NOTES 1 - THE ESSENCE OF STRATEGIC HUMAN RESOURCE MANAGEMENT

THE ESSENCE OF STRATEGIC HUMAN RESOURCE MANAGEMENT INTRODUCTION The term, Strategic Human Resource Management, conveys the sense of human resource management in a strategic context. In order for this to take place there has to be some connection made with the strategic process through which the aims of an organization are managed, that is, its strategic management. If a global company is to function successfully, strategies at different levels need to inter-relate. Throughout the first half of our century and even into the early eighties, planning with its inevitable companiopn, strategy- has always been a key word, the core, the near-ultimate weapon of good and true management. In this lecture we examined the theoretical debates on the nature and signaficance of the new HRM model. LEARNING OUTCOMES Familiarity with the subject matter of Strategic Human Resource Management in oUtline terms, I,e. the subject`s scope. Understanding of the philosophical and conceptual framework for Strategic Human Resource Management, I,e. the linkages between the subject and corporate/organizational strategies, the significance of people as potential contributors to corporate purposes, the value of people as entities in themselves, and the importance of strategic thinking as a means for survival and growth in the future. SHRM Strategic Human Resource Management is an approach to making decisions on the intentions of the organization concerning people-essential components of the organization`s business strategy. It is about the relationship between HRM and Strategic management in the organization. Strategic HRM refers to the overall direction the organization wishes to pursue in achieving its objectives through people. Strategic HRM can be regarded as an approach to dealing with longer-term people issues as part of the strategic management thurst of the business. It covers macro-organisational concerns relating to structure and culture, organizational effectiveness and performance, matching resources to future business requirements, and the management of change. Defined by Wright and Snell (1989): SHRM deals with `those HR activities used to support the firms competitive

strategy. Miller (1989): Strategic Human Resource Management encompasses those decisions and actions which concern the management of employees at all levels in the business and which are directed towards creating and sustaining competitive advantage. Walker (1992): The means of aligning the management of human resources with the strategic content of the business. THE AIMS OF SHRM SHRM aims to provide a sense of direction in an often turbulent environment so that organizational and business needs can be translated into coherent and practical policies and programmes. SHRM should provide guidelines for successful action, and the ultimate test of the reality of strategic HRM is the extent to which it has stimulated such action. THE CONCEPT OF STRATEGIC HUMAN RESOURCE MANAGEMENT 1.Human Resources a strategic issue There is an overall corporate purpose and that the human resource dimensions of that purpose are evident. A process of developing strategy within the organization exists and is understood, and that there is explicit consideration of human resource dimensions. The organization at all levels establishes responsibility and accountability for human resource management. It includes the responsibility to identify and interact in the social, political, technological and economic environments in which the organization is and will be doing business. 2.The need for a Concept Much of the literature provides evidence that strategic integration is not well developed and advances reasons why to achieve it would be beneficial to organizations. Organisation advocated an increase in the input of human resource considerations at strategic planning, an attitude of treating employees as assets, more participation and involvement for employees, effective and open communications, less rule-oriented policies and practices, better training and career development opportunities, reward and recognition tied to performance. 3.Models and frameworks of strategic human resource management a)The fomburn, Tichy and Devanna model of HRM: The early HRM model

developed by Fombrun (1984) emphasizes the interrelatedness and the coherence of human resource management activities. He wrote that three core elements are necessary for firms to function effectively: Mission and strategy Organization structure Human resource management They defined strategy as a process through which the basic mission and objectives of the organization are set, and a process through which the organization uses its resources to achieve its objectives. They also made a distinction between the three levels of managerial work: Strategic levels: policy formulation and overall goal setting Managerial levels: concerned with the availability and allocation of resources to carry out the strategic plan. Operational levels: day-to-day management But their most important conclusion war that: HR systems and organizational structures should be managed in a way which is congruent with organizational strategy. b)The Harvard Model of HRM The analytical framework of the Harvard model offered by Beer consists of six basic components: Situational factors Stakeholders interests Human resource management policy choices HR outcomes Long-term consequences Feedback through which the outputs flow directly into the organization and to the stakeholders C)The Guest model of HRM David Guest (1989) has developed a more prescriptive theoretical framework, reflecting the view that a core set of integrated HRM practices can achieve superior individual and organizational performance. The central hypothesis of Guests model is that if an integrated set of HRM practices is applied in a coherent fashion, with a view to achieving the normative goals of high commitment, high quality and task flexibility, then superior individual performance will result. The Guest model has six components: An HRM strategy A set of HRM policies A set of HRM outcomes

Behavioural outcomes A number of performance outcomes Financial outcomes. THE MEANING OF STRATEGIC HRM According to Hendry and Pettigrew (1986), strategic Human resource Management has four meanings: The use of planning A coherent approach to the design and management of personnel systems based on an employment policy and manpower strategy and often underpinned by a philosophy. Matching HRM activities and policies Seeing the people of the organization as a strategic resource for the achievement of competitive advantage. STRATEGIC INTEGRATION: INTEGRATING BUSINESS AND HR STRATEGIES The whole concept of strategic HRM is predicted on the belief that HR strategies should be integrated with corporate or business strategies. Strategic integration is necessary to provide congruence between business and human resource strategy so that the latter supports the accomplishment of the former and indeed, helps to define it. The aim is to provide strategic fit and consistency between the policy goals of human resource management and the business. THE REQUIREMENTS FOR STRATEGIC HRM Strategic HRM is most likely to be practiced in organizations with the following characteristics: Strong, visionary and often charismatic leadership from the top. Well articulated missions and values. A clear expressed business strategy which had been implemented successfully. A positive focus on well understood critical success factors The organization offers a closely related range of products or services to customers. A cohesive top management team. A personnel/HR director who plays an active part in discussing corporate/business issues as well as making an effective and corporate/business-oriented contribution on HR matters.

Strategic human resource managementor SHRM is a branch of HRM. It emerged from the discipline of human resource management and is a fairly new field. Strategic HRM is defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and competitive advantage. SHRM in an organization means to accept and involve the functions of HR as a strategic partner in formulating and implementing the companys strategies through human resource activities which may involve recruiting, selecting, rewarding and training company personnel. In spite of the similarity in names, HRM and SHRM are two different practices; SHRM is basically a part of the complete HRM process. Besides that SHRM focuses more on long-term objectives rather than the in-house objectives with employees dealt by HRM. In the late 1980s writers started stating strong opinions for a much more strategic approach to managing people than was the standard practice of that time. They clamored for the change of traditional management practices of industrial relations and people to the modern more improved ones. The center point of SHRM is to address and solve problems that effect management programs centering on people in the long run and more than often globally. We can say that the main goal or objective of SHRM is to increase productivity not only in the employees but in the business overall, it achieves this by focusing on business problems and obstacles outside of the human resources range. SHRM identifies important human resource areas where strategies can be implied for the improvement of productivity and employee motivation. To achieve good results communication between human resource and top management of the organization is of utmost importance as cooperation is not possible without active participation.

Key features of SHRM

The key features of strategic human resource management are given below: Some organizing strategies or schemes link individual human resource interventions so that they are mutually supportive A great amount of responsibility is transferred down the line for the management of HR There is a precise link between overall organization strategy, organization environment, HR policies and practices.

Development in SHRM
In recent times HRM professionals have been facing challenges with employee participation, performance management, employee reward systems, high commitment work systems and human resource flow because of globalization. Traditional models and techniques have no place in todays business world; also local companies which go global cannot use the same tactics in the global business world. Top managements and HR professionals that are involved in strategic human resource management face a wide range of issues which include some of the following: Rapid change in technology

Introduction of new concepts of general management Globalization of market integration Increased competition, which may not necessarily be local Resultant corporate climates Constantly changing ownership Cross-cultural issues Economic gravity- shifting from developed to developing countries.

Strategic human resource management is crucial large as well as small companies. In small companies thisprocess 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. Purcell and Boxall argue that, Strategic HRM is concerned with explaining how human resource management influences the performance of an organization. They also point out that, Strategy is not the same as strategic plans. Strategic planning defines how things need to be done and it usually takes place in larger organizations in the form of a formal process. However, it is also true that strategy exists in all organizations regardless of their size; though it may not necessarily be written down or expressed. SHRM defines how the organization behaves and tries to cope with its business environment. Because strategic human resource management is based on human resource management principles it always incorporates the concepts of strategy; which proves that human resource management is actually a coherent approach to the management of workforce [people].

Business strategy and SHRM

All good business strategies, at least the ones which have a chance of succession are formed by the people factor. One of the main factors behind reporting human capital data and evaluation is the need for proper information; to be fed into the business strategy formation procedure. People have become the biggest asset in the majority of organizations. This requires for the skills, abilities and knowledge to be organized and implemented for maximum effect so that the organization may create value. The intangible value of organizations lies in the people that it employs. This value is being recognized by investors and accountants and in now generally accepted that it has signs of sustained performance in the long run. In this case it would be too simplistic to suggest that strategic human resource management is part of business strategy. In this case, the two must be mutually informative in the way people are motivated, managed, deployed and the availability of knowledge and skill should shape business strategy. It has now a regular occurrence to findstrategic human resource management inextricably linked with and also incorporated into business strategies.

Strategic human resource management and human capital management [HCM]

Many writers have argued that HCM and SHRM is the same thing, and though the concept of the two strategies is quite similar, there are still some points that set the two apart. The following SHRM definition by Dyer and Holder

shows three main features: Organizational level because strategies involve decisions about key goals, major policies and the allocation of resources they tend to be formulated at the top. Focus strategies are business-driven and focus on organizational effectiveness; thus in this perspective people are viewed primarily as resources to be managed toward the achievement of strategic business goals. Framework strategies by their very nature provide unifying frameworks which are at once broad, contingency-based and integrative. They incorporate a full complement of HR goals and activities designed specifically to fit extant environments and to be mutually reinforcing or synergistic. This argument is based on the fact that both strategic human resource management and human capital management in their proper sense rest on the assumption that people are treated as assets rather than costs. It also assumes that both processes focus on the importance of taking on a mixed and strategic approach to the management of people, which is one of the main concerns of stakeholders in any organization. The concept of human capital management strengthens and complements the concept of SHRM this concept is explained in the following definition by Dyer and Holder: It draws attention to the significance of management through measurement, the aim being to establish a clear line of sight between HR interventions and organizational success providing guidance on what to measure, how to measure and how to report on the outcomes of measurement. It underlies the importance of using the measurements to prove that superior people management delivers superior results and to indicate the direction in which HR strategies need to go reinforcing attention on the need to base HRM strategies and processes on the requirement to create value through people and thus further the achievement of organizational goals defining the link between HRM and business strategy strengthening the HRM belief that people are assets rather than costs Emphasizing role of HR specialists as business partners. For this reason it can be said that both SHRM and HCM can be regarded as important mechanisms in the process of managing people and also form the basis for the achievement of HCM advantage through a resourceful strategy. Strategic human resource management takes on the main modern challenges which are faced by human resource management. This may include the following: Knowledge management Aligning human resource with core business strategies Demographic trends on employment as well as the labor market Integrating soft skills in human resource departments

[adsense1]So, strategic human resource management is designed to assist organizations to meet the needs of their employees in the best way they can so that company goals can be promoted. We can also say that SHRM is actually managing people proactively because it requires planning ways for an organization to meet the needs of its employees, thinking ahead, and also helping the employees to meet the needs of the organization. This process changes the outlook and affects the way things are done at a business site, in other words it helps to integrate modern ideas and models into the traditional human resource practices to come up with better solutions which not only benefit the employees but the organization. This is mainly a process where everything is improved, from the hiring of employees, to the training, assessment and discipline techniques used by the HRM department.