S T R A T E G I C H U M A N R E S O U R C E M A N A G E M E N T A N D I T S S C O P E

BY: SAJJAD UL AZIZ QADRI (080692005)

Minhaj University Lahore

CONTENTS

Introduction.................................................................................................................................................................. 1

References......................................................................................................................................................................7

Figures............................................................................................................................................................................. 8

INTRODUCTION

HUMAN RESOURCE MANAGEMNT

Human resource management (HRM) is the strategic and rational approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business. Many HR professionals see the HR function as a separate entity, and are not involved in finding business solutions. For example, HR planning often takes places separately from the overall strategic planning process and only at set intervals. (e.g.,annually) Additionally, HR planning is done as a means of convincing top management to allocate sufficient resources for HR rather than to enhance the organizational performance process. However, Human Resources Strategy is aligning all of the people in the business sphere towards business success. HR professionals should integrate their management of administrative functions as the manner in which they gain insight, of how to develop business tactics that enhances their competitive advantage

ORIGINS OF HRM

HRM-type themes, including 'human capital theory' and 'human asset accounting', can be found in the literature from the 1970s. However, the modern view of human resource management first gained prominence in 1981 with its introduction on the prestigious MBA course at Harvard Business School. Simultaneously, other interpretations were being developed in Michigan and New York.

Sparrow and Hiltrop (1994) picked out four main approaches from this period:

The Michigan and New York Schools: strategic matching theories

The Harvard school: a multiple stakeholders theory

The Warwick School: a political and change process theory

The Schuler School: a behavioural transformation theory

DIFFERENT INTERPRETATIONS OF HRM.

The Harvard interpretation sees employees as resources. However, they are viewed as being fundamentally different from other resources - they cannot be managed in the same way. The stress is on people as human resources.

The Harvard Map or model outlines four HR policy areas:

Human resource flows - recruitment, selection, placement, promotion, appraisal and assessment, promtion, termination, etc.

Reward systems - pay systems, motivation, etc.

Employee influence - delegated levels of authority, responsibility, power

Work systems - definition/design of work and alignment of people.

Which in turn lead to the 'four C's' or HR policies that have to be achieved:

Commitment

Congruence

Competence

Cost effectiveness

PEOPLE AS HUMAN RESOURCES.

A different view is associated with the Michigan Business School. The Michigan model has a harder, less humanistic edge, holding that employees are resources in the same way as any other business resource. They must be:

• obtained as cheaply as possible

• used sparingly

• developed and exploited as much as possible

Sparrow and Hiltrop (1994), pointing out that this is a 'matching' model of strategic HRM originally outlined by Tichy, Fombrun and Devanna (1982), state that:

"The philosophy does not limit itself to direct employees of an organization. Therefore humans or people - as opposed to just employees - need to be managed in a way that is consistent with broad organizational requirements such as quality or efficiency. Personnel policies and organization structures have to be managed in a way that is congruent with organizational strategy and organizational effectiveness depends on there being a tight 'fit' between human resource and business strategies. HRM strategies are all about making business strategies work and so emphasis is placed on how to best match and develop 'appropriate' HRM systems."

The Michigan theorists highlighted the following as being the most important HR issues to achieve such a match:

Selection of the most suitable people to meet business needs

Performance in the pursuit of business objectives

Appraisal, monitoring performance and providing feedback to the organization and its employees

Rewards for appropriate performance

Development of the skills and knowledge required to meet business objectives

The New York variation on the matching model, outlined by Schuler and Jackson (1987), looked at Michael Porter's generic competitive strategies (quality enhancement, innovation and cost leadership or reduction) and developed a set of 'needed role behaviours' for each strategy which, according to Sparrow and Hiltrop (1994):

"varied across a number of dimensions and then (they) stipulated a set of hypotheses about the personnel and industrial relations practices that were needed. They identified the most important HRM practices about which strategic decisions had to be made and for each practice noted the dichotomous but logical alternatives that could be applied. HRM could be seen as a menu of strategic choices to be made by HR executives intended to promote the most effective role behaviours that are consistent with the organization strategy and are aligned with each other."

Schuler and Jackson (1987) listed these choices under a number of categories, e.g.

Planning choices: Informal ... Formal; Short-term ... Long-term; Explicit ... Implicit job analysis; Job simplification ... Job enrichment; Low employee involvement ... High employee involvement

STRATEGIC HRM

Strategic Human Resource Management (SHRM) is an effort to align human resource strategy to business strategy. Strategic Human Resources starts with understanding the goals of the business so that the people decisions are aligned with the business objectives. Dave Ulrich, a professor of business at the Ross School of Business, University of Michigan said, “Value is defined by the receivers of HR work more than by the givers.” HR can provide

value and deliver strategic human resources through practices that attract, retain, reward and develop top talent. The quality of talent in a business can be a true differentiator.Becton & Schraeder., (2009)

SHRM is in its evolution phase and has different approaches to understand. One way is to understand how employees and customers serve business objectives, understanding the challenges faced by the company's core customers, and assessing the company's competition, in order to deliver value to all stakeholders. Strategic Human Resources balances the needs of employees with the needs of the organization and proactively develops policies, procedures and makes tailored, as opposed to standardized, decisions to address these specific needsHammonds, (2007)

HR can ensure observance to the business strategy through the following measures: i. Determine the appropriate organizational structure, job designs for the company. ii. Emphasize key attributes of successful candidates during recruitment and selection. iii. identify key competencies in all performance management programs. Iv. Ensure that all training and development programs build company bench strength. V. Design compensation and rewards systems that reward desired behaviors. Vi .Create employment branding initiatives that communicate desired customer experiencesHammonds, (2007)

C. A. Lengnick-Hall & Lengnick-Hall, (1988) have given three approaches while finding a link between the Strategy and Human Resource Management; (i). Matching managerial style or personnel activities with strategies, (ii). forecasting manpower requirements given certain strategic objectives or environmental conditions, and (iii) presenting means for integrating human resource management into the overall effort to match strategy and structure.

SHRM can also provide value through the study of organizational effectiveness and by developing engagement strategies Beer, P.R.Mills, D.Q., & Walton, (1984). A headcount report has little value to a team of executives, however presenting engagement strategies that reduce turnover and reduce replacement costs can be measured and reported in a defined dollar value Schuler, R.S, Jackson, & (1987). By tracking engagement strategies and the change in turnover SHRM can report the cost of the programs and dollars saved in reduced turnover and this does get the attention of the executive team. N. Tichy, Fombrun, & Devanna, (1982)

Strategic human resource management is a complex process which is constantly evolving and being studied and discussed by academics and commentators. Its definition and relationships with other aspects of business planning and strategy is not absolute and opinion varies between writers P.Sparrow & Hiltrop, (1994). Strategic HRM can be

regarded as a general approach to the strategic management of human resources in accordance with the intentions of the organization on the future direction it wants to take. It is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need. It has been defined as: Strategic human resources is generally made up of many individual business and human resources-related strategies, N. M. Tichy, Fombrun, & Devanna, (982). "There may be strategies to deliver fair and equitable reward, to improve performance or to streamline structure. However, in themselves these strategies are not strategic HRM. Strategic HRM is the overall framework which determines the shape and delivery of the individual strategies." [cipd.co.uk] (MG)

SCOPE OF SHRM

Today it has been recognized that it is not just financial and technological capital that provide companies with the competitive edge, but people, or human capital. Without attracting and retaining the right people, in the right jobs, with the right skills and training, an organization cannot succeed. Therefore, people have been recognized as companies’ most important asset. As the Federal Government moves toward a performance-based management approach, we, too, need to realize the importance of our human resources. A huge percentage of agencies’ budgets are spent on human resources -- salaries, benefits, training, work life programs, etc. Nowhere else do you make that substantial an investment and not measure the return. Not only do a strategic use of human resources provide the competitive edge, but several recent studies have confirmed that the quality and innovation of HR practices impact business results Delery & Doty, (1996). These studies were able to draw a correlation between increased quality of HR practices and increased business success, M. Lengnick-Hall, Lengnick-Hall, Andrade, & Drake, (2009). Among other benefits, HR alignment with mission accomplishment increases HR’s ability to anticipate its customers’ needs, increases the agency’s ability to implement strategic business goals, and provides decision-makers with critical resource allocation information.

SHRM IN CONTEXT

Jackson & Schuler, (1995) are of the view that HRM can’t be understood in isolation, we have to first understood the context. The theoretical Perspective based in sociology, economics, management and psychology focus on different aspects of the domain of RM in context. The perspectives which have guided most of empirical studies are; (i). General System Theory, (ii). Role Behavior Perspective (iii). Institutional Theory (iv). Resource Independence Theory (v). Human Capital Theory (vi). Transaction Costs Theory (vii). Agency Theory (viii). Resource Based Theory .

On the other hand Internal Contexts of the HRM include (i).Technology (ii).Structure (iii). Size of the organization (iv ). Life Cycle Stages (v). Business Strategy and the external Contexts of the HRM include (i). Legal, Social and Political Environments (ii). Unionization (iii). Labour Market Conditions (iv). Industry Characteristics (v). National Culture . Jackson & Schuler, (1995)

REFERENCES

Becton, J. B., & Schraeder., M. (2009). Strategic Human Resources Management: Are We There Yet? The Journal for Quality and Participation, 31(4).

Beer, M. L., P.R.Mills, D.Q., & Walton, R. E., Free Press. (1984). Managing human assets.Delery, J., & Doty, D. (1996). Modes of theorizing in strategic human resource management:

Tests of universalistic, contingency, and configurational performance predictions. The Academy of Management Journal, 39(4), 802-835.

Hammonds, K. H. (2007). Why We Hate HR HR Magazine by Fast Company.Jackson, S. E., & Schuler, R. S. (1995). Understanding human resource management in the

context of organizations and their environments. Anna Rev. Psychol. Department of Psychology, New York University, 6 Washington Place, New York, NY, 46:, 237-264.

Lengnick-Hall, C. A., & Lengnick-Hall, M. L. (1988). Strategic Human Resources Management: A Review of the Literature and a Proposed Typology. The Academy of Management Review,, 13(3), 454-470

Lengnick-Hall, M., Lengnick-Hall, C., Andrade, L., & Drake, B. (2009). Strategic human resource management: The evolution of the field. Human Resource Management Review, 19(2), 64-85.

P.Sparrow, & Hiltrop, J.-M. (Eds.). (1994). European Human Resource Management in Transition, . .

Schuler, R.S, Jackson, S. E., & (1987). Linking competitive strategies with human resource management practices", Academy of Management Executive. 1(13), 207-219.

Tichy, N., Fombrun, C., & Devanna, M. (1982). Strategic human resource management. Sloan Management Review, 23(2), 47-61.

Tichy, N. M., Fombrun, C. J., & Devanna, M. A. (982). Strategic human resource management. Sloan Management Review, 23(2), 47-61.

FIGURES

Figure 01