Rajendra singh

Ifim b-school

strategic role of HRM

 Abstract

Strategic Roles of Human Resources Management is to planned human resources

development and activities intended to enable an organization to achieve its goal. The

strategic roles of human resource management to formulate company strategic and

implement those activities through HR activities. HR metrics is about measuring and

managing the linkages between the initiatives and key challenges that are strategic to

the business. In this report we will see how strategic roles of human resource

management effect entire strategical decisions of an organization. By a strategic

approach to HRM, we are referring to a managerial process requiring human

Resource (HR) policies and practices to be linked with the strategic objectives of the

Organization. Here we will discuss different models of human resources strategic roles

played by human resource mangers to achieve organization goals efficiently and

effectively. We will see the relationship between different cluster of HR practices and

organizational performance. HRM helps in acquiring, developing, stimulating &

retaining the outstanding employees as it gives both effectiveness & efficiency to the

working of the organization, it has been started being used strategically.

 Introduction
The human resource management that aims to improve the productive contribution of
individuals while simultaneously attempting to attain other societal and individual
employee objectives has undergone drastic change with the passing of years.

We all know that HRM is concerned with the "people" & keeping the fact in mind that
HRM helps in acquiring, developing, stimulating & retaining the outstanding employees
as it gives both effectiveness & efficiency to the working of the organization, it has been
started being used strategically & is now termed  as Strategic human resource
management.

Defining SHRM:

o Organizational use of employees to gain or keep a competitive advantage against

competitors.

o Involves aligning initiatives involving how people are managed with organizational
mission and objectives.

In today's flattened, downsized & high-performing organizations, highly trained &

committed employees – not machines – are often the firm's competitive key.

Perhaps the most drastic change in HR's role today is its growing involvement in
developing & implementing the company's strategy.

In order to understand the modern aspect of HR i.e. SHRM, lets discuss the terms
which would help us in understanding the concept:

o Core Competency can be defined as - A unique capability in the organization that

creates high value and that differentiates the organization from its competition.

o Mission Statement explains purpose and reason for existence; it is usually very broad,
but not more than a couple of sentences & it serves as foundation for everything
organization does.

o Strategy: the company's plan of how it will balance its internal strengths &
weaknesses with external opportunities & threats in order to maintain a competitive
advantage, earlier this role was performed by the line managers, but now it is carried by
the HR manager.

Strategies increasingly depend on strengthening organizational competitiveness & on

building committed work teams, & these put HR in a central role. In the fast changing,
globally competitive & quality oriented industrial environment, it's often the firm's
employees – its human resources – who provide the competitive key. And so now it is a
demand of the time to involve HR in the earlier stages of development & implementing
the firm's strategic plan, rather than to let HR react to it. That means now the role of HR
is not just to implement the things out but also to plan out in such a manner that the
employees can be strategically used to get edge over the competitors, keeping in mind
the fact that this is the only resource (HUMANS), which cannot be duplicated by the
competitors.

The changing role of HRM:

The role of human resource management is changing & is changing very fast, to help
companies achieve their goals. HRM has gone through many phases – from hiring &
firing to relationship building, from there to legislation role, & now its role is shifting
from protector & screener to strategic partner & as a change agent.

Model of strategic management

In the descriptive and prescriptive management texts, strategic management appears
as a cycle in which several activities follow and feed upon one another. The strategic
management process is typically broken down into five steps:

1. Mission and goals

2. Environmental analysis
3. Strategic formulation
4. Strategy implementation
5. Strategy evaluation.

The first step in the strategic management model begins with senior managers
evaluating their position in relation to the organization’s current mission and goals. The
mission describes the organization’s values and aspirations; it is the organization’s
raison d’être and indicates the direction in which senior management is going. Goals
are the desired ends sought through the actual operating procedures of the organization
and typically describe short-term measurable outcomes (Daft, 2001).
Environmental analysis looks at the internal organizational strengths and weaknesses
and the external environment for opportunities and threats. The factors that are most
important to the organization’s future are referred to as strategic factors and can be
summarized by the acronym SWOT – Strengths, Weaknesses, Opportunities and
Threats.

Objective
The Strategic Management Process includes:

– Determining what needs to be done to achieve corporate objectives, often over 3 - 5

years
– Examining organization and competitive environment
– Establishing optimal fit between organization and its environment
– Reviewing and revising strategic plan

Strategy is a multi-dimensional concept going well beyond traditional

competitive strategy concepts. Strategies are broad statements that set a
direction. Strategies are a specific, measurable, obtainable set of plans
carefully developed with involvement by an institution's stakeholders. These
action statements are linked to an individual or individuals who are
accountable and empowered to achieve the stated result in a specific desired
timeframe.  They are patterns of action, decisions, and policies that guide a
group toward a vision or goals.

The Stage in the Process of Strategic Management:

Mission statement- Business definition and future plan for success.

Environmental analysis- OT analysis and preparing to meet environmental pressures.
Organizational self-assessment- SW analysis and chalking road map for attaining goals.
Establishing goals and objectives- Laying concrete figures that will help in
benchmarking the performance. These benchmarks will lead to the development of
strategy that will decide how the company intends to meets its environmental
challenges with given environmental and resource constraints in the time to come.

Benefits of a Strategic Approach to HR:

* Facilitates development of high-quality workforce through focus on types of people

and skills needed
* Facilitates cost-effective utilization of labor, particularly in service industries where
labor is generally greatest cost
* Facilitates planning and assessment of environmental uncertainty, and adaptation of
organization to external forces
* Successful SHRM efforts begin with identification of strategic needs
* Employee participation is critical to linking strategy and HR practices
* Strategic HR depends on systematic and analytical mindset
* Corporate HR departments can have impact on organization's efforts to launch
strategic initiatives.

Factor Linkages of HR Plans and Strategies:

Given diagram presents various factors that have an impact on HR plans and Strategy
and how are they interlinked with each other. Their interactions and impact on each
element and the resulting change in HR Plan and policy is also indicated clearly.

There are so many benefits from Strategic roles of human resource management to the
organization it can help the organization to achieve their goals more effectively and
more efficiently.

Example:-

HR Managers in the IT industry must stop thinking of transactional issues like

vacations, handling routine queries on relocation, compliance, time sheets, spending
quality time on one’s compensation, discussions based on billing, and bench issues.
Instead they need to start thinking of efficient assessment systems to create employee
value resulting in profitability and enhancing shareholder value.
At L&T InfoTech we are engaged with Fortune Hundred clients wherein our HR gets
involved in an evaluation process at regular intervals with the client to meet mutual
expectations. To discuss a few of those:
1) Staffing
2) Lessons Learnt
3) Learning and development efforts to acclimate and keep in tune with technology and
domain knowledge.

4) How has the competition fared at the client location?

5) Any new HR initiative undertaken by L&T InfoTech.
6) How does L&T InfoTech integrate onsite hires with their offshore associates?
7) Areas of improvement.
8) Time Lines for implementing the feedback given at the time of review.

In effect the above is a clear-cut example of how we manage our intangible assets,
along with managing client expectations. Therefore HR functions require a totally
different set of skills than managing people in a traditional factory environment.

Research Methodology

Recently, Maxxim Consulting interviewed 20 CEOs of FTSE350 companies in the UK

and found that only four knew exactly how many people worked in their respective head
offices. Also, just four CEOs knew how much their head offices cost to run each year.

According to Claire Arnold, a Partner at Maxxim Consulting:

"Our study shows that at most UK corporate headquarters, unnecessary layers of

complexity and bureaucracy often accumulate over time. This is an area that many of
the FTSE350 are set to review in 2008 with a view to finding cost-savings. The fact that
so few of the Chief Execs we interviewed for our study were sure exactly how many
people worked at head office is a clear indication that there's some serious
housekeeping to be done."

Granted this was an extremely small study and must be regarded as illustrative rather
than definitive. But, nevertheless, what part should HR managers play in such
'housekeeping' exercises?

It seems that finally senior managers - some of them, at least - are willing to give HR
managers a significant role in strategic decisions. But how many human resource
managers know how to fulfill that role? Paul Kearns (2003: 4) tells the tale of a
workshop exercise for senior human resource managers when participants were given a
military scenario. Briefly, they were asked to envisage that they, and a thousand
soldiers under their command, had been dropped behind enemy lines - with no
information about their opposition. What would they do? The first response he received
was 'I'd retreat'. Kearns comments: 'Why does this response from an HR person not
surprise me?' It doesn't surprise me either because so many HR managers are used to
operating someone else's strategy, rather than participating vigorously in their
organizations' strategic decisions.

Noting that 'business partner' and 'strategic thinker' have featured as the most important
roles in some recent surveys of human resource management, Jamroq and Overhot
(2004) observe that 'there's something elusive and ambiguous about this widely touted
goal of becoming a strategic business partner'. They cite a recent conference on the
future of HR where a panel of human resource experts came out with the statement that
'I can't define it, but I know it when I see it' when asked to define the term 'strategic
business partner.'

Measuring the effectiveness of HRM

Is measurement at the root of the problem? Are HR managers measuring the wrong
things? One common approach is to use a 'Balanced Scorecard' which includes a range
of HR measures as well as the more traditional financial and other metrics. Gubman
(2004) feels that 'Too many HR scorecards focused on operational metrics: Time to
hire, cost per hire, percentage of appraisals completed, etc. While important to track,
these kinds of measures will not get HR to the strategic partner role. They only reinforce
the view of HR as an administrative function. Key HR measures needed to be central to
business success.'

More beneficially, according to Gubman, HR managers should focus instead on the

same two major issues as their financial colleagues: return and growth. 'HR-things' can
only create economic value from three sources:

 Employee turnover and retention

 Productivity - revenue against employee costs
 Expenditure on the HR function and related activities

Providing measures for these three elements does not require any 'rocket science'
because they relate to three familiar HR goals:

1. Attracting, developing and retaining staff

2. Aligning, engaging, measuring and rewarding performance
3. Controlling or reducing HR costs

HR-relevant measures for growth are trickier and need to be tailored to the
organizations' individual situation. Grubman believes that HR measures can be devised
that, like market share, can indicate trends and forecasts for improved revenue in the
future. He argues that the following are the most significant growth-related human
resource measures at present:

 Leadership development, to be measured in terms of unique candidates

ready to assume executive and other major roles.
 Engagement - levels of employees' intellectual and emotional commitment
to their work.
 Diversity, particularly the number of women and ethnic minority employees
coming through the system or 'talent pipeline'.

Tamkin et al (2008) used a set of criteria described as the '4A model' (Access, Ability,
Attitudes, Application) in their study of almost 3000 British organizations and found that
the use of 'bundles' of HR practices produced improved performance and profitability.
They suggest a number of issues that HR managers should focus on:

Behaving proactively

Weiss (2000) argues that HR managers must demonstrate the ability to provide
stimulating ideas and challenge decisions that do not have business value. To do this,
they need to perform at the same intellectual level as their colleagues in an executive
meeting. Most importantly, they need to wear a 'business hat' rather than a 'HR hat'
otherwise they will be relegated to the traditional administrative or tactical (second-level)
role that has bedevilled the human resource function for decades. Weiss considers that
HR managers need to demonstrate the following to show their ability to add value:

 Broad understanding of the business, thus helping the human resource

function to contribute to the overall direction of the company.
 Knowledge of how all activities need to align, enabling the company to
maximize the success of its strategic initiatives.
 Professionalism in investing in human capital and HR processes, allowing
HR to help guide employees and the organization's decision making.
 A unique perspective, allowing the HR function to become an 'ideas
merchant' so that people and the outcomes of organizational processes
can be made into strategic advantages.
Suggestion
"HR needs to keep moving itself forward, toward the strategic partner role, by becoming
better profit-and-loss business leaders. Be the ones to lead companies back into
thinking externally, about customers and markets, and how to create unique value for
them. What a surprising and powerful role that would be for HR leaders! Start
measuring HR impacts on real business results, not HR activities. Instead of measuring
time to hire, measure the people aspects of opening up a new market and the returns
they generate."

Conclusion

Ideally HR & top management work together to formulate the company's overall
business strategy; that strategy then provides the framework within which HR activities
such as recruiting & appraising must be crafted. If it is done successfully, it should result
out in the employee competencies & behavior that in turn should help the business
implement its strategies & realize its goals.

According to an expert "the human resources management system must be tailored to

the demands of business strategy".

In order to be successful the employees should be developed in such a manner that

they can be the competitive advantage, & for this the human resource management
must be an equal partner in both the formulation & the implementation of the corporate
& competitive strategies.
Reference:-

1) Supreet Ahluwalia
Senior Lecturer
Department of Business
Manipal University Dubai Campus

2) Prof. Dileep Kumar M.

Ex-Professor
Symbiosis (SCMHRD, SCDL), IIIT, SCMLD, SBS

3) Strategic Human resource management John Bratton.

4) Strategic Human Resource management Jeffrey A. Mello.

5) Gubman, E. (2004) 'HR Strategy and Planning: From Birth to Business

Results', HR. Human Resource Planning, Vol. 27, Iss.1, pp 13-24.

6) SiliconIndia Magazine.

7) Kearns, P. (2003) HR Strategy: Business Focused Individually Centred,

Butterworth-Heinemann.

8) Towers, David. "Human Resource Management essays".

9) Armstrong, Michael (2006). A Handbook of Human Resource

Management Practice (10th ed.). London.

10) B.K.,”HRM Strategic for competitive Advantage”