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This individual report has been structured in such a way to critically examine the importance of strategy in context of human resource management. Considering the depth of the subject of human resource management this report has been divided in to three sections.
The initial section of the report defines the term and the concept of human resource management as per different authors' perception. At this point, various functions of human resource management have been explored in order to bring a clear understanding about those critical human resource functions.
The next sections of the report analyses the term strategy in perspective of human resource management. This followed by examining the process of strategic human resource management. Finally the latter section of this individual report addresses the importance of strategy in human resource management and indentifies critical steps in developing a human resource strategy.
Human Resource Management - An Overview
With the world of business becoming more and more complicated, it is essential that more efficient organization of its features is large or small. That's where human resources come into play. Human resource management is very critical for any business to survive in the world of high tech, fast pace today. This not only allows an organization to manage employees, but also ensures that the work is done effectively so that the individual objectives of employees and the corporate objectives of the management are met.
Ivancevich (1998, p.04) has defined the process of human resource management as all processes and functions that are performed in an organization that facilitates the most efficient use of human resources to meet the goals of both the organization and individuals. On the other hand, Mathis & Jackson (2003, p. 04) has defined human resources management as the conceptions of formal systems of an organization to ensure the effectiveness of the efficient use of human talent to accomplish organizational goals.
According McNamara from the Authenticity Consulting, LLC, the role of human resource management includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to meet these needs, recruitment and training the best employees, ensuring that they are very effective, dealing with performance issues, and ensure that their staff and management practices comply with different regulations.
Based on the above facts it is very clear that, human resources management is one the most important business function that is focused on the role of personnel needs and responsibilities of an organization, due to the fact that hence, employees are considered as the greatest asset of a business, organization tend to spend massive amounts of time and effort evaluating their systems of human resource management in order to gain optimum level of performance from their employees for the betterment of the organization in order to achieve its corporate objectives.
2.1 Functions of Human Resource Management
Human resources management involves the development of a perfect blend between the traditional and administrative functions and well-being of all employees in an organization. This set of functions offered to promote thought, stimulate debate, diagnose the organizational environment and develop a strategy for rational management of human resources for the organization. Let us see, the seven distinguished hallmark functions of human resource management, which are interrelated and interdependent.
Human Resource Planning
Recruitment and selection of employee,
Performance Evaluation and Compensation
Provision of employee services
Employee training, development and education
2.1.1 Human Resource Planning
Planning the resources of an organization is a key responsibility of each and every senior manager. Debatably the most important single resources are the people of an organization. People represent the most flexible resource available for the senior managers of an organization. Positioning the right people, in the right numbers, with the right knowledge, skills and experience, in the right jobs, in the right place, at the right time and at the right cost would prove to be the beneficial key to an organizations' success.
In assisting with the planning of an organization's Human Resources requirements, Personnel Specialists or rather Human Resources Manager would play a vital role. Therefore it is very much evident, that the Human Resources Planning as a systematic approach to the acquisition, use and deployment of people in an organization.
Mathis and Jackson (2003) has defined human resource planning as the process of analysis and identification of needs and the availability of human resources for the organization in order to achieve its corporate objectives. It is how organizations assess the supply and demand of human resources. In addition, an effective human resources plan will also identify ways of eliminating the gaps that may exist between demand and supply of human resources.
In other words Human Resource Planning is all about determining the numbers of employees to be recruited into an organization or intimidate out of it. Human Resource Planning goes together with an organization's strategic planning, Ivancevich (1998, p.145) has mentioned that the process of strategic human resource planning refers to an organization's decision about what it wants to achieve and how it wants to achieve. The following illustrations can give us a clear idea about the factors that determine human resource planning and the various stages of a human resource planning process.
Factors that determine Human Resource Planning
Diverse stages of a Human Resource Planning Process
Levels of workforce planning requires an assessment of current and future needs of the organization compared with current and future resources provided. Appropriate measures, then planned to bring demand and supply in balance. It is clear that the future human resource planning requirements of an organization will be determined from the following critical factors:
Predictions of sales and production.
Revolution of Technology.
Difference in terms of productivity, flexibility of work from the training, work study, organizational change, new motivationsâ€¦etc.
Transformation in working practices such as the use of subcontractors or agency staff, mechanisms for disposal tasks, shopping, replacement...etc.
Changes, which correspond to the new rules, such as payroll taxes or their abolition, new health and safety changes.
Modifications in government policies such the incentives for investment, regional or trade subsidiesâ€¦etc.
2.1.2 Recruitment and selection of employee
Before an organization can fill its job vacancies, it has to analyze and locate people who not only qualified for the position, but also needs a job. Although recruitment has always held an important place in organizations, the growing demand for highly qualified personnel has meant that effective recruitment practices are becoming an important source of competitive advantage. Linda (2001, p.151) has defined recruitment as the process of finding individuals to carry out the tasks that need to be done within the organization. Meanwhile Fisher, Schoenfeldt and Shaw (1997, p.223) has defined recruitment as the process by which organizations locate and attract individuals to fill job vacancies. Most of the organizations have a continuing need to recruit new employees to replace those who leave or are promoted.
Recruitment and human resources planning goes together with selection process by which organizations evaluate the suitability of candidates for various vacancies. Without an accurate planning process, an organization may recruit the wrong number or type of employees. Fisher, Schoenfeldt and Shaw (1997, p. 223) have suggested that organizations not only can generate internal candidates among its existing employees who aspires promotions and/or transfers, but also from outside can generate candidates via vacancy announcements, campus recruitment, unsolicited applicants, field trips, professional organizations and executive search firms. But at this point careful consideration should be given to the advantages and disadvantages of both forms of information from internal and external recruitment.
Meanwhile according to Ivancevich (1998, p.227) defines selection process by which an organization chooses from a list of candidates to the person or people who best meet the selection criteria for the position available, given the current environmental conditions. Meanwhile Fisher, Schoenfeldt and Shaw (1997, p.269) has defined selection as the process of measurement, decision making and evaluation. They also mention that the goal of human resource selection system is to bring into an organization individuals who will perform well on the job in order to achieve the individual and corporate objectives. The selection process can be simply shown as follows:
(Combining information about a person to make hiring decision)
(Making sure that hiring decisions increase the efficiency and profitability)
(Ensuring selection tests are reliable)
2.1.3 Employee Motivation
To maintain a quality staff and encourage them to give their best at work requires attention to the financial and psychological and even physiological rewards offered by the organization as a continuous exercise. In simple terms, the motivation of employees can be defined as an inner force that drives people to achieve personal and organizational objectives.
In order to survive in business in the world of business, organizations must make sure that its employees are motivated to bring out their optimum level of performance. Hence change is the only thing that remains constant, without no doubt motivated employees are critically needed in the organization which adopts change. Motivated employees help organizations survive as they are more productive and efficient. To be effective, the respective managers need to understand what motivates employees in the functions they are due to perform. Therefore it is very clear that, out of all the functions of a manager performs; motivating employees is arguably the most complex. This is partially due to the fact that what motivates employees changes constantly.
2.1.4 Performance Evaluation
Performance Management can be classified as one of the most significant functions in the process of Human Resource Management. An effective performance system not only provides the context to link individual objectives with departmental targets, but also it supports and facilitates the attainment of both individual and departmental goals. Meanwhile employee performance evaluation is an evaluative and communicative tool which is used to evaluate the performances of employees.
The performance evaluation process is conducted with care and understanding, thus helps employees see how their work and what is expected contributions in the broader context of the organization. The performance evaluation processes is effective in achieving these objectives and additional benefits. Documented evaluations of employee performance are communicative tools that ensure the supervisor and staff reports are clear about the needs of each employee. Evaluating the performance of employees also communicates the desired results or output required for each employee, and defines how they will measure.
An organization must constantly take stock of its workforce and to assess its performance in existing jobs, for three critical reasons, which are respectively to improve organizational effectiveness through the optimization of individual contributors, to identify the potential, which is to recognize existing talent and use it to fill senior vacancies in the organization or to transfer them into jobs where their skills are better utilized, and finally to provide an equitable method of linking payment to performance in the absence of numerical criteria. Therefore it is very much clear that, employee performance evaluation provides legal, ethical and visible evidence that employees are actively involved in understanding the requirements of their job duties, responsibilities and their results.
2.1.5 Employee learning and development
Learning can be described as methods of acquiring knowledge and skills is determined by the employer to perform a work in progress and future, whereas, development refers to activities that improve the performance of the single organization. The concept of learning and development in the context of organizational growth is probably the area of highest priority strategic human resource management process. In today's knowledge based economy, the attraction, retention and growth of talent is essential to achieve business objectives to address the competitive advantage and high performance.
Learning and development have come to be viewed as lifelong activity, rather than the front end acquisition of qualifications. The eventual endeavor of learning and development process has been characterized as the creation of the learning organization, constantly reviewing its mistakes and successes and adapting its activities appropriately.
According to the above discussion, the importance of learning and development can be simplified as follows: It allows management to cope with the pressure of different environments. Learning and development generally leads to an increase in volume and quantity produced. It leads to job satisfaction and improved employee morale. Skilled workers need less supervision. It enables employees to develop and grow within the organization and increase their earning potential. Learned staff makes better economic use of materials and equipments, which results in waste reduction.
2.1.5 Industrial Relations
Industrial relations has become one of the most difficult and complex problems of modern industrial society. Industrial development is impossible without the cooperation of their work and harmonious relationships. Therefore, it is in everyone's interest is to create and maintain good relations with workers and employers.
In context of human resource management, industrial relations explain the relations between employees and employers under the regulations of the organization. Industrial relations examine the relationship between management and workers, particularly groups of workers represented by unions. Industrial relations are essentially the interaction between employers, workers and the government and the institutions and organizations through which these interactions are mediated. From the business point of view of labor relations covers all aspects of the employment relationship, including management of human resources, employee relations and labor and management relations.
Good industrial relations, is a recognizable and legitimate goal of any organization, but it is difficult to define due to the fact that a good mechanism of the relationship between the two parties have complex relationship between: (a) employees and their formal and informal groups, unions, organizations and their representatives, (b) Employers and their leaders, and official organizations such as professional associations, and (c) the Government and regulatory and governmental agencies and the independent bodies such the Advisory, conciliation and arbitration.
3.0 Strategy - A Human Resource Perspective
The human resource strategy sets out the policies companies use in evaluating the work of the needs of the company and the recruitment or hiring of new employees. This process may take longer to complete, if the company has several departments and a wide variety of functions in their business operations. In developing a human resources strategy, companies must choose to hire skilled or unskilled workers.
The importance of human resources in this day and age can be seen that without proper management of human resources of most organizations will bust a few years to take hold. Human resources management is essential because it allows a company to make the best of his employees while gather in the profits. Therefore an organization should know how to get the best from its employees, by simple using a human resource strategy course. Just talk to a human resources strategy is a kind of business done by the human resources manager to ensure that not only meets the daily goals and objectives, but it's long-term as well.
Human resources strategy is a strategy that applies to the entire organization. It supports a comprehensive approach to strategic management of human resources, addressing issues of people in the long term, the macro concerns, quality, culture, values, commitment and resources relevant to future needs. The objective of the HR strategy is to develop high quality leadership at all levels within the organization. Effectiveness of human resources strategy can be evaluated in the achievement of the strategic plan.
It is very clear that, with the assistance of a strategy for a Human Resources Manager provides not only an organization to see the bigger picture, but also to ensure that integration policies are balancing to the long border organizational needs. Therefore, the human resources strategy can overcome the daily tasks of employees to see the greatest impact on the group in society and how it works. Also it is to be mentioned that human resources strategies in line with the resources in long-term, and helps to communicate effectively what is happening and how it fits the political future of society.
4.0 Strategic Human Resource Management
In simple terms strategic human resource management can be defined as the strategic approach in managing human resources at an organization. The process of strategic management of human resources is designed to help organizations to meet the needs of their employees, while promoting their corporate objectives. Strategic human resource management addresses all aspects of a business that may affect employees, such as hiring and firing, wages, benefits, training and administrationâ€¦etc. Wei (2006) has mentioned that the process strategic human resource management involves designing and implementing a set of internally consistent policies and practices that ensure the human capital of a firm contributes to the achievement of its corporate objectives.
Organizations are working hard to meet the needs of its employees in order to nurture an increased productivity of work atmosphere. Strategic human resource management is the best way to achieve this goal. The ability to plan the needs of workers and think ahead can help improve the number of skilled employees who chose to remain working for the organization. Improving employee retention can reduce the amount of money companies spend on finding and training new employees.
The process strategic human resource management function covers a wide range of terms and models. Such terms consists of employment practices, including recruitment, selection, performance appraisal, training and development and the administration of compensation and benefits. Meanwhile the best practice view, the best fit view and the resource based approach are known as some of the popular models in the process of strategic human resource management.
Strategic human resource management is linking human resource management with strategic goals and objectives for improving business performance and developing organizational cultures that fosters innovation and flexibility. These activities of human resource planning and implementation enable an organization to achieve their organizational goals. Therefore it is apparent that, Organizations focusing on identifying, analyzing and balancing two kinds of forces respectively the internal strengths and weaknesses on one hand and the external opportunities and threats of the organization on the other.
5.0 Developing a Human Resource Management Strategy
To develop the human resources strategy, an organization must respond towards two critical questions which are, respectively, the kind of people the organization requires to manage and direct the enterprise to achieve strategic business objectives and programs for individuals and initiatives should be designed and implemented to attract, develop and retain staff to compete effectively. In order to answer these questions organizations obliged to address the following four key dimensions,
1. Culture: beliefs, values, norms and managerial style of the organization,
2. Organizational structure, job roles and reporting relationships of the firm,
3. People: organization, skills, abilities and leadership skills, and
4. Human resources systems: people around systems such as implementing the strategy - employee selection, communication, training, awards, career development, etc.
5.1 Steps in developing a Human Resource Strategy
There are seven critical steps to develop a human resources strategy and active involvement of senior managers should be sought through the approach. These seven critical steps are as follows:
Step 1: Understanding the business strategy.
Step 2: Developing a Mission Statement
Step 3: Conducting a SWOT analysis of the organization
Step 4: Conduct a detailed human resources analysis
Step 5: Determine critical people issues
Step 6: Develop consequences and solutions
Step 7: Implementation and evaluation of the action plans
6.0 Importance of a Human Resource Strategy
The strategy of human resource management is being developed based on the overall business strategy, and he wholly followed the major initiatives in the business strategy. The management team of human resource should focus on the design and a clear definition of the strategy for managing human resources. Strategy of human resource management has two major goals which are respectively to help the organization to understand the priorities and initiate the human resource function and to contribute towards the employees of to prioritize according the human resource functions of the organization.
Wei (2006) suggested that, by combining the Human Resource Management function with business strategy, Strategic Human Resource Management reflects a more flexible arrangement and utilization of human resources to achieve the organizational, goals, and accordingly helps organizations gain a competitive advantage.
The importance of human resource strategy should not be underestimated. This is because, human resource strategy not only helps to direct and formulate human resources policies, but also covers issues faced in an organization in terms of employment, reductions and promotions and how they are affected by market conditions, industry developments and its own strengths and weaknesses. Human resource strategy has the purpose of the project outcomes. It also shows specific guidelines for the extent of employee perceptions.
The most unique strategies of human resources is anticipated to last about five years and thereafter should be re-assessed on yearly basis to make sure that the strategies not only in line with where the organization's mission statement, but also takes into account the market circumstances. It is also very important that the strategies of human resources are also related with the business plan for the global enterprise.
Once the Human Resource strategies are integrated within the organization, it plays not only a vital but also a crucial role, when it comes to clarifying the firm's human resource problems and develops effective resolutions to them. As mentioned earlier it would be difficult to imagine any organization achieving its corporate goals and sustaining effectiveness without the competent human resource management curriculums and functions. Hence today due to the recognition of the decisive importance of people, Human Resource Management has become a most important aspect of strategic planning and thinking.
The human resource strategy will not be able to exist without its communication against the direction of the management levels of the organization due to the fact that the line management must understand the objectives and strategy of the HR function to support them as applicable. The employees of the organizational human resource function is the second target group for human resource strategy, because they must know how to build their own objectives and visions of their individual role in the human resources management function. Therefore the human resource strategy must be open to all the desired target groups, where the human resource function must know how to process the information contained in the human resource strategy. The strategy for managing human resources can be provided in whole or in groups can be divided into several groups with different information available.
In conclusion, we can see from the above information, the importance of strategy in human resource management can not only set clear goals but also acts as a kind of guide to help employees understand their importance in an organization and how the relationship with overall organizational goals.
I would like wrap-up this report which is purposefully done to critically examine the "Importance of Strategy in context of Human Resource Management". It is very much evident that this report has undoubtedly examined the importance of concept of human resource management; followed by an in-depth analysis that explores the various functions of human resource management in order to bring a clear understanding about the critical human resource functions.
Also the analysis of 'strategy' in the perspective of human resource management has been carried out in order clearly understand the role strategy plays in the human resource management function. To support the arguments with regard to the topic of this report the process of strategic human resource management has too been examined. This is followed a detailed concentration on the importance of strategy in context of human resource management and has identified the critical steps in developing a human resource strategy.
As a conclusion, with my utmost level of continence, I want to mention here that I strongly feel that the reader would be able grasp the Importance of Strategy in context of Human Resource Management after reading this report which is prepared after gaining a substantial understanding from the various reliable sources
Last but not the least I wish to convey my heartfelt gratitude towards my lecturer, my parents, my colleagues and all other well wishers who immensely supported me throughout my studies in order to successfully complete this report.