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One of the most powerful fields of new business arena is the Strategic Human Resource Management. Business developers and policy makers are becoming more concerned about the quality of the work life and workplace as a part of the human capital management and have stretched this concept up to the strategic level. Strategic HRM links the strategic objectives and goals with that to human resource and focuses the organization towards developing culture for innovation and competitive advantage. Its functions are not much different from HR except to take each HR function as a strategic partner. It focuses on HRM programs with long term perspective. Its primary focus is to find and solve such problems that can affect the people in the long run and hence increase employee productivity by emphasizing such issues that occurs outside human resource rather than the traditional HR issues through innovation in technology, new management concepts, managing diversities in cross cultural organizations and looking for continuous improvement to gain a competitive advantage. Along with its own functions, strategic human resource management also do some of the strong challenges that are faced by the traditional human resource management i.e. aligning human resource with organizational strategy, labor market issues, integration of skills in human resource development and knowledge management.
To review a firm's human resource practices strategically, I have selected "Ittehad Chemicals Limited". It is a Pakistani based chemical company and is market follower and with huge profits as Pakistan have only three big guns in chemical industry and Ittehad Chemicals is one of them.
Ittehad Chemicals Limited, one of Pakistan's front-line manufacturers of basic inorganic chemicals has come a long way. The Factory, commissioned in 1964 started off production.Â Wide range of products, touching every industry sphere Ittehad Chemicals products find application in almost every industry of Pakistan ranging from textiles, carpets, fertilizers to soaps and detergents, from vegetable oil, paper and board to power generation, gas, petroleum to sugar and beverages. The present product line includes Caustic Soda (Solid, Liquid and Flakes), Liquid Chlorine, Hydrochloric Acid, Sodium Hypochlorite (Liquid Bleach, Zinc Sulphate Mono, Bleaching Earth, Sulphuric Acid and Lime, for industrial use.
The company's vision is:
"To be the first choice of preference by customers looking for premium quality chemical products. We aspire to be a trend setter in our industry and always look to the future with courage and a commitment to excellence in all our practices." [i]
To excel in all practices, Ittehad Chemicals Limited must excel in the human resource's efficiency too. The company's Human Resource vision is:
"We believe in true human resource utilization. Ittehad Chemicals Limited must be the true twenty first century organization by re-inventing the organizational competencies"
For a strategic human resource oriented organization, the vision and strategy of its human resource must be aligned with the organizational strategy and vision. Strategic human resource management is the multilevel approach to viewing the role and function of human resource management in the larger organization. First, it links the strategic management process with that of human resource practices. Then it reveals the similarities among different human resource management functions through a series of planned actions. There are six theoretical models to term an organization as 'strategic', (behavioral perspective, institutional theory, power/resource dependence models, resource-based view of the firm, agency/transaction cost theory, and cybernetic models). [ii] These models would be very useful for understanding Ittehad Chemical's strategic perspectives.
Under strategic models of human resource management, I would like to discuss Ittehad Chemicals limited in the context of the behavioral perspective model and resource dependence model. The behavioral perspective model assumes that the basic reason behind different employment practices is to manage and control your employee's attitudes and behaviors. And this control can lead to better results if it is properly aligned with the strategy of the organization because the most effective behaviors and attitudes differs for every company and they mainly depends upon the strategy that the specific company pursue. Thus in strategic human resource context, in order to reinforce behaviors, different human resource practices and policies are required and supported by the organizational strategy.
Ittehad Chemicals Limited uses this behavioral perspective model for guiding its strategy with the help of its human resource's behaviors. Its behavioral approach is used specifically at managerial level. Behavior approach maintains that behavior is the product of individual's interaction with his or her environment. Now days this approach is not giving maximum results but is aligned exact according to the organizational strategy. The reason why it is still not giving hundred percent is current economic conditions as the raw materials (gas, electricity etc) are too expensive, a particular department might not be able to achieve the best of results or profits as it cannot achieve its target in the most desirable way. So, due to external factors, a department has to suffer as they are not in control of that department. That's why Ittehad Chemicals Limited's HR department is mainly concerned with the behaviors keeping these exceptions into mind and focus mainly on declarative knowledge, procedural knowledge and the motivation behind his behavior and attitude.
One of the prominent aspects of Ittehad Chemical Limited's behavioral approach is the motivation for innovation and self initiatives. Managers are allowed to innovate chemical formulae and to present the possible outcomes to the laboratory management and the higher authorities who readily act on the proposals. In case of success, the efforts of the initiator are appreciated and compensated while in case of failure, management encourages the effort for the positive behavior and attitude towards innovation. This shows organization's focus is towards role behaviors more than knowledge and potential of the employees.
Broadly there are three main areas in which Ittehad Chemical Limited is linked up with the behavioral perspective model. First, it is having focus on those human resource practices which helps in elicit the positive attitude and behavior. Second, these practices are directly linked with the company's vision and strategy. Third, these practices guide the human resource towards achieving their targets and hence contributing to the organization success.
Ittehad Chemicals uses behavioral approach for the managerial level. But for the non-managerial posts, results based approach is used which focuses on the outcomes and the results produced rather than what sort of behavior employee's show in the workplace as it requires less time and also it is cost effective. Although Ittehad Chemicals limited is using different approaches for different level of workers, the ultimate theme behind it is to keep all the efforts aligned with the organizational strategy.
The resource dependence model (Pfeffer & Salancik, 1978) focuses predominantly on power relationships within and among organizations. It assumes that all organizations depend on a flow of valuable resources (e.g., money, technology, skills) into the organization in order to continue functioning. The ability to exercise control over any of these valued resources provides an individual or group with an important source of power (Pfeffer, 1981).Â Ittehad Chemicals Limited's human resource is somewhat following this model. They focus on getting power relationships through technology and skills. Highly automated production plants are imported from China and Germany and highly skilled workers are there to maintain these plants. These expertise has lead Ittehad Chemicals to compete with the industrial leader i.e. Sitara Chemicals Limited. Pfeffer and Cohen (1984) studied the determinants of the development of internal labor markets (i.e., internal promotion systems rather than hiring from outside). Ittehad Chemicals Limited is having same philosophy of managerial succession. They always prefer to grow the management internally rather than hiring from outside. That's why the average experience of an Ittehad Chemical Limited's manager is around 20-22 years. These all characteristics sum up to the achievement of the overall mission keeping the organizational strategy aligned with it and result in the 'strategic' nature of the organization.
One of the key factors to respond in the today's dynamic environment is to manage the change which is "the process of managing transformational changes, which affect the culture, structure and performance of an organization."Neil Crawfor. An organization must be flexible enough to cater the change so that they can handle the pressures of the dynamic environment e.g. worldwide competition, changing demand of the customer, advancement in the technology and changes in the legislation. Such factors force organization to change their ways of operations which can result in re-allocation of team and individual goals, elimination of mall functioned policies and processes and searching/adding new ways of doing things. It is not an easy task to do because breaking the status quo is something always hard to do. This requires changes in the organizational strategy by transforming the organizational culture, changing processes and implement radical changes. There was a survey in 2007 with several HR managers that revealed the reasons for causing changes in the organizations were mainly due to new performance management process, changes in culture, changes in information technology, changes in strategy, changing in accounting systems, downsizing or layoffs, changes in legislations, rebranding, mergers or acquisitions, change in the ownership and outsourcing.
Ittehad Chemicals Limited believes change management as a core skill and is required by the most managers and that must be implemented in such a way that meets the organizational goals. They have kept pace with the changing environment of a country like Pakistan where the level of uncertainty is so high. During recession when most of the organizations were laying the people off, Ittehad Chemicals was not among them. Its flexible marketing and human resource structure enabled it to handle the changing environment by holding the same number of employees. The government reduced the tax rates on imports of Ittehad Chemical Limited's frontline product i.e caustic soda which resulted in the strength of global competition. Under such pressure, Ittehad Chemicals Limited had to make sudden decisions which came through an innovation of its research and development department who invented the use of bi-products (which were previously being wasted) in making new products. For instance, huge amount of chlorine was wasted but with the new techniques, Ittehad Chemicals Limited was able to use it in manufacturing paraffin wax which was a breakthrough at that time.
Not only were the wastes used in new product development, the experts also worked on the raw materials to develop new products. For instance HCL was used to make different chemicals, the experts found another use i.e. they succeeded to develop calcium chloride by using HCL by using the same raw materials. Such competent work force made Ittehad Chemical Limited's position stronger at the time of recession. The company did not downsize and preferred to run with the same amount of employees.
Another response of changing market situations and dynamics, Ittehad Chemicals Limited invested in new technology. Some five to six years back, all the production plants were manual but Ittehad Chemicals Limited shifted to the automation and huge investments were made in this regard. The company also changed its existing production technology by investing in replacing few plants so that the productivity gets enhanced in addition to the low cost of production.
Another vital factor in handling the change is Ittehad Chemical Limited's strong performance management systems. The system of appraising the employees is strong enough to identify the development and training needs. For instance when SAP was installed in the company, the employees had to learn the changed system. Ittehad Chemicals Limited was one of the pioneer companies in Pakistan to install SAP so every employee was anxious to learn the new system and skills. The human resource department identified the training needs of every employee and provided them the required skills. Such system develops an urge in the employees to learn more which shows human resource and human resource department has a great impact on supporting and facilitating the change in the company.