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Importance of Strategic Leadership in Business

The term “human resource” was first coined by John R.Commons, who was a pioneering economist in his book, “The Distribution of Wealth”, published in the year 1893. Human resource generally defines the overall potentials, capabilities, skills and abilities that the individuals of an organisation possess which are in turn continuously sharpened, updated and tailor-made to suit the needs of the dynamic global business environment. However researchers indicate that it was in 19th century, that the organisations finally understood the necessity of building their human resource departments and address the internal and external business factors in an appropriate and strategic manner (Adair, 2019). It was gradually after 19th century that the business organisation understood the importance of maintaining a sound human resource department which in turn required a strategic planning by the organizational heads. Today the global business organizations are not just focused on ensuring that they meet the existing market demand in terms of delivering its products or selling the service rather it also has to take into account its existing human resource and how it can be furthered strengthened. Managing people within the organization is also a very vital step in ensuring business success because ultimately it is the existing talent as well as new talent which the firm can bring in that can ensure further success of the business (Armstrong, 2016). Strategic human resource management is a proactive process of managing employees in an organization, that includes standard human resource components such as attracting, developing, rewarding, and retaining employees and brings them one step further by taking in consideration the goals and needs of other departments. Therefore to ensure the same it demands a strategic leadership and an effective people managent approach that is meant to focus on personal as well as professional development of the employees and altogether help the business build a sustainable approach to effective organizational management. In absence of such strategic HRM it is found to lower employee performance along with impacting the overall organizational culture. Hence this essay will discuss about the techniques how successful global business entities are tactfully managing its human resource and also analyse how the absence of strategic human resource management can affect the business in terms of its employee performance and its brand image in the market

In order to help an organization foster its economic success as well as strengthen its corporate culture and ensure utmost satisfaction of the employees it is very important for managers to not just limit their role in administering the economic and technological activities or the work process but to emerge as a leader and assume a holistic role of leading the organization by incorporating innovation, focusing on the greater good of the people, addressing the existing challenges and developing sustainable business strategies. Positive leadership is modelling, facilitating, and purposefully influencing positive emotions that encourage team members and employees to excel in their work (Armstrong, 2019). Positive leaders cultivate an empowering environment through communication, accountability, emotional intelligence, motivation, and model-worthy work ethic. Positive leadership approach helps managers to create the right balance between business-oriented strategies and people-oriented strategies. In considering the existing literature there lays certain crucial differences between a manager and a leader. That is while a leader is assigned with the task of creating a certain vision for the other employees and the management a manager is actually responsible for looking how those visions can be achieved by preparing a definite plan of action (Armstrong, 2011). However in today’s global competitive business environment it has actually become important for the managers to assume the role of a leader and strategically develop an achievable plan of action, focus on keeping the workforce motivated and achieving the set goals and objectives 

Leadership Strategy

In strategic human resource management a business leader primarily focuses on integrating business goals with social goals and altogether developing a sustainable business strategy which will enable the business to produce long-term profits. Leadership goals in such a scenario primarily surround around help the talent within the organization to develop an innovation oriented approach that will enable the business to integrate the triple bottom line that is the 3ps: People, Planet and Profit and help the business build a strong brand image in the market (Bratton and Watson, 2018). Global managers need to build such holistic approach in their leadership strategy in order to build an inclusive business growth strategy which takes into account the concept of sustainability and helps the business to develop the concept of doing business in a responsible manner. For example strategic leadership goals have been established in Apple Inc where the managers constantly motivate the employees to focus on innovation driven approach for ensuring that the businesses can completely function of renewable energy resources (Christiansen et al. 2017). This is exactly how strategic leadership goals are established and achieved. Apple has a comprehensive climate change plan, where it identifies its carbon footprint and what it is doing to mitigate it. The tech giant has designed its in-the-works new main campus in Cupertino, California to be powered by 100 percent renewable energy

Global business organizations definitely have a very vast human resource hence for strategic management of the same the business leaders and managers need to develop an appropriate style of leadership. However choosing which type of leadership would best work for the business is dependent on certain factors (Rees and French, 2016). One primary factor is employee psyche, the existing work culture and the existing level of knowledge and skill set of the human resource in the organization. Moreover for global business entities it is also important for the managers to understand that as the workforce is quite diverse in terms of culture and ethnicity the leadership approach has to be inclusive as well as flexible. Focusing on today’s competitive global business market transformational approach to leadership is quite appropriate as it create room for innovative thinking and encourages the workforce for brainstorming ideas (Hargie, 2021). Moreover in this leadership style the leaders are also involved in training and coaching of the employees when necessary while on the other hand there exists reasonable freedom to innovate and experiment with ideas. Hence flexibility along with proper guidance is exactly what keeps the workforce motivated. Tesla is one such organization which has a transformational leader like Elon Musk (Chen and Perez, 2018). This is exactly the reason why Tesla has been able to create a new standard in the electric vehicle industry and has brought in revolution in the global automotive industry. 

Effective leadership and management is highly dependent on the existing structure within the organization has it has a direct impact on the employee-employer relationship and the overall work process. Organizational structure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management. Today contemporary business organizations mostly follow a decentralised structure as this allows companies to remain fast, agile, and adaptable, with almost every employee receiving a high level of personal agency (Škudien?, Li-Ying and Bernhard, 2020). For example, Johnson & Johnson is a company that's known for its decentralized structure. As a large company with over 200 business units and brands that function in sometimes very different industries, each operates autonomously. Even in decentralized companies, there are still usually built-in hierarchies (such as the chief operating officer operating at a higher level than an entry-level associate). However, teams are empowered to make their own decisions and come to the best conclusion without necessarily getting "approval" from up top.

Leadership Goals

Strategic human resource management is heavily dependent on ensuring that the existing human resource is diverse that is diverse in culture, age group, ethnicity, gender so that the existing pool of talent can bring in varied ideas and create an innovation driven work culture (Parry and Tyson, 2013). However in this process strategic leadership of the managers play a very important role. For example in Nestle the organizational leaders specifically focus on strengthening its diversity management policy by implementing plans like Gender Balance Acceleration Plan. This plan has enabled the management to offer equal parental support benefits to same-sex and different-sex couples. Partnering with LGBT+ civil society groups to advocate for civil rights and workplace protections, gaining recognition from non-profit organizations such as Swiss LGBTI label, a certification that recognizes open and LGBTI-inclusive corporate culture. Empowering employee engagement groups such as Proud@Nestlé to encourage dialogue and create a safe space for conversations around LGBT+ topics.

Positive work culture is one of the prime factors that help in enhancing employee welfare. Managers play a very significant role in ensuring that the overall work culture is positive which means that the organizational leaders are majorly invested in ensuring personal as well as professional growth of the employees (Storey, Ulrich and Wright, 2019). The best example to further expand this concept is to refer to Google’s Employee Development plan. The vice president of people operation at Google Company urges other organizations to mind employee welfare. No employees want to be in an organization that look down upon them or don't value their contribution. For this reason, employees have to believe that their trainings are improving them. A strong employee development plan is a suitable method of increasing loyalty among employees, and hence decreasing labour turnover. Making progress in an organization is nearly impractical without an employee development plan (Yukl, 2019). Such employees will never learn anything new and hence, these employees will have minimal productivity for the organization. Empowering employees is the key to growth and success for any organization. Firstly, they acknowledge their employees’ right to learn and allow them to do so whilst on the job, as well as encouraging them to give back to their colleagues in equal measure. It’s no secret that Google employs some of the most sought-after professionals in the world. That means they have the most knowledgeable specialists in the industry, and they encourage them to share their knowledge (Butler and Rose, 2011). They say “your own employees are perhaps the most qualified instructors available to you.” They focus on micro-learning, and it’s not something they’re secretive about. Their training content is delivered in small, digestible chunks directly from peers, rather than a central training team.

Employee benefits actually help in motivating the workforce and develop a loyalty towards their workplace. It is extremely important for the managers to focus on ensuring that apart from appropriate remuneration and incentives the employees enjoy certain other benefits like medical leaves, health insurance, gift vouchers or holiday sponsorships and any other form of non-monetary benefit that can build greater employee satisfaction. 20% of employees perform better when provided benefits. Offering benefits to employees helps relieve their stress. When they know that things back at home are being taken care of, they sleep better and perform better (Smith, Farmer and Yellowley, 2013). According to Glassdoor, Apple employees get an annual 25% discount when they purchase an iPod, computer, or iPad. Every three years, workers can get $250 off an iPad or $500 off a Mac. Apple software is 50% off. The company also offers other discounts for family and friends, depending on the product.

Styles of Leadership

Another very vital aspect of addressing a strong organization culture is to focus on the health and safety of the employees. This is extremely necessary for long-term employee retention as well as to increase productivity.  A safe and healthy workplace not only protects workers from injury and illness, it can also lower injury/illness costs, reduce absenteeism and turnover, increase productivity and quality, and raise employee morale. In other words, safety is good for business (Kirton and Greene, 2016). While today most business organization tends to focus on the physical environment to ensure safety however what they ignore is the mental wellbeing of the employees and its significance. However Google Inc has set new standards in terms of ensuring employee wellbeing by tracking mental health of the employees through ‘resilience training videos’. This is one of the major steps in addressing strategic human resource management. This has actually made Google of the best places to work for as the employees feel high valued. Another major example in this category is Microsoft (Martin, 2014). Microsoft is committed to supporting our employees’ well-being and safety while they are at work and in their personal lives. In addition to Microsoft’s comprehensive benefits package, their Occupational Health and Safety program helps ensure employees can stay safe while they are working.

According to research scholar E.W Vetter, in his research article has defined human resource planning as “a process by which an organisation should move from its current manpower position to its desired manpower position. Through planning, management strives to have the right number and right kind of people at the right places at the right time, doing things which result in both the organisation and the individual receiving maximum long-run benefit.” where as Leon C.Megginson views human resource planning as an integration approach directed towards panning personal functions (Stewart and Brown, 2019) of the employees to help them perform better in an organisation and on the other hand equip the organisation to better understand the needs of the employee as well as the goals of the business entity. Critically analysing all the above mentioned definition, the process of human resource planning can be categorised as:

  • The whole planning process must be objective and hold certain specific goals
  • The planning process must be totally directed towards analysing the human resource needs of its organisation
  • Human resource planning aims to achieve the right balance between the demand and supply of manpower (Owen, 2020)
  • Human resource planning is a multi-dimensional activity which must take into concern the organisational needs as well as personal needs of the employees and create the right balance

Thus from the above presented discussion, it can be well understood why human resource planning is referred as an indispensable part of human resource management.

Forecasting basically helps the organization understand the external demand and supply of labour market and accordingly assess the need of the organization in terms of recruiting and training of the candidates. Strategic human resource management definitely takes into account the need of forecasting in order to assess the future market and how the organization can build its capabilities in the present day to avoid future challenges (Wyatt, 2021). Some important techniques of forecasting involve assessing the external market environment, then analysing the internal employee strengths and weaknesses. The next step is to anticipate the chances of employee turnover. Employee turnover rates place demands on organizations to improve employee retention and recruitment strategies. Knowing what kinds of labour are available in the job market is critical when it comes to filling vacant positions when employees retire. Some are promoted to higher positions; and others leave to go work elsewhere (hbr.org, 2022). Once an organization has identified what resources are available in the workforce and has defined its organizational needs, it can complete the last of the four main steps in HR to forecasting future needs. Factors to consider include evaluating current employee potential, determining training needs and putting succession plans in place. A primary question managers should consider is whether employees are working in positions that fully utilize their strengths, abilities and experience suggests that recognizing talent and potential and focusing on employee strengths can prompt promotions or other shifts in job roles. Matching employees’ skills to an organization’s goals improves employee job satisfaction as well as helps a company to achieve its strategic objectives.

Developing Organization Culture for Strategic Human Resource Management

Efficient business managers not only focus on bringing in new talent within the organization but are equally devoted in building a proper training strategy for the new recruits. While recruitment process is indeed a lengthy one where the managers need to work in close association with the HR department to understand the job vacancy, analyze the job requirements, reviewing applications, screening, short listing and selecting the right candidate on the other hand training strategies require different set of planning and execution (Smith, Yellowley and McLachlan, 2020). There are different kinds of training which are arranged for the new recruits which include orientation training, on boarding training, technical skill training, soft skill training which must be arranged by the managers to help the new recruits easily understand the overall organization culture and its work process. For instance in Nestle all the new joiners goes through a mandatory training on Nestlé Corporate Business Principles (NCBP) and Code of Business Conduct (COBC)  These training sessions are also included in all need-based custom sessions conducted during company summer trainee, management trainee and technical training orientations (nestle.com, 2022). The training on COBC also includes a session on anti-corruption. The COBC and NCBP training sessions have been conducted for all external, contractual and third-party employees at the Nestlé Head Office in both English and Hindi for ease of understanding.

In terms of global human resource management one of the primary aspects which global business managers must focus is to conduct cross-cultural training within the organization so that when the expatriates and sent to international markets the culture shock is reduced and they face lesser challenge. Diversity and cross-culture training are some of the most important aspects of ensuring strategic global human resource management. Global managers must implement resources in proper training of all expats in terms of hard skill and soft skill training. Taking example of Coca-Cola it is important to understand how Coca-Cola Co. not only sees itself not as a global organization, but as a multi-local enterprise (Mazur, 2014.). That’s because its global strategy is to allow its businesses in more than 200 countries to act according to local needs, local laws and local cultures. The expat training program focuses on people who have knowledge of their particular field plus knowledge of the company, and who can do two things in an international location. One is add value by the expertise that they bring to each assignment and two is enhance their contribution to the company by having that international experience

Along with this it is equally important to build a strong corporate governance framework where the global organization follows certain code of conduct and business ethics in managing the employees in a international market environment. Discussing examples of some major failure in terms of strategic human resource management, one company which needs to be mentioned in Amazon. Though Amazon has also earned the title of being one of the most customer-centric companies yet this customer-obsession and company’s never-ending commitment to serve its customers sometimes goes over the top for the employees who feel that they are not much valued by the company (Kantor and Streitfeld, 2015). Though there is no out and loud proof of this growing dissatisfaction among employees but going by the survey reports of PayScale in the year 2013, Amazon is noted to be the company with least employee retention rate among many other companies who come under the Fortune 500 list. The tooth-and-claw competition and to remain on top often creates a toxic work environment for the employees in the longer run. Moreover the policy of self reviewing one’s own value is creating another major problem which often goes unnoticed by the managerial heads, popularly known as the “rank and yank system”.

Organization Structure

Recommendation and Conclusion:

The chosen analysis primarily focuses on how the aspect of strong leadership and management plays a very crucial role in ensuring strategic human resource management for the business organization. It is very important for today’s business leaders to understand the fact that good managers do not just focus on economic aspect of the business rather it focuses on building a sustainable business approach which is inclusive of economic and societal development (Rees and Smith, 2021). It is highly recommended that managers all across the globe should actually focus on building a strong corporate governance framework that will help the employees abide by a certain code of conduct and will ensure strategic performance. Along with this proper employee performance evaluation and acknowledging their efforts play an important role in ensuring strategic human resource management in today global competitive business environment.

References:

Adair, J., 2019. Develop your leadership skills: fast, effective ways to become a leader people want to follow (Vol. 153). Kogan Page Publishers.

Armstrong, M., 2011. How to be an even better manager: A complete AZ of proven techniques and essential skills. Kogan Page Publishers.

Armstrong, M., 2016. Armstrong's handbook of management and leadership for HR: Developing effective people skills for better leadership and management. Kogan Page Publishers.

Armstrong, M., 2019. How to Manage People: Fast, effective management skills that really get results (Vol. 148). Kogan Page Publishers.

Bolea, A. and Atwater, L., 2020. Becoming a Leader: Nine Elements of Leadership Mastery. Routledge.

Bratton, J. and Watson, S., 2018. Talent management, emotional labour and the role of line managers in the Scottish hospitality industry: A roundtable discussion. Worldwide Hospitality and Tourism Themes.

Butler, M. and Rose, E. eds., 2011. Introduction to organisational behaviour. Kogan Page Publishers.

Chen, Y. and Perez, Y., 2018. Business model design: lessons learned from Tesla Motors. In Towards a Sustainable Economy (pp. 53-69). Springer, Cham.

Christiansen, L.C., Biron, M., Farndale, E. and Kuvaas, B. eds., 2017. The global human resource management casebook. Routledge.

Hargie, O., 2021. Skilled interpersonal communication: Research, theory and practice. Routledge.

hbr.org, 2022. Employee retention. [online] Hbr.org. Available at: <https://hbr.org/topic/employee-retention> [Accessed 5 April 2022].

Kantor, J. and Streitfeld, D., 2015. Inside Amazon: Wrestling big ideas in a bruising workplace. The New York Times, 15(08), pp.1-19.

Kirton, G. and Greene, A-M. 2016 The Dynamics of Managing Diversity: A Critical Approach. 4th edition, Oxford: Elsevier Butterworth-Heinemann.

Martin, G.C., 2014. The effects of cultural diversity in the workplace. Journal of diversity management (JDM), 9(2), pp.89-92.

Mazur, B., 2014. Sustainable Human Resource Management in theory and practice. Ekonomia i Zarz?dzanie, 6(1).

nestle.com, 2022. Diversity & inclusion. [online] Nestlé Global. Available at: <https://www.nestle.com/jobs/diversity-inclusion> [Accessed 5 April 2022].

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Smith, P.E., Yellowley, W. and McLachlan, C.J., 2020. Organizational Behaviour: Managing People in Dynamic Organizations. Routledge.

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