to this philosophy it is believed that when any company uses the culture that involves respect and follows reward system for its employees, the employees gives best service to the customers. These things make FedEx as one of the best companies and differentiate from its competitors in best customer service and on time deliveries. To make a competent, dedicated and fully focused on the customers is the main strategy of this company. This strategy is clear to its all Strategic HR Management practices. FedEx recruits employee who has excellent skills and can be competent at all the levels of the company. This company pays very high salaries and incentives according to the performance of the employees. All the employees go through the trainings and development programs to perform more good to achieve the goals for the company.
The process model of Strategic Human Resource Management shows the present and future human resources for any organization to get the particular goals. This will show the Human Resource Management and strategic plan for the organization.
Process of strategic human resource management
Planning processes was best practice organizations that not only define what will be done within a given time, but also the numbers and types of human resources that are require to achieve the defined business goals. The number of task performs in Strategic HRM process. Defining the current business, assessing the company's internal and external strengths, weakness, advantages and disadvantages, summarizing the new statement, converting the mission into goals and classify the strategies.
In continuous development of the organizations, Strategic Human Resource Management is known as a source of competitive advantage. The role of SHRM is very significant for the growth of any organization which is defined following as-
1. Planning and Organizing the work is the main role of the management which will generate new ideas and goals for the promotion of the organization.
2. Â Strategic Prospective that develop Human Resource plans and strategies that are aligned to the organization's strategic direction and business strategy, integrating HR Management with general management, managing the interface between HRM and systems, make & apply HRM policies.
Â Scan the whole environment (Domestic & international)& identify emerging trends it will affect the org.
and also managing people who related issues accompanying mergers.
3.Â Organizational Design Analyzes work processes and improves where necessary. SHRM also
suggests the options for organizational design & structure which will be helpful for the growth.Â
Â 4. Change Management is also known as an Advise management which is performed by SHRM that implicates to change for the people who are working in the organization and also provide support to employees during change.
5. Corporate Wellness Management whichÂ develop & communicate policies and procedures with regard to the management and manage health and safety.
6. Training & Development develops a training & development strategy according to the requirements that improve the productivity and delivery and Conduct a training & assessment.
Â 7. Career Management includesÂ design and implementing a career management program that aimed and manage all career-related issues in the org.
Â 8. Performance Management Makes design and implement a performance management system which linked to relevant HRMÂ and also to Use outcome of performance assessment which are the basis of decision-making in areas.Â
9. Compensation Management develops compensation strategies & policies for line with legislation. This management also develop appropriate compensation systems for the org and manage overall labor costs & reduce it to get maximum profit .Â
10. Information Management provide the current information regarding employees that is to be used in the decision-making process and measurement of HRM's contribution to the organization, suggests the management regarding trends emerging from the data of it and also conduct HRM research.
Â Administrative Management that provide integrated HR administration that is speedy & cost effective.
According to the time, for the continuous growth of an organization, the development and the implementation of human resources are very essential.Â
There is an ever-present risk that the concept of strategic HR becomes somewhat nebulous - nice to have but hard to realize. This is much more difficult is to turn them into realistic plans, Strategic HR are more about getting things done than thinking about them.
These HR strategies are explained following as-
Fundamental process considerations
Â Characteristics of the process
Developing HR strategies
Setting out HR strategies
Conducting a strategic review
Implementing HR strategies
Fundamental Process Considerations-
When we considering approaches to the formulation of HR strategy it is necessary to underline the interactive relationship between business strategy and HR. The emphasize the limit of excessively rationalistic models strategic and HR. The point that is HR strategies are not necessarily developed formally and systematically. Since actions provoke reactions (acceptance, confrontation, negotiation etc) these reactions are also part of the strategy process.'Â
Characteristics of The Process-
Schools of strategy development
Levels of strategic decision making
Strategic options and choices-
The process ofÂ developing HR strategiesÂ involves generating strategic HRM options and then making appropriate strategic choices. It should be relate to but also some anticipate the critical needs of the business. They should be founded on detailed analysis and study, not just wishful thinking, and should incorporate the experienced and collective judgement of top management about the organizational requirements.
Developing HR Strategies-
The following three-step approach is proposed by Grattan
Build the guiding coalition - involve people from all parts of the business.
Image the future - create a shared vision of areas of strategic importance.
Understand current capabilities and identify the gap - establish 'where the organization is now and the gap between aspirations for the future and the reality of the present.
A methodology for formulating HR strategies-
A methodology for formulating HR strategies was developed by Dyer and Holder (1988) as follows:
1. Assess feasibility -Â from an HR point of view, feasibility depends on whether the numbers and types of key people required to make the proposal succeed can be obtained on a timely basis and at a reasonable cost, and whether the behavioral expectations assumed by the strategy are realistic (eg retention rates and productivity levels).
2. Determine desirability -Â examine the implications of strategy in terms of sacrosanct HR policies (eg a strategy of rapid retrenchment would have to be called into question by a company with a full employment policy).Â
3. Determine goals -Â these indicate the main issues to be worked on and they derive primarily from the content of the business strategy. For example, a strategy to become a lower-cost producer would require the reduction of labour costs. This in turn translates into two types of HR goals: higher performance standards (contribution) and reduced headcounts (composition).
By studying some of the successful organizations around the world, it came to know that there are quite a few number of HR strategies that are in use. Few of them are Personnel, Generalist, Business Partner, Outsourced, Fact based decision making and so on.
Personal Strategy is usually the traditional approach to HR and one of the common strategy used by various organizations. Personnel Strategy is often used where a single person runs HR management and is generally recommended for Small and Medium enterprises which works effectively on minimizing costs.
Generalist strategy is an approach which emphasizes in providing various services for the different needs in an organization or an enterprise. This strategy delivers quite a few HR services in its segment and is appropriate for Medium to Large enterprises.
Business Partner strategy comes next in line after Personnel and Generalist strategies. This strategy is commonly used by many organizations to emphasize and de-emphasize the transactions. It is also considered as one of the important models in the segment.
Outsourcing strategy helps HR management & Generalists to analyze and strategies different HR functions which are further outsourced to vendors and other sections. Outsourcing is considered appropriate in Small and Large Enterprises. For an example Outsourcing in US is more successful because there is a lot of support that is available for this segment.
Fact based Decision making strategy generally follows the Supply chain and 6 sigma models in which it shifts from various models to fact based decision making. Further this strategy uses technology for making decisions having said that it does not effect all the areas of HR as it does in e-HR strategy. This strategy is appropriate for Medium and Large Enterprises that are technology driven.
Further a lot of companies use all these Strategies systematically so as to get the desired results when put into action. Its also important to remember that there are no good or bad strategies, all that's necessary is to chose the right ones for an organization to make them work and yield the best results possible. One shouldn't also forget that a strategy which proves beneficial and helpful to one organization may not be as useful and beneficial to the other organization too. Therefore one must chose a strategy that benefits their organizational structure more in the long run to achieve their business goals.
There is an ever-present risk that the concept of strategic HRM can become somewhat nebulous - nice to have but hard to realize. The danger of creating a rhetoric/reality gap is acute. Broad and often bland statements of strategic intent can be readily produced. What is much more difficult is to turn them into realistic plans that are then implemented effectively. Strategic HRM is more about getting things done than thinking about them. It leads to the formulation of HR strategies that first define what an organization intends to do in order to attain defined goals in overall human resource management policy and in particular areas of HR process and practice, and secondly set out how they will be implemented. Difficult though it may be, a strategic approach is desirable in order to give a sense of direction and purpose and as a basis for the development of relevant and coherent.
HR policies and practices.
It is also necessary to stress that coherent and integrated HR strategies are only likely to be developed if the top team understands and acts upon the strategic imperatives associated with the employment, development and motivation of people. This will be achieved more effectively if there is an HR director who is playing an active and respected role as a business partner. A further consideration is that the effective implementation of HR strategies depends on the involvement, commitment and cooperation of line managers and staff generally. Finally, there is too often a wide gap between the rhetoric of strategic HRM and the reality of its impact. Good intentions can too easily be subverted by the harsh realities of organizational life. For example, strategic objectives such as increasing commitment by providing more security and offering training to increase employability may have to be abandoned or at least modified because of the short-term demands made on the business to increase shareholder value. A methodology is required for the process that can be conducted by means of a strategic review. The methodology can be applied in three different ways. One of the most important aims in the development program will be to align the HR strategy to the organizational culture and the business strategy by achieving vertical integration or fit.
Task 4.1 & 4.2
IMPLEMENTING HR STRATEGIES
Getting HR strategies into action is not easy even if they have been developed by means of a systematic review and set out within a clear framework. Because strategies tend to be expressed as abstractions, they must be translated into program with clearly stated objectives and deliverables. The term 'strategic HRM' has been devalued in some quarters, sometimes to mean no more than a few generalized ideas about HR policies, at other times to describe a short-term plan, for example, to increase the retention rate of graduates. It must be emphasized that HR strategies are not just programs, policies, or plans concerning HR issues that the HR department happens to feel are important. Piecemeal initiatives do not constitute strategy.
The problem, as noted by Gratton et al (1999), is that too often there is a gap between what the strategy states will be achieved and what actually happens to it. As they put it:
Developing and implementing HR strategies
One principal strand that has run through this entire book is the disjunction between rhetoric and reality in the area of human resource management, between HRM theory and HRM practice, between what the HR function says it is doing and how that practice is perceived by employees, and between what senior management believes to be the role of the HR function, and the role it actually plays. The factors identified by Gratton et al that contributed to creating this gap include:
â- The tendency of employees in diverse organizations only to accept initiatives they perceive to be relevant to their own areas;
â- The tendency of long-serving employees to cling to the status quo;
â- Complex or ambiguous initiatives may not be understood by employees or will be perceived differently by them, especially in large, diverse organizations;
â- It is more difficult to gain acceptance of non-routine initiatives;
â- Employees will be hostile to initiatives if they are believed to be in conflict with the organization's identity, eg downsizing in a culture of 'job-for-life';
â- The initiative is seen as a threat;
â- Inconsistencies between corporate strategies and values;
â- The extent to which senior management is trusted;
â- The perceived fairness of the initiative;
â- The extent to which existing processes could help to embed the initiative;
â- A bureaucratic culture that leads to inertia.
Barriers to the implementation of HR strategies
Each of the factors listed by Gratton et al can create barriers to the successful implementation of HR strategies. Other major barriers include failure to understand the strategic needs of the business, inadequate assessment of the environmental and cultural factors that affect the content of the strategies, and the development of illconceived and irrelevant initiatives, possibly because they are current fads or because there has been a poorly digested analysis of best practice that does not fit the organization's requirements. These problems are compounded when insufficient attention is paid to practical implementation problems, the important role of line managers in implementing strategies, and the need to have established supporting processes for the initiative (eg, performance management to support performance pay).
Overcoming the barriers
To overcome these barriers it is necessary to:
HRM processesâ- conduct a rigorous preliminary analysis of needs and requirements;
â- formulate the strategy;
â- enlist support for the strategy;
â- assess barriers and deal with them;
â- prepare action plans;
â- project-manage implementation;
â- follow up and evaluate progress so that remedial action can be taken as necessary.
Strategic Human Resource Management is a kind of approach towards human resources of an organization. Despite of its continuous development over the past decade, Strategic Human Resource Management is completely a new concept which works more effectively in managing the organization. In this era, it is vital for any organization to formulate and implement its strategies time to time in order to provide best services to its employees and also to get best of their potential to achieve company's aims. There should also be an good approach to check the effectiveness of strategies.