Human resource management importance in organisations

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STRATEGIC HUMAN RESOURCE MANAGEMENT

INTRODUCTION:

Human resources management strategy is very important for every organisation to function smoothly. Faced with rapid change organizations need to develop a more focused and coherent approach to managing people. In just the same way a business requires a marketing or information technology strategy it also requires a human resource or people strategy.

Strategic human resource management is a branch of Human resource management. It is a fairly new field, which has emerged out of the parent discipline of human resource management. Much of the early or so called traditional HRM literature treated the notion of strategy superficially, rather as a purely operational matter, the results of which cascade down throughout the organisation. There was a kind of unsaid division of territory between people-centred values of HR and harder business values where corporate strategies really belonged. HR practitioners felt uncomfortable in the war cabinet like atmosphere where corporate strategies were formulated.

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Strategic human resource management is crucial large as well as small companies. In small companies this process may be as simple as the manager or the owner himself taking time to observe employees, along with assisting, assessing and giving regular reviews. However larger companies will require a whole department to be in charge of such activities for the development of employees. The quality of staff members can be improved by meting their needs in such a way that it may benefit the company. Investing in employees and providing them with tools they need to thrive and prosper in the company proves to be a good investment in the long run for the company.

So ahead in the literature review we will look in deep about the Strategic human resource management and the company following SHRM in their daily practice and how effective it is for running their organisation effectively.

http://ezinearticles.com/?What-is-Strategic-Human-Resource-Management?&id=549585

http://www.accel-team.com/human_resources/hrm_08.html

http://www.mba-tutorials.com/human-resource-management/487-shrm-strategic-human-resource-management.html

LITERATURE REVIEW:

Strategic human resource management is a complex process which is constantly evolving and being studied and discussed by academics and commentators. Its definition and relationships with other aspects of business planning and strategy is not absolute and opinion varies between writers. So there are many definations for strategic human resources management.

A comprehensive Human Resource Strategy plays a vital role in the achievement of an organisation's overall strategic objectives and visibly illustrates that the human resources function fully understands and supports the direction in which the organisation is moving. A comprehensive HR Strategy will also support other specific strategic objectives undertaken by the marketing, financial, operational and technology departments.

Strategic HRM can be regarded as a general approach to the strategic management of human resources in accordance with the intentions of the organisation on the future direction it wants to take. It is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need. It has been defined as:

  • All those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business.2
  • The pattern of planned human resource deployments and activities intended to enable the forms to achieve its goals

Strategic HRM is based on HRM principles incorporating the concept of strategy. So if HRM is a coherent approach to the management of people, strategic HRM now implies that that is done on a planned way that integrates organisational goals with policies and action sequences.

A good business strategy, one which is likely to succeed, is informed by people factors. One of the driving factors behind the evaluation and reporting of human capital data is the need for better information to feed into the business strategy formulation process. In the majority of organisations people are now the biggest asset. The knowledge, skills and abilities have to be deployed and used to the maximum effect if the organisation is to create value. The intangible value of an organisation which lies in the people it employs is gaining recognition by accountants and investors, and it is generally now accepted that this has implications for long term sustained performance.

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http://www.cipd.co.uk/subjects/corpstrtgy/general/strathrm.htm

Strategic Human Resource Management by(Randall S. Schuler and Susan E. Jackson) second edition 2007 Blackwell publishing ltd.

Defination of strategic human resource management:

SHRM

has been defined as ‘A distinctive approcah to employment management which seeks to achieve competetive advantage through strategic deployment of highly committed and capable work force using a work force using an array of cultural, structural and personnel techniques. (storey,2001)pg4

Strategic Human Resource Management theory and practice second edition by,( graeme salaman, john storey and jon bills berry)Sage publisher

http://www.strategichrinc.com/

According to Wright & McMahan, 1992, Strategic Human Resource Management refers to:

"The pattern of planned human resource activities intended to enable an organization to achieve its goals."

Strategic human resource management concentrates on human resouce plans that have long term goals. It has a number of differences with the conventional human resource management methods. It does not focus on matters related to internal human resources. The principal objective of strategic human resource management is to enhance the efficiency of the employees through stressing on business hindrances that take place external to human resources.

Objectives for Strategic Human Resource/People Planning For the Organization:

There are three goals for this process:

Goal 1:

Develop the Strategic Human Resource/People Plan/Document and yearly priorities.

Goal 2:

Ensure successful implementation and change.

Goal 3:

Build and sustain high performance in people management over the long term.

Principal Characteristics of Strategic Human Resource Management:

Following are the principal characteristics of strategic human resource management as per Gratton and Truss:

  • There is some type of an express association between the human resource practices and policies and all the strategic goals of the company and the environment of the company
  • There is some co-ordination outline associating individual HR interferences in order to make them reciprocally corroborative.
  • The majority of the responsibility for handling of human resources is delegated downwards

http://finance.mapsofworld.com/strategic-management/human-resource.html

Strategic human resource management (SHRM) is the purposeful resolution of human resource administration and policy issues so as to enhance a public agency's effectiveness. It requires understanding how personnel functions interrelate in context, recognition of their importance, and commitment by personnel managers, employees, supervisors and political leaders to work together for change (Klingner and Nalbandian, 1998, p. 386).

An HR strategy will add value to the organisation if it:

  • Articulates more clearly some of the common themes which lie behind the achievement of other plans and strategies, which have not been fully identified before; and
  • Identifies fundamental underlying issues which must be addressed by any organisation or business if its people are to be motivated, committed and operate effectively.

The first of these areas will entail a careful consideration of existing or developing plans and strategies to identify and draw attention to common themes and implications, which have not been made explicit previously.

The second area should be about identifying which of these plans and strategies are so fundamental that there must be clear plans to address them before the organisation can achieve on any of its goals. These are likely to include:

  • workforce planning issues
  • succession planning
  • workforce skills plans
  • employment equity plans
  • black economic empowerment initiatives
  • motivation and fair treatment issues
  • pay levels designed to recruit, retain and motivate people
  • the co-ordination of approaches to pay and grading across the organisation to create alignment and potential unequal pay claims
  • a grading and remuneration system which is seen as fair and giving proper reward for contributions made
  • wider employment issues which impact on staff recruitment, retention, motivation etc.
  • a consistent performance management framework which is designed to meet the needs of all sectors of the organisation including its people
  • career development frameworks which look at development within the organisation at equipping employees with "employability" so that they can cope with increasingly frequent changes in employer and employment patterns
  • policies and frameworks to ensure that people development issues are addressed systematically : competence frameworks, self-managed learning etc.
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In addition, the HR strategy can add value is by ensuring that, in all its other plans, the organisation takes account of and plans for changes in the wider environment, which are likely to have a major impact on the organisation, such as:

  • changes in the overall employment market - demographic or remuneration levels
  • Cultural changes which will impact on future employment patterns
  • changes in the employee relations climate
  • changes in the legal framework surrounding employment
  • HR and employment practice being developed in other organisations, such as new flexible work practices.

The six broad interconnected components of this system consist of three planning steps and three execution steps.

The top three components represent the need for planning. Organizations must determine their strategic direction and the outcomes they seek. This is usually accomplished with some form of strategic planning. Classic strategic planning is a formal, top-down, staff-driven process. When done well, it is workable at a time when external change occurs at a more measured pace.

However as the pace and magnitude of change increases, the approach to strategic planning changes substantially:

  • First, the planning process is more agile; changes in plans are much more frequent and are often driven by events rather than made on a predetermined time schedule.
  • Second, the planning process is more proactive. Successful organizations no longer simply respond to changes in their environment, they proactively shape their environment to maximize their own effectiveness.
  • Third, the planning process is no longer exclusively top-down; input into the process comes from many different organizational levels and segments. This creates more employee ownership of the plan and capitalises on the fact that often the most valuable business intelligence can come from employees who are at the bottom of the organizational hierarchy.
  • Lastly, the strategic planning process less reactive and more driven by line leadership.

Once strategic planning is under way, a process must be undertaken by the organization to design and align its HRM policies and practices to provide for organizational success. The remaining step in planning is to determine the quality and quantity of human resources the organization needs for its total force.

The rest of the HR strategic system exists for and is guided by these plans, policies, and practices. These execution components contain mechanisms that generate the correct skill sets, invest in staff development and performance, and productively employ them in the organisation. The last component provides a means to assess and sustain the competence and performance of the organization and the people in it with regard to outcomes that the organization seeks.

http://gametlibrary.worldbank.org/FILES/844_HR%20planning%20principles.pdf

In company called HLB UK LTD the management system, human resource is given due importance while planning goals and long term strategies. The skills that are necessary to meet the organizational goals are developed in employees. This point is considered during the planning phase and included in the policies devised for meeting goals. Nowadays, the human resource department does much more than just recruiting employees for the company. Using the human resource effectively in order to give the company a competitive advantage and completing the set targets, are some of the priorities.

The mission statements reflect the strategies, goals and the overall approach of companies. The values inherited and the policies devised by firms are based on the mission statements; which are the driving force that motivate the employees to move ahead.

Let us see at the Advantages of Strategic Human Resource Management in HLB UK LTD:

There are many advantages and benefits that strategic human resource management offers.

  • It helps analyze the opportunities and threats that are crucial, from the point of view of the company.
  • It is possible to develop strategies and have a vision for the future.
  • The need for competitive intelligence, which is of utmost importance in strategic planning, is fulfilled by means of implementing strategic human resource management.
  • The attrition rate can be reduced, if strategic HRM is implemented properly. It also performs the important task of motivating employees.
  • Development and maintenance of competency among employees, is the most important benefit offered by strategic HRM.
  • It helps determine the weaknesses and strengths of the company, thereby enabling the management to take appropriate measures.
  • It helps keep a check whether the expectations of employees are addressed properly.
  • Business surplus is achieved by making the employees competent enough to deliver the goods.

Limitations of Strategic Human Resource Management

But at same time there are some limitations as well of SHRM which are faced by the company which are as followes:

  • Resistance to change from the bottom line workers.
  • Inability of the management in communicating the vision and mission of the company clearly to the employees.
  • Interdepartmental conflict and lack of vision among the senior management in implementing the HR policies.
  • The diversity of workforce that makes it difficult for the management to handle them accordingly.
  • Conflict among the employees over the issue of authority and the related fear of victimization.
  • The resistance from institutions such as the labor unions.
  • Changes that take place in the organizational structure.
  • The changing market scenario which in turn creates pressure on the effective implementation of strategic HRM.

But if implemented efficiently, strategic human resource management helps in improving the productivity of employees and utilizes their expertise in meeting the company goals.

Organizations and companies succeed, or fail, based on the quality and effectiveness of their employees. Today's successful firms recognize that to compete in global markets, they must have world class Human Resource managers who are active participants in strategic and operational decision. Whether they are reengineering the pay and benefits of the company or implementing Total Quality Management (TQM) programs, Human Resources Managers play a central role. The goal of strategic management in an organization is to deploy and allocate resources in order to provide the management with a competitive advantage. It goes

Without saying that two out of three classes of resources (organizational and human)

Correlated with the human resource functions. Towards maximum effect, the HRM

functions must be integrally involved in the company's strategic management process.

Strategic management process

first analyzes a company's competitive situation,

develops its strategic goals and mission, it's external opportunities and threats, and its

internal strength and weaknesses to generate alternatives. In his second phase, strategic

management process determines a plan of actions and deployment of resources to

achieve the pre-specified goals. This kind of strategic approach should be emphasized in

human resources management.

Strategy formulation consists of five major components:

  • Mission is a statement of the organization's reason for being, customers served and their needs, and the technology used. Also presents the company's vision and values.
  • Goals are what the firm hopes to achieve in the medium-to-long term future.
  • External analysis examines the firm's operating environment to identify the strategic opportunities and threats.
  • Internal analysis identifies the firm's strengths and weaknesses,focuses on the quantity and quality of resources available.
  • Strategic choice is done after the Strengths Weaknesses Opportunities Threats (SWOT) analysis to define strategic alternatives, then the choice is made among these alternatives.

http://www.prometa.com/1d3ef1e0.png

STRATEGIC APPLICATIONS OF HR BUSINESS FUNCTIONS:

Human resources functions

refer to “those tasks and duties performed in both

Large and small organizations to provide for the coordinate human resources. The

Society of Human Resources Management identified six main functions:

1- HR planning, recruitment, and selection

2- HR development & training

3- Compensation and benefits

4- Safety and health

5- Employee and labor relations

6- HR research

Activities of the HR planning, recruitment, and selection function are:

Performing job analysis that is “ the process of determining and reporting pertinent

information relating to the nature of a specific job”. This can be done using a motion

Study, a time study or a statistical sample to draw inference about the demands of TacticalApplicationsStrategicApplicationsOperationalApplications Planning, Recruitment and selection

Manpower planning Labor force tracking Labor cost analysis and budgeting Turnover analysis Recruiting Workforce planning/scheduling Training and Development Succession planning Performance appraisal planning Training effectiveness Career matching Skill Performanc evaluations Questionnaires, interviews and observation are tools to analysis jobs. This analysis produces job description and job specifications. The following step is the

  • Job designthat is “ the process of structuring work and designating the specific

    Work activities of an individual or a group to achieve certain organizational

Objectives”

  • HR planning that is “ the process of determining the human resource needs of an

    Organization and ensuring that the organization has the right number of qualified

People in the right jobs at the right time”. First of all be familiar With the business strategy, define the impact of this strategy over the specific units Of the organization. Define the skills needed and the additional human resources Required and develop action plans to meet the needs.

Methods for forecasting and planning the HR needs:

  1. Judgmental methods such as managerial estimates, and Delphi technique. Finally, Scenario analysis using work force environmental scanning data to develop alternative work force scenarios. Brainstorming between managers and HR managers to forecast the future, then the managers will go back to define changing points.
  2. Statistical and modeling techniques using historical data to predict the future. Time series analysis, personnel ratios, productivity ratios and regression analysis
  3. Benchmarking is to carefully examine internal practice and procedures and measure them against the ways other successful organizations operate. Forecast methods will be compared to other successful organizations.
  4. Determining the additional need using both skill inventory and management inventory to specify all available data about the current employees. Depending on a single method of forecasting is not always accurate; in fact a mixture of different types of these methods may be very helpful according to the activity of the organization and type of data.
    • Developing and implementing an action plan to meet the requirements.
    • Recruiting the HR needed to fulfill the organization's goals.
    • Selecting and hiring HR to specific jobs needed. The following figure illustrates the whole process

http://unpan1.un.org/intradoc/groups/public/documents/ARADO/UNPAN006257.pdf

The areas of business planning, human resources planning, and strategic planning and performance measurement are outgrowths of the desire of managers, stakeholders and stockholders for direction and accountability. These strategic planning sites bring excellent resources to the strategic planning effort.

Conclusion:

Overall we have seen that the strategic human resource management plays very important role in every organisation which we have seen in case of HLB UK LTD as it increases effenciency of the organisation. A comprehensive Human Resource Strategy plays a vital role in the achievement of an organisation's overall strategic objectives and visibly illustrates that the human resources function fully understands and supports the direction in which the organisation is moving. So it is very important for every company weather large or small to have the strategic human resource management as it is the one of the very important tool for business to run smoothly and flexibaly.

References:

  1. http://ezinearticles.com/?What-is-Strategic-Human-Resource-Management?&id=549585
  2. http://www.accel-team.com/human_resources/hrm_08.html
  3. http://www.mba-tutorials.com/human-resource-management/487-shrm-strategic-human-resource-management.html
  4. http://www.cipd.co.uk/subjects/corpstrtgy/general/strathrm.htm
  5. Strategic Human Resource Management by (Randall S. Schuler and Susan E. Jackson) second edition 2007 Blackwell publishing ltd.
  6. Strategic Human Resource Management theory and practice second edition by,( graeme salaman, john storey and jon bills berry)Sage publisher
  7. http://www.strategichrinc.com/
  8. http://finance.mapsofworld.com/strategic-management/human-resource.html
  9. A Strategic Human Resource Management System for the 21st Century. Naval Personnel Task Force, September 2000
  10. http://gametlibrary.worldbank.org/FILES/844_HR%20planning%20principles.pdf
  11. http://www.prometa.com/1d3ef1e0.png
  12. http://unpan1.un.org/intradoc/groups/public/documents/ARADO/UNPAN006257.pdf