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The Concept Of Strategic HRM

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Question:

Describe about The Concept of Strategic HRM?
 
 

Answer:

Strategic Human Resource Management (SHRM) is a management of the man power in the company, in which the company wants to attain the competitive advantage through their people. Strategic HRM clearly talks about integrating the role of HRM and the strategies of the company. The question here arises that why should the top management take the people’s considerations while making its corporate strategies. The answer to this is because intellectual capital is considered as a major source of competitive advantage and also when it comes to the implementation of strategic plan it is the people who implement it. It involves taking steps in people management through which company wishes to attain their long term goals. The strategy is aligned towards the aim that company wants to have people with high level of specialized and generic skill sets, people are motivated and committed towards attaining the long term goals of the company. It deals with broad issues like effectiveness of organization and performance matching of the resources and their requirements etc. On a more basic level it deals with major issues of people that affect the strategic plan of the organization and also what is the effect of strategic plan on these issues. The investments that are made for the development of people is not viewed as the “unfortunate cost” but it is rather viewed as an “asset”. (Salaman, Storey, and Billsberry, 2005). There are 3 basic proposition on the basis of which SHRM is based on: (Armstrong, 2005)

A belief that Human Resource plays a very critical role in helping the organizations to attain their long term goals

Aligning the skill sets of the resources towards the firm strategies

Maintaining Mutual support among the peers

Now, since the company is moving towards the future growth prospects and we will need to develop our system to attain our future goals. In that light, we need to focus on the HRD, as this will be biggest asset which will help us win the race. Firstly, the force is dynamic and can learn and re-learn things quickly. Secondly, it is that competitive advantage that is not easy to imitate. Hence, we have to invest today towards SHRM

Importance of Human Resource Development in the Organization:

Understand the market dynamics that are prevailing today. We also have best people in the industry to help us achieve the goals. But, as we know that these dynamics are temporary and in almost ZERO time, we have a new need to be satisfied in the market with new offerings. At that time the older skill sets are obsolete and we need new skill sets. At that time it’s the Human Resource Department that comes into picture and make them attain those Skill sets. (Stewart, 2008).

HRD helps in making the HR competent. Its function is to develop the skill and knowledge of people for which it provides competent HR according to the job requirements. HRD is a major tool in development of Human skill and Knowledge as it helps in career development. It helps in creating employees who have commitment towards their jobs.

People work in an organization for gaining the correct reward for their work and that is something, which keeps them motivated, committed and encouraging in giving their 100% in the work assigned to them. The entire reward management and compensation management is done by the HR dept. as a part of Human Resource development to keep them motivated to attain the best results. (Therith, 2009)                                                                                                                                  

Every job requires some skill sets. So, special skill set people is needed and that is achieved through recruitment and that is one of the prime important role as a part of HRD. It is essential that people with right skill sets should be given the right task so that there is a job satisfaction among the people.

No organization in this world can stay similar from start till the end. Change is an important part of the business and implementing this change is rather a very difficult task.    HRD here works as a major facilitator of change management in an organization. Through improved practices of labor management relation it is major tool for solving the conflicts within an organization.

Training and development are tools of HRD which help in the development of the employees by matching the needs with the organizational development. Employees better perform in an organization because of the skills and abilities that are developed by the help of HRD.

Other miscellaneous importance may be: (Ruth Mayhew, 2015)

Designing the correct compensation structure.

Recruiting the correct people for the apt job

Safety Structure for providing the safe working environment

Compliance: This is again very critical, since as we will grow, we will have to follow certain federal laws and as a part of HRD, proper structure needs to be followed.

We will have to develop work-ways manual. Which we will be following as a part of Code of Conduct, Policies and frameworks. All this will be taken care by the Human Resource Development Department.

All the above stated points are the brief outline of the importance of HRD.

Framework of Strategic Human Resource Development:

For this report we have chosen the Aspirational Human Resource Development Framework. Which will capture the three sides of the business: (SUSAN E. JACKSON, 2014)

External Environment’s Impact: External impacts like Markets, labors, Laws & Regulation etc.

Company Direct Environment: The internal environment of Objective, culture and Structure. The HRM System that provides the working policies and Environment and Internal Stake Holders i.e. what internal stakeholders have gained

External Stake Holders: Investors, customers and Society, about what have they gained.

This frame work will mean the most to us, due to the following reasons:

We are now aiming to become a bigger organization, in that regard we will have a separate set of rules, market forces, regulations etc. governing us and we need a specialized set up to deal with all this.

For the company’s direct environment, we will have certain goals to be met and for achieving these goals we need people who will be helping us as a major force. The correct compensation structure, appropriate trainings and development activities, all the rules and policies etc. There has to be a proper HRM system that we have to develop. Since, thorough that system we will be imbibing the culture in the people for the goals to be achieved in the coming days.

External Stake Holders: There are three major stake holders that we are accountable to, firstly our investors. We have to give them returns and that returns is achieved through bottom line and we have achieve high bottom line with correct people only and hence, we need a strong full-fledged department to take care of these issues. Similarly, we have to provide value to our customers and we can achieve it through high quality of our product, again the skill set of our people will be pioneer requirement and again further justifies the department’s need.

 

The Strategic Human resource Process, Roles in SHRM: (Singh, 2004)

This is a 3 stage process:

Formulation of Business Strategy and making it in line with HE Strategy

Making the systems in HRM in line with the strategy

Monitoring the effectiveness of the system implemented

The first part of the process is the formulation of the business strategy which provides the base for as to why strategic HRM takes place. In this phase the organization recognizes the HR department as a strategic partner and is providing opportunities. The first stage requires the presence of the team composition that is helpful in the formulation of business strategy. The next step in the process is the making it compatible with the lines of strategy. This means creating sync between the HRM systems and the strategy that is being implemented. The third step in the process is about checking the effectiveness of the strategy that is implemented. And also properly monitoring it. The last step of monitoring the effectiveness is the most important step because if this part of the process is not done properly it has the ability to ruin the entire strategic plan.

In this case we would like to recommend the Two-Way Vertical fit system for the SHRM i.e. we won’t just make HR to be a different vertical but will involve the HR is decision making frame work as well. There will be functional strategy that will be developed and this will fit into the HR Strategy to manage the work force.       This would include activities like creating culture changes, Identification of the abilities of mergers and acquisitions and actively making changes in the business structure. There will be certain enablers and deterrents that will be present to define this strategy. This two way vertical fit would work as an interactive effort between business strategy and HR strategy so that each functions in a way to benefit each other. The business strategy in this way would be interactive to the HR strategy.

Implementation of HR Strategy: We will be following the following steps for implementation of HR Strategies: (Martin, 2014)

Redefining the Company’s Vision: Company’s vision must keep the role of HR and importance of People at high level. The example could be:

“To be a people oriented company with vision towards goals achievement, to be known as a company where people build their careers”

Such a vision statement will have impact on the mind of the people and they will consider that company cares for them.

Redefining the scope and work-ways of HR department: Introducing the new work-ways for HR like market corrections, retention bonus etc. So that we do not lose the critical resources.

Investigating the needs of the company: We must ensure that short, medium and long term goal must be set properly.

Implementing the plan and it must be visible: The following issues must be deployed immediately:

Service awards

Retention bonus

Hikes in the likes to do market correction etc.

This summarized the importance, scope and implementation procedure of Strategic Human Resource Management.

 

Activity 2:

Since, we are now clear that there is a need for Strategic Human Resource Development system in place for the company. In the previous section we discussed the importance and the implementation framework of SHRM. Now, in front of Board of Directors we will be putting up certain issues that affects the implementation of SHRM and the main objective is to make them realize that these issues should not deter the benefits that may gained through the SHRM

Identification and Analysis of Contemporary issues Affecting SHRM:

Organizational Context:

Willingness of all the departments to include HR has a different vertical, to be involved in decision making.

Investment on people is not seen as a real investment: This is the major issue that deters the mind of the managers in investing in people. Cost that is put in directly accountable is very much visible and the benefits that are gained are not easily visible. (Kate Walsh, 2010)

Cultural barriers to imbibe changes quickly: Now as and when we will be bringing in new people in the company, there will be a visible cultural gap that will be evident, since people from diverse background will be joining us. This is a big issue that will affect SHRM. In order to tackle this, we need proper culture to prevail in the company and also regular training on how to deal with cultural barriers. If the people are ready to respect and discount this fact, then they will be able to absorb the changes pretty easily. The changes will be majorly in line of bringing in closeness and oneness in the system. (Mayhew, 2011)

Technology Advancements in the company: Now when the company will take the leaps forward, there will be new technologies that will be added in the system. Definitely the old employees will not be comfortable working with them. (Mayhew, 2011)

Communication Barriers: The thing that always bring people closer to the corporate is the transparency in the communication structure of the company. If we are doing what we are saying and keeping our communication seamless and transparent. Then it will be a big boon in bringing the employees and the corporate together.(StrategicHumanResourcesIssues, 2008)

Implementation Context:

The older systems that in place are part of the culture and hence, it may be problematic to imbibe changes immediately.

Other departmental interventions will be there, since currently each department is being run by their own wish. Now a centralized system will be implemented.

There should be a merger of all the sub HR systems prevailing in the system and hence it may lead to adaptation issues.

 

Activity 3:

Identification of the range of HR Strategies:

There are various ways through which we may approach the Implementation of Strategic Human Resource Management. In this section we will discuss strategies that will make most sense to us as a small scale business. The following are the strategies identified: (Raghunath, 2015)

Overall HR Strategies: Overall umbrella about how people and resources would be managed

Management through Performance: Arranging the following trainings for skill enhancements:

How to adapt changes in work place

How to develop skill sets, so that new opportunities open for you

New Compensation structure and the advantages of performance

Management through Involvement:

Define KPIs for managers that they are accountable for productivity

Each manager will KPI related to attrition in the department.

KPI related to quality at each level in the work force

Management through Commitment:

New KPIs will be introduced as a part of motivation for work force.

Long service award to be implemented as a part of culture

Retention bonus as per the level e.g. Middle management may be given higher retention bonus compared to lower management

Specific Strategies: Targeting a particular sub system and improving it for betterment.(Moore, 200X)

Leadership Strategy: The major decision making is in the hands of the leaders and this strategy is to be adopted because the building blocks of this strategy would be Executives only. Hence involvement of Leadership in SHRM is mandatory. It is very important here to carve a difference here between the leadership and managerial way. The strategy that are being followed should be well tested and understood by the leaders so that other can follow them and work with their full commitment to achieve it.

Talent Strategy: Each person as we all know is not efficient to do all the tasks. A person may be good in some activity while the other may have a good hand in some other activity .We need to find the exact match between the skills set and job requirement. A mismatch in this process can cause repercussions as high as job dissatisfaction, and a stage of people leaving the organization and joining others. The saving of the best talent in your organization is an emerging issue which needs to be taken care of. A single talented person can do wonders for your organization only if the people with right skill set are provided with right job. This is to be the specialize strategy since people’s involvement will increase if people get to work on their core competency. It is essential to devlop the core competency of any person in an organization because it can create niche for your business.

Reward and Compensation Strategy: According to a common saying “Happy Workers are more productive workers”. It is essential that the employees should be made happy in the best possible manner. Rewards and compensation is a sort of motivation for the employee as they in a way encourage an employee that he is doing things in the right direction in the right manner. Rewards and compensation are also a way to acclaim the efforts that the employees make in taking the organization to a completely different level. This is again a specific strategy, since if proper reward system is not there then attrition will increase and hence, this is an immediate priority.

These strategies make the most sense for our business currently, since they define the structure from the scratch and we need a roadmap right now that we can follow and then built on from there towards a SHRM.

 

Analysis of the decided Strategies:

In this section, we will be analyzing each strategy w.r.t. our company, discussing the critical importance and launch pad for beginning the strategy:

Analysis of Overall Strategy: We need to hit the nail through three directions i.e. Involvement, Performance and Commitment. The major focus of SHRM is that we have to build the competency with our people.

The involvement of people is possible if we clearly define the roles of the people. People should be involved in each and every step of the strategy because ultimately it is them who would follow it and help the organization in achieving its goals.

Critical importance of this overall strategy is that we need to bring this harmony in the thinking cord of the people. People should understand that in line with the vision of the company and for that purpose we need to develop this overall impact strategy. If there is a belief in people’s minds that the company is actually thinking in the line of making People as their competitive advantage then only other strategies would work in line. Strategic HRM as we all know works best when there is a mutual benefit both for the people and the company.

As a beginning Launchpad, we must ensure that some clear communication goes from the leadership side regarding these changes. This will make the things clear on the first level. Then the formal invitation for people to give their skill set preference and on the basis of that T&D programs may be developed. This will give the best trigger to start with.

Analysis of Specific Strategy: Since may a time overall strategy is just considered as just another loose talk by the corporate. So, we need to implement specific strategies and target to the areas here that will improvise the skill sets, make them competent in doing their work in the most efficient manner and intruding them to take the ownership of the work they are doing. Only by these implementations we will be able to make them upbeat and achievers.

Implementation of Leadership Strategy can be started by mapping the resources to leaders and they will act as their mentor. This will have a dual impact, firstly, people will feel elevated by the fact that they are working with the leaders and they will impact the businesses directly. This will increase the Job Satisfaction. Hence, making them the core competency.

Talent & Reward Strategy is necessary because at the end everyone wants to work for some rewards and skill sets. This is the methodology through which we will be able to intrude them for giving their 100% in their work and making them take the ownership. Reward system should be based on KPI Model and each KPI must be such that it is hitting the bottom line of the company.

Assessment of the Strategies is for the proper working of the implementations done. We need to map KRA (Key result Areas) to each strategy and on the basis of that we will notice if the KRA is being hit or not.

The few KRAs could be:

How is the productivity increasing by implementing the T&D initiatives

Is training delivered is being used in the system.

Dip in the attrition rate of the company

Increase in the Bottom line

Job Satisfaction and Reward management implementation. Are we able to find the deserving resources?

How has the restructured Recruitment initiatives brought better skill set people for the designed job?

With this we will conclude the assessment of the strategy and believe that if this structure is followed, it will increase the impact of HR and make the work place a better place to work, where people may think to build their career. We must remember that, we have to create the competitive advantage through our people.

 

Bibliography

Armstrong, 2005. The concept of strategic HRM. In: The conceptual framework of strategic HRM. l.:s.n., pp. 33-50.

Graeme Salaman, J. S. a. J. B., 2005. Strategic Human Resource Management: Defining the Field. [Online]

Available at: https://www.corwin.com/upm-data/9919_040313Intro.pdf

[Accessed 8 June 2015].

Kate Walsh, M. C. S. &. J. L., 2010. Key Issues in Strategic Human Resources, l.: Cornell University School of Hotel Administration: The Scholarly Commons.

Martin, 2014. How to Design and Implement an HR Strategy. [Online]

Available at: https://www.entrepreneurial-insights.com/design-implement-hr-strategy/

[Accessed 2015].

Mayhew, R., 2011. Contemporary Issues Faced by Human Resource Managers Today. [Online]

Available at: https://smallbusiness.chron.com/contemporary-issues-faced-human-resource-managers-today-1875.html

[Accessed 2015].

Moore, M., 200X. What Are HRM Strategies?. [Online]

Available at: https://smallbusiness.chron.com/hrm-strategies-59260.html

[Accessed 2015].

Raghunath, 2015. HR strategies. [Online]

Available at: https://s-h-r-m.blogspot.in/2010/07/hr-strategies.html

[Accessed 2015].

Ruth Mayhew, 2015. 10 Reasons HR Is Important to an Organization. [Online]

Available at: https://smallbusiness.chron.com/10-reasons-hr-important-organization-22424.html

[Accessed 2015].

Singh, S. K. &. M., 2004. STRATEGIC HUMAN RESOURCE MANAGEMENT: THREE-STAGE PROCESS AND INFLUENCING ORGANISATIONAL FACTORS, Ahmedabad: IIM Ahmedabad.

Stewart, S. S. &. J., 2008. Teaching, learning and assessing HRM, Leeds: Journal of European Industrial Journal.

StrategicHumanResourcesIssues, 2008. Strategic Human Resources Issues. [Online]

Available at: https://old.northcarolina.edu/hr/hr_council/committees/Strategic-HR-Issues.pdf

[Accessed 2015].

SUSAN E. JACKSON, R. S. S. &. K. J., 2014. An Aspirational Framework for Strategic HRM, France: Academy of Management.

Therith, C. T., 2009. The importance of HRM, l.: BIT, DPA.

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