The Strategic Role of Human Resources Management in the Organization - Essay Example

?The Strategic Role of Human Resources Management in the Organization Human resource management (HRM) has known to exist in organizations since decades. However, its form has known to change with the passage of the years due to the fluctuations in the environment and customers demands. The traditional form of HRM has been modified to come from the background to the forefront of the organization as a strategic participant in important decision making aspects of the company. This is known as strategic human resource management. It will facilitate the attainment of competitive advantage in the automotive production industry, become a source for greater revenues and increase performance levels due to the recruitment of competent individuals and employee development programs. The paper discusses the important aspects of strategic human resource management and how it proves to outperform the conventional human resource management processes. It also includes the areas where HR can contribute with their useful analysis for the success of the company. 1. Introduction Earlier, human resource management was considered to be a mechanism to manage the people, policies and routine procedures in the organization. It bore no greater relevance than this paradigm. Human resource management was often reversibly used for personnel management or people management. It is due to the passage of years that the field of human resource management has evolved and its horizon has broadened. The demanding needs of the current markets and dynamic customer behaviours make it necessary for the human resource management to be aligned with the strategic goals and plans of the organization. The isolation of these aspects creates a gap between the execution of the goals and management of the company’s resources. The evolution in the field of HRM has made it come out of its narrow scope and has created the concept of strategic human resource management (SHRM); that is required to be adapted by every organization in the prevailing times for profitable outcomes. This evolution has made its presence in many fields of businesses, including the automotive production industry. 2. Strategic Human Resource Management According to Bratton and Gold (2001); strategy is defined as the set of decisions that are taken to achieve business goals and objectives. On the same lines, Mayer (2008) defined strategy as the actions that are undertaken by the organization to achieve success and competitive advantage in the market place. The human resources are the most important driving forces that affect the performance level of the organization and make the attainment of competitive advantage possible for the organization. The lack of consideration for the human resources department in the decision making of the organization creates differences between the execution and strategic plans; it is required to include the human resources department in the formulation of strategies so that the employees can be managed in a fitting manner. SHRM cannot be understood or addressed in a complete manner unless HRM is explained; therefore the reasons of inadequacy of the traditional HRM have been explained in the following section. 2.1 Reasons of Inadequacy of Traditional HRM Mayer (2008) stated that traditional human resource management mainly focuses at the day-to-day functioning of the organization thereby reducing the focus on the long term objectives of the organization. Taylor (2005) pointed out that HRM adopts a people-centered approach that diminishes the focus on the real business needs of the organization. The role of HRM, in other words, people management seems to be limited to the management of the following four objectives; staffing, performance, change management and administration. Human resource managers lack the knowledge about the business needs therefore the policies and procedures are not aligned with the direction and overall vision of the organization. It is due to these reasons that the prefix ‘strategic’ has been added to the idea of human resource management. Strategic human resource management (SHRM) promotes the idea of utilizing human resource as a strategic asset of the organization. Human resource management (HRM) that was earlier considered to be a maintenance function, is now adapted as one of the most important aspects to attain greater performance levels. 3. Aims of SHRM Strategic human resource management focuses on the attainment of the long term goals of the organization rather than short term. SHRM addresses the training and development needs of the employees that produces profits in the long run and make avenues for their progress. The role of the strategic human resource manager is to recognize the aspects where effective strategies can be deployed to increase the performance level and loyalty of the employees. The overall aims of the strategic human resource management are aligned with the objectives of the organization. Human resource is one of the important assets of any organization and therefore needs to be managed in a manner that would reflect the attainment of the objectives of the organization. The strategic human resource manager tends to be involved in the decision making aspects of the organization so that appropriate training and development activities are possible, for example, the human resource manager will arrange for employee training if a new production technology is launched in the market and becomes a goal for the company to introduce it in their production process. After this training program, the top management can be assured that their employees are updated with latest techniques of production and will be able to successfully execute new planned ventures. Latest technologies might reduce their production costs and durations. Recruitment and selection is also one of the important aspects of SHRM. It is due to these processes that competent individuals become a part of the company. Recruitment is referred to attracting the appropriate segment of job seekers for the job, whereas selection is the process in which the most capable individual is offered the job. The pre-requisite of both of these activities is the correct identification of the requirement and qualification for the vacancy alongside the needs (related to that position) to attain business objectives. HR should be considered as an integral part of the decision making aspects so that the direction and objectives are fully understood by the HR managers; the comprehension of these important aspects are reflected in the recruitment of appropriate individuals. The presence of competent individuals increases the productivity level of every department and keeps their customers satisfied with the service. The smooth functioning of departments may also reduce the production time due to which increased customers’ demands can be catered and greater revenues can be achieved for the company. The following figure is the strategic human resource management model: Figure 1: Strategic human resource management model (Schwind, Das & Wagar, 2007) It can be seen that all the HR practices are coordinated and the HR processes have complete connectivity with organizational strategies, culture, goals and mission statements etc. This level of integration is the need of the prevailing times and the source for success. 4. Role of Strategic Human Resources Management in Different Organizations The transition from conventional form of HR management to strategic human resource management has already taken place in many companies around the world. They have realized the importance of changing company’s infrastructure, systems and procedures with the changing trends in the market. Connolly (2010) conducted a study regarding the level of integration of the HR departments in the decision making aspects of their respective companies. He concluded his study with positive feedbacks from most of the companies. British Telecom is a renowned company in the European region and their Director of Strategy Services stressed on the need of recruiting outstanding people in their organization. He considered it as a main source of attaining competitive advantage in the era of technology. He also stated that HR has a very significant strategic role in their organization since their job is to manage a great asset of the organization- employees. Another example of a successful organization making use of SHRM is PepsiCo; Connolly (2010) stated that their respective HR department is designated to view the strategic plans of all the departments to ensure that their HR propositions are being followed in the correct manner. Connolly (2010) also concluded that the senior manager of the HR department is granted access to the CEO and boardroom meetings just like any other senior manager in the organization. 5. Different Views about Strategic HRM The concept of SHRM has been debated about since number of years and its relevance in an organization has been discussed from different angles. According to Musah (2007); it has been argued that SHRM does not differ from HRM to a great extent and tends to address the same areas. Alcazar, Fernandez, Gardey (2005) presented a well defined difference between the two concepts and stated that HRM is concerned with the human side of the business whereas SHRM amalgamates the aspects of HRM alongside complete focus on the business strategic decisions and direction of the organization. Musah (2007) also stated that SHRM facilitates the formulation of the strategy to increase the productivity level of the employees as well as for their retention. The combination of strategy with the human resource activities has perplexed the masses since many years. The reason for this confusion is that human resource management has been known to stay confined within the boundary of ‘people management’, rather than participating in the midst of strategy formulation and hence execution. Ulrich, Borcbank, Yeung and Lake (1995) clarified these confusions and stated that the unification of HRM practices with strategy tends to facilitate the acquisition, development and maintenance of significant HR skills that are required for the smooth execution of strategic plans and objectives. 6. Role of SHRM in Different Levels of Management Decisions Som and Cerdin (2003) explained that the role of HRM has evolved to such a great extent that it has been known to benefit multiple levels of management decisions; strategic level, managerial level and operational level. 6.1 Strategic Level Decisions SHRM plays an important part in the formulation of decisions that might be relevant for the attainment of the long term goals for example, the type of resources that might be required in the organization in the future (with respect to the vision for the future). A different production line might be planned for the upcoming years that would require expertise in a specific technical area. The long term demand of such resources will cause an effect on the prevailing recruitment activities of the human resource manager. Another long term decision of the company can be the global expansion of the company; SHRM can highlight the top management about the existing infrastructure of the company, formulate strategy about how it would need to be altered to cater to such an expansion and initiate steps for the achievement of the long term goal. HR would have a major role to play in the development of expansion strategy since it is always advised to have centralized HR operations to promote unison among all the operating units. 6.2 Managerial Level Decisions These types of decisions focus on the activities in the medium term. Managerial level decisions address the training and development programs of employees to ensure that their resources are updated with the developing technologies in the automotive production industry with respect to the near future plans of the top management. SHRM focuses on the training and development of the employees with the perspective of attaining competitive advantage in the market since it is every company’s object to outperform its competitor. Compensation, effective reward system and promotion policies are important and effective ways to retain employees; SHRM can highlight the needs and requirements of the employees in a better manner since they are well-aware of the grievances of the employees. HR department serves as a mediator between the organization and the employees for all their issues therefore valuable programs can be developed by the inclusion of SHRM in the decision making. As stated earlier, human resource is an important asset of the company therefore presence of greater level of employees’ satisfaction (with their respective benefits and career path) should be on the company’s agenda. 6.3 Operational Level Decisions Operational level decisions address the short terms operations and activities in the company, for example, salary and wage system, short term skill training, etc. It is also an important part of the strategic human resource management to provide its employees with an amiable and undiscriminating working environment. A healthy environment will facilitate smooth operations and activities that will help the company achieve their organizational goals. 7. Types of Fit The need of the modern competing times is that organizations evaluate themselves according to the models and structures that have been proposed by researchers over the years. There are two types of fit related to SHRM; fit refers to the series of HR activities that facilitate the attainment of the objectives of the organization. According to Wright and McMahan (1992); there are two types of fit; horizontal and vertical fit: Vertical fit refers to the achievement of the organizational goals by the alignment of the HR activities and processes with the business direction. Horizontal fit refers to the coordination of the HR activities amongst each other so that they can perform in an organized manner. 7.1 Relevance of Fit The vertical fit tends to increase performance level and helps attain competitive advantage in the market. This alignment ensures that the efforts that are being exerted by the employees are not being wasted and being utilized towards the betterment of the company’s status. The increased coordination between the HR practices produces a formal and organized infrastructure for the organization. This enables a smooth execution of the different types of functions, ranging from production to supply, administrative to maintenance etc. It also reduces the time required for the execution of the operations and tasks since there are no obstacles or hindrances in the process. These advantages of the horizontal and vertical fit of SHRM reaffirm the relevance of inclusion of HR in the decision making aspects of the organization and formulation of strategies. 8. Conclusion The traditional human resource management was considered to be ‘people management’ that mainly involved the basic HR functions of administration, staffing, controlling etc. The field of business has changed with time and people have become important assets in the competing world. Strategic human resource management promotes the amalgamation of HR practices with the organizational goals so that the human resources can be managed and hence directed towards the attainment of the objectives. The knowledge of the vision of the company makes the HR managers formulate effective employee development and training programs. Due to which, employees produce better results for the companies. The comprehension of the business objectives also enables them to recruit and select appropriate individuals as per the job requirements. It will also enable the HR managers to identify relevant requirements about the vacant positions in the organization and develop better job descriptions. The production level and quality of the products can be increased if appropriate and competent individuals are hired by the HR department. Therefore, SHRM promotes the idea of incorporating HR perspectives in the decision making and strategy formulation aspects of the organization. References Alcazar, FM, Fernandez, PMR, Gardey, GS 2005, ‘Researching on SHRM: An Analysis of the Debate over the Role Played by Human Resources in Firm Success’, Management Revue. Bratton, J. & Gold, J 2001, Human Resource Management: Theory and Practice (2nd Edition). Routledge Publishers. Connolly, TR 2010, Transforming HR: Line Delivery's the Way to Go, Workplace Performance Technologies, viewed 29 January 2011, Mayer, SJ 2008, ‘Strategic Human Resource Management Practices of High Performance Organizations’, Innovative Human Dynamics, viewed 26 January 2011, Musah, S 2007, ‘A Report on the Strategic Human Resource Management Approach to Centralizing the Personnel Department of Amperstand Clothing Coy and AmperstandPlus’, Stoik Musah, 14 February, viewed 27 January 2011, Som, A., Cerdin, J 2003, ‘Strategic Human Resource Management Practices: An Exploratory Survey of French Organizations’, Essec Research Center. Schwind, H., Das, H., Wagar, T 2007, Strategic Importance of Human Resource Management, Mc Graw Hill Publishers. Taylor. S 2005, People Resourcing, 3rd Edition, CIPD Publication. Ulrich, D., Borcbank, W., Yeung, AK., Lake, DG 1995, ‘Human Resource Competencies: An empirical assessment’. Human Resource Management, vol. 34(4): 473-495. Wright, PM., McMahan, GC 1992, ‘Theoretical perspectives for strategic human resource management’. Journal of Management, 18(2), 295-320. Read More