Importance of Strategic Human Resource Management - Literature review Example

Introduction

Human resource department is one of the main departments in every business organization. Right from the past, the main function of Human resource managers has been primarily administrative and operational functions of the organization. It means that the main work of the human resource managers is filling purely the administrative roles through facilitating paperwork that is involved in functions such as hiring new workers, handling compensation issues, training the employees and many other functions. However, to survive in the ever-changing business world human resource management has evolved continually to cater for the needs of the current times. The human resource world is changing faster in the current world more than any other time in history (Armstrong, 2000). The managers are compelled to respond to the changes in the field by adopting the modern management practices that would help keep the organization relevant in business. The changes have caused the human resource management to be categorized into distinct ways; the human resources management that concentrates on the administrative roles and the strategic human resource management. The later is the modern day category that most of the organization are adopting to boost their operation to greater heights (Armstrong, 2000). The current aggressive business organizations no longer have human resource managements that serve the administrative and operations roles but rather they have shifted to building strategic human resource management teams. This paper discusses the concept of strategic human resource and its importance to the modern business operations. The paper first examines a brief history of HR and then the importance accrued to organizations that shift their HR team from being just conventional to a strategic HR team.

History of Human resources management

Human resource is one of the oldest fields since its roots can be traced back to the ancient times where the kingdoms trained many people to work as armies to protect the kingdoms. The HR history is all about the evolution of the communes and the emergence of the first ancient societies (Mathis, & Jackson, 2008). Thus, the armies were the first human resource to be developed since a nation that did not have a strong army was easily overpowered by other nations. Therefore, the leaders in various kingdoms sought to develop armies that composed of strong, brave and smart leaders who engaged and shared the vision of victory. The kingdoms first developed procedures for hiring and selection process which are still the main function of human resources of the modern times.

From the ancient times, then the HR evolved during the British industrial revolution in the 18th century. This was the time when there was the emergence of large factories which demanded large workforce and these workforce required people who can control and manage them. The industrial revolution was the landmark of the history of the human resource (Mathis, & Jackson, 2008). During this time, factories hired thousands of workers and it is the time when many entrepreneurs discovered that the satisfaction of the workers influenced their work performance and productivity.

Another rapid transformation of the human resource management occurred during the 20th century; this is the time when most organization adopted personnel management department. This department deals specifically with employees’ issues, and it is responsible for the law requirements (Mathis, & Jackson, 2008). This department of HR has the duties of implementation of different social and workplace safety programs. The 20th century also saw the emergence of the trade unions; they tried to change the rules of the game in the business world since trade unions advocate for the rights of the employees.

The recent change in the human resource management was the introduction of HR partnering model where different businesses partner to carry out their businesses meaning their human resource teams need to partner to manage effectively the functions of the partnering firms (Mathis, & Jackson, 2008). This has led to the development of succession planning, embracing diversity management, and development of corporate cultures and the use of technology. Thus, the modern day human resource requires highly skilled individual who can strategically manage the organization to maneuver through the murky waters of business (Mathis, & Jackson, 2008). The strategic HR managers need to link the firms’ functions to their goals. Therefore, it is important that every business organization in the contemporary world should adopt strategic management approach for it to attain its goals.

Importance of Strategic Human Resource Management

In its definition, strategic human resource management is a kind of managerial process that tends to link HR policies within an organization to the organization’s strategic objectives. In other words, this kind of HRM tries as much as possible to consistently align HR policies programs and practices to develop and enhance the facilitation of the achievement of strategic organization’s goals and objectives (Armstrong, 2000). Strategic human resource management often incorporates HR planning into the firm’s strategic management hence, enhancing the capability of the firm to meet its set goals through HR leverage.

The Strategic Human resource team provides competitive intelligence information that is used to develop competitive strategies that would counter the competition in the industry. Therefore, the modern day Strategic human resource management has not only given firms a competitive edge but also it has made organizations to attract and retain highly competent employees that lead to high productivity (Armstrong, & Baron, 2002). Most contemporary business organization have now strategic HR in place who carries which are more than just being administrative and operational to a more strategic functions that seek to boost the organization’s performance. A strategic management process is more than just setting the rules that should be followed, but it is a philosophical approach to business (Armstrong, & Baron, 2002). The top management ought to think strategically first apply the thoughts to the process. The strategic management process can be best applied when every individual within the firm understands the strategy.

Toyota Motor Corporation is one of the modern day firms that have tried to embrace the concept of strategic HR management. Toyota is the world’s second largest automobile manufacturers after the General Motors (Toyoda, n. d). The secret behind this success is that Toyota Motor Corporation has relied on developing its strategic human resource. This entails the right selection of its employees in that the team can differentiate the applicants who can fill particular job vacancies regarding their performances (Kalb, 2012). Thus, the company can hire qualified individuals who have the characteristics which enhance career development in the organization. Companies such as Toyota which have shifted to developing strategic HR teams enjoy various benefits.

When a particular human resource shift from just playing the traditional roles of administration and operation, to become a strategic human resource; the organization benefit in some ways. First, the business better meets customers’ demands since its customer service strategies have been translated into specific policies and practices (Armstrong, & Baron, 2002). In other words, a strategic HR is more objective, and when it is adopted, the firm is likely to know what kinds of goods the customers want, and also the change in the preferences of the customers. This would enable the organization to design products that satisfy the customers. It is well known that a satisfied customer would always come back thus; a well organized strategic HR would help the organization to attract and retain its customers hence, high sales (Armstrong, 2000). The second importance of strategic HR is that it helps the organization to attain financial performance through its more effective execution of strategy.

A strategic HR always would provide a prudent management of the organization financial resources. This means that a firm’s financial matters are well taken care of if the Human Resource team adopts the strategic way of management. Strategic human resource team develops strategies that aids in motivating the employees to attain greater productivity hence, more output (Dessler, 2005). One simple way in which the human resource team can do this is through the development of various kinds of employee incentives such as bonuses and promotions. The employees’ incentives often motivate the employees in the organization to work harder to achieve the set goals (Armstrong, & Baron, 2002). A strategic oriented HR would always single out one or a few employees who are showing positive productivity and reward them handsomely so that other employees can be motivated to work hard to also get these rewards.

A strategic human resource team helps in creating competitive advantages for the firm through the firm’s workforce. The HR employs dedicated, experienced, motivated and well-trained employees into the firm. Such employees increase efficiency and productivity in operations as well as boosting product quality. Thus, a strategic human resource focuses on hiring workers with high potential for professional growth and allowing their workers ample time to learn and grow their careers. For example, Toyota Motor Corporation conducts systematic companywide and divisional training with the emphasis on the job training. Toyota also often defines the required qualifications for professional staff. The act of developing firm’s employees to have top-level expertise in their various fields enable the firm to build effective minds in the industry placing the firm on the leading edge of innovation.

A strategic human resource always promotes and compensates employees according to how they have performed. Those workers who contribute a lot to the firm are compensated well. Thus, the highest compensation is paid to employees with the largest contribution to the organization (Armstrong, 2000). It implies that the strategic HR goes beyond the traditional HR that is based on purely administrative functions where they always dispense the pay rise for the employees basing on arbitrary metrics such as the number of years the employee has been in the company. Thus, the strategic HR uses the compensation function as a strategic point to encourage the employees to work hard so that they can realize high productivity for them to be paid well.

Strategic HR managers proactively put several policies in place to keep their firms on the right track of the employment laws which include the workplace safety, workplace discrimination, and diversity management. For instance, a strategic HR team would likely to recognize the fact that when building premises within an organization, the issue of handicapped employees should be put in mind to avoid future litigations that may arise (Armstrong, & Baron, 2002). However, a purely administrative human resource team would handle legal issues reactively putting the policies in place to prevent future incidences that could cost the organization.

Strategic HR helps in the leveraging the external providers. In the modern day business world, most firms are relying on outsourcing of employees and the raw materials. A strategic HR team advocates for outsourcing services for the companies an act that provides the firm with an opportunity to access great experts who bring their expertise knowledge in the firm. Leveraging the external providers gives an organization a chance to boost its service delivery through placing then priority to maintain high standards on the service provider (Armstrong, 2000). Another importance of strategic HR is that is to avoid spending money on the wrong things. Even if when an organization has the right strategies, if they are not administered in the right manner, excess spending may occur.

Another importance of a strategic HR is that it helps the organization to get the processes right. This is because the HR team tends to evaluate and analyze the current administrative processes and note the weaknesses (Armstrong, & Baron, 2002). It then comes out with the best designs that would give the solutions to the challenges the organization face. In the end, the organization gets the processes right meaning that it increases the chances of attaining its set goals and objectives (Dessler, 2005). Another important aspect of embracing strategic HR team within an organization is that makes it easy for an organization to carry out-out an evaluation and control actions. Every organization needs to conduct evaluation and control measures such as performance measurements, review of the internal and external issues and taking corrective actions to make the firm remain on the right track.

The strategic HR team develops the parameters that can be used for this performance measures and evaluation. The parameters determine the progress by measuring the actual results against the expected results (Armstrong, & Baron, 2002). However, an HR that is administrative oriented would not be able to develop the evaluation parameters, and this is dangerous for the organization. Lastly, an organization that has established a strategic HR team would easily understand its direction. The team strategically formulates a clearly defined HR strategy and focused plan that would show how HR tend to add value to the business and how it will start its transition to the exceptional service delivery (Dessler, 2005). The strategies are shared among the managers and other employees in various departments. This makes every stakeholder in the organization to understand the direction of the organization. Thus, everyone discharges his/her duties diligently knowing very well what is expected of them.

Conclusion

Strategic management process is more than just the rules and regulation that have to be followed. It takes a philosophical approach to business where the upper management is tasked to understand the goals of the business and have to contribute and develop ways in which the organization can function in a cost effective manner. The aim of doing business is making profits through minimizing the cost and maximizing the revenue. Therefore, strategic HR management is well placed to reduce the costs and provide the opportunities for an organization to boost its earnings. As discussed, Toyota Motor Corporation is one company that practice strategic management where it has shaped its human resource team with a range of skills such as different languages and operational skills and highly specialized knowledge to deal with different kinds of situations. Therefore, it is high time for any business firm to shift its HR from just being administrative oriented to a strategic oriented HR because there are so many benefits which the firm is likely to enjoy.