“Strategic HRM”

By: Prapanna Lahiri

Strategic Human Resource Management:

Human resource management (HRM) in any organisation is about human beings. In modern business an organisation’s manpower is viewed as its resources and assets helping it to achieve its goals, Human resource can be technically defined as the total knowledge, abilities, skills, talents and aptitudes of an organisation’s workforce.

Human resource management basically is concerned with selection of right persons for the right jobs (staffing), providing continuous assistance in their skill development (training) and providing essential inputs and formulations to create a team spirit where employees satisfy their desires by developing themselves (motivating) that will eventually contribute to the attainment of organisational goals.

The concept of Strategic HRM initially started being discussed around the early 1990s and was variously sought to be defined by academics as:

  • Proactivemanagement of the employees of a company or organisation
  • The undertaking of all those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business.
  • The pattern of planned human resource deployments and activities intended to enable the organisation to achieve its goals.

Strategic HRM is constantly evolving and remains a subject of ongoing discussion by academics and other commentators. One has to understand the term ‘strategy’ to analyse strategic HRM. This word originally was used in the military context and is widely used in present-day corporate world. It envisages thinking ahead to determine which option will provide maximum benefits in order to survive and grow in a highly competitive environment. In the words of Jauch and Glueck, “Strategy is a unified, comprehensive and integrated plan that relates the strategic advantages of the firm to the challenges of the environment.” Strategy is all these – perspective, position, plan and pattern and is designed to ensure that the basic objectives of the organisation are achieved through its proper execution”.

All enterprises, big or small, for their success, have to manage the use of three critical resources which are:

  1. Technology used to make a product or deliver a service.
  2. Finances the organisation uses to pay for its requirements
  3. The people whose skills and talents are utilised to effectively do the work needed to be performed.

Successful organisations have strategic plans that are specific to effective management and utilisation of these three critical resources. Hence, strategic human resource planning is part of the overall strategic planning practised in an organisation. When creating a human resources plan, it is important to consider what employees need and what the company can reasonably supply.

AIMS OF STRATEGIC HRM

The underlying principle of strategic HRM is the perceived advantage of having an agreed and understood basis for developing approaches to people management in the longer term. The fundamental aim of practice of strategic HRM is to generate strategic capability by ensuring that the organisation has the skilled, committed and well-motivated employees needed to achieve sustained competitive advantages. While deliberating on the aims of strategic HRM it is imperative to consider how HR strategies will take into account the interests of all the stakeholders in the organisation, employees in general as well as owners and management.

From the point of view of interest of stakeholders there can be two approaches to strategic HRM:

Soft strategic HRM: It will place greater emphasis on the human relations aspect of people management, stressing continuous development, communication, involvement, security of employment, the quality of working life and maintaining work life balance, making ethical considerations more important.

Hard strategic HRM: It will emphasise more on the yield to be obtained by investing in human resources in the interests of the business.

THE PROCESS

The process includes typical human resource components such as hiring, discipline and payroll and also involves working with employees in a collaborative manner to enhance retention, qualitatively improve work experience with a view to maximise mutual benefit of employment for both the employee and the employer. While we talk about proactive management of human resource components it encompasses identification and exploitation of opportunities for taking pre-emptive measures against potential problems and threats to make every such action result oriented. It simply means avoidance of a scenario where things are allowed to happen and then reacting to take remedial measures. Strategic HRM focuses on taking actions that differentiate the firm from its competitors (Purcell, 1999).

Following are the successive phases of the strategic process;

  • Defining the organisation’s vision and mission
  • Establishing short term and long term objectives to achieve the organisation’s vision
  • Selecting strategy to attain these objectives
  • Aligning the organisation structure, systems and processes with the selected strategy
  • Making decisions commensurate with the strategy and the organisational structure
  • Providing organisational leadership pertinent to the strategy
  • Evaluating the effectiveness of the strategy in achieving the organisation’s objectives

BENEFITS OF STRATEGIC HRM:

  1. As opined by Ulrick and Lake, the strategic HR framework aims to leverage and / or align HR practices to build critical capabilities enabling an organisation to achieve its goals.
  2. It helps analyse the opportunities and threats that are critical from the point of view of the enterprise. .
  3. Strategic HRM offers both financial and non-financial benefits to an organisation which practices it.
  4. Proper implementation of strategic HRM reduces the attrition rate and motivates employees.

LIMITATIONS OF STRATEGIC HRM ARE:

  1. Inability of the management to clearly communicate the vision and mission of the company to the employees.
  2. Resistance to change from bottom line workers and labour unions.
  3. Diversity of workforce makes it difficult for the management to handle them as planned.
  4. Conflict in the ranks of employees over the issue of authority and the related fear of victimisation
  5. Changing market scenario may create pressure on effective implementation of strategic HRM.

 

CONCLUSION:

Strategic HRM is in some ways an attitude of mind that expresses a way of doing things. It is realized in the form of HR strategies formulated.  To say the least strategic HRM is the key to improved business performance.

 

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