Human resource management works with human to formulate and implement the business strategy. HRM and strategy were not related too much before but nowadays the coordination between them is reasonably common in the competitive world. Every manager needs to know how human resources are associated with strategic management to increase the effectiveness of the organization. This assignment has been prepared to give a clear view about the importance of HRM, formulation and implementation of HR strategies. Therefore, the contemporary issues related to strategic human resource management have been analyzed appropriately to show their impact on strategic HRM. All the topics have been assessed by relating with modern business world to show practical overview of human resource management and strategic human resource management.
1. Understanding the role and importance of HRM:
1.1. Definition of strategic human resource management
In general, human resource management refers to a process by which the organization functions are accomplished and objectives are achieved through managing and utilizing experienced and skilled workforce. Human resource management starts with recruiting and selecting employees and then makes sure the utilization of the workforce.
Strategic human resource management is defined as macro-organizational approach that designs strategic policies and frameworks to decide how the long-term goals and objectives will be achieved through using trained and skilled workforce (Armstrong and Baron, 2002). People are the main resource to implement the strategic planning. Strategic human resource management ensures the formulation and implementation of organization strategy by managing the workforce. Strategic HRM identifies critically the issues and success factors related to strategic decisions and workforce. The main characteristic of strategic HRM is that it makes a relationship between human resources and strategic management process.
1.2. Importance of human resource management:
HRM fulfills the legal requirements of an organization to achieve strategic fit. Legal requirements such as workplace safety, compensations and benefits, employee training, employee relations and so on are easily satisfied by the help of HRM (Thompson and Heron, 2005). HRM ensures the comfortable environment for the workforces so that they can feel safe in the workplace. Feeling safe helps them to keep full concentration on their work. HR manager also motivates the employees by offering bonuses, rewards and benefits based on their performance. He ensures the employee training to make skilled and capable workforce. HR manager also handles the situation when any conflict occurs between employee and employer. Thus human resource management accomplishes the legal requirements.
Human resource is always a mean of obtaining competitive advantage. The organization in which the workforce is managed tactfully gets the strong competitive advantage in today’s business market. Strategic HRM helps to formulate corporate strategy by utilizing the human resources. It clearly increases the effectiveness of the organization by making alignment with corporate strategy. HR manager decides the leader of a team inside the organization and monitors the activities of the team so that strategic planning can be implemented appropriately.
In order to survive in the competitive market, there is no alternative of better organization performance. HRM attracts and retains high qualified people to improve the organization performance. Strategic HRM designs the job framework to determine the actual path towards organization goals. Therefore, it develops a performance culture to motivate the employees. It has direct impact on productivity, service quality, growth and profitability.
1.3. Framework of strategic human resource management:
Strategic human resource management coordinates the HR activities with strategic management. Another thing is that it enables HR practices through strategic planning and actions. The actual framework of strategic human resource management is analyzed as follows-
Figure: The framework of Strategic HRM (Schuler and Jackson, 1987)
Strategic HRM firstly plans how to link up the HRM practices with organization strategy. HRM practices are affected greatly by institutional forces and firm strategy. HR capital pool such as skills and abilities and HR behaviour have huge impact on getting first level outcomes. Proper HRM practices bring performance satisfaction in the organization. The employees are satisfied with benefits and rewards based on their performance. That is why the rate of turnover and absenteeism decreases. Since human resources are responsible to implement the organization strategies, they are associated with the strategic management process. HRM mainly retains qualified employees to achieve competitive advantages by showing best performance. Those employees directly implement the strategic planning. Thus business strategy and HRM work together inside the organization.
2. Formulation and implementation of strategic HRM:
2.1. Analysis of the strategic human resource process:
Analyzing the strategic human resource process is very important before going to implement it. That is why here the strategic human resource process is analyzed through considering its three stages(Torrington and et al., 2011). Firstly, the organization formulates its strategy and converting it into HR strategic objectives. Secondly, it focuses on the implementation of human resource system based on its strategy. And finally, it evaluates critically the effectiveness and strategic combination of human resource system.
HR department and top management work together to make HR policies and practices that will support organization goals. Then they have to consider required competencies to make the implementation of HR system because skilled and properly trained employees are necessary to keep pace with the business strategy. Continuous monitoring is done while practicing HR activities to ensure the best performance. The top management has to be able to make any certain changes within short time so that any adverse situation can be handled. The policies of HR system are modified if situation demands.
2.2. Assessment of the roles in strategic human resource management:
When an organization will be going to recruit employees, it should be remembered that the employees will have exact competence and ability to fulfill the organizations desired task. Otherwise the organization has to face serious problem to accomplish their task at a time effectively. This is known to all of us that human resource management basically performs eight strategic roles. These are as follows (Armstrong and Baron, 2002)-
Organization design and work system, human resource planning, recruitment, selection, training and development, compensation, employee relations and finally performance management. These all roles are linked up with business strategies to make them effective as well as relevant with the organization objective.
Definitely Each one of these HR practices influences organizational performances. That is why these roles should be assed very carefully. To assess these HR practices the managers should be careful enough about the factors affecting the strategic human resource management. Strategic human resources management is a very important part of the overall business strategy. SHRM is one of the influential factors to achieve the ultimate goal. That is why the importance of the basic HR practices is a lot. Without conducting the HR practices properly it is quite tough to get efficient employees. And without efficient and quality employees, it is very much difficult to reach the ultimate goal. An effective & efficient playing of HR roles can minimize the internal conflicts of an organization. Efficient HR practices also help to get future advantages. It is possible to say from another perspective that effective practices of HR roles help to acquire competitive advantages over competitors. That is why in this competitive edge every organization is very much concern about the roles of strategic human resource management.
2.3. Analysis of the development and implementation of human resource strategies:
Effective human resource strategy is one of the keys to success for an organization. It is important for the HR department of any organization to be a strategic partner to achieve the organizational vision. That is why it is important to drive a human resource strategy development and implementation through the best practices.
In order to develop and implement effective human resource strategy the organization follows several practices. It designs HR strategy according to organization’s vision and corporate strategy. Then it introduces successive planning system for crucial positions and executes performance management system covering professionals of all levels. Sometimes manager executes revised organization structure to keep pace with the situation. He also establishes regional training centres and makes assessment for continuous improvement and expansion (Armstrong and Baron, 2002).
These practices can help an organization to develop and implement effective strategy to achieve the organizational goal. That is why to achieve the organizational goal and long run benefit, an organization has to accomplish these practices very carefully. And without conducting these practices efficiently this is quite difficult to hope to develop and implement successful human resource strategy.
3. Assessment the range of HR strategies:
3.1. Identification of a range of HR strategies for Prezzo restaurant:
Identification of HR strategies aligned with the organization’s goal and objective is an integral part for every organization. Prezzo is a chain of Italian restaurants in New Oxford Streetthat decided to emphasize in HR strategies that can be applicable to my organization. Successful implementation of HR strategy depends on an effective combination of knowledge, efficiency and capabilities that will fit with organizational structure along with financial and technological value of organization.
Particular HR activities should be selected at first. Based on this specific wok design and work context should selected. Afterwards, rewards and recognition program should be set up based on performance management. But, here employee communication is necessary among the top, middle and lower level managers.
Figure: Identification the range of HR strategies (Sayedjavadin and Zadeh, 2005).
Prezzo restaurant was first opened in London 2000.Since beginning it has put emphasized in TQM (Total Quality Management). For maintain quality of their food up to the maximum level, it is necessary to formulate HR strategies over its 160 restaurants. Prezzo has some energetic staff that is the most important part for the success. Moreover Prezzo also has efficient and innovative chefs who are responsible for special meals and thus ensuring customer satisfaction. So HR strategy has been identified notifying these two employee segment.
3.2. Assessment of HR strategies and their application in Prezzo restaurant:
Prezzo always looks for people who are energetic and friendly as well. Because it thinks energetic and friendly people can carry out the responsibilities and it follows this implication in all sectors from chefs to waiters to managers everywhere. A distinctive assessment of some of HR strategies and their application has been depicted below:
Commitment HR strategy:
Prezzo employees are energetic and friendly. But it is necessary to ensure before selecting managers or waiters they have both uniqueness and strategic value projecting on the long term relationship with stakeholders. Under this strategy,
- The restaurant should build up a family-type environment.
- Arranging training and development program particularly for waiters and other lower level employees related to communication skill with customers.
- Implementing performance based training system and adopting a standard performance appraisal (Lepeak. and Snell, 2002).
Productive HR strategies:
This strategy can be applied to specify key employees who have high strategic value (Porter, 1985).Their knowledge, experience and efficiency will be regarded as assets like for Prezzo. Specific implications are-
- Standardizing jobs to face the adverse situation and to facilitate rapid replacement.
- Identifying individuals who have core competencies.
- Designing compensation system form job-based and performance-based criteria.
Compliance strategy:
This is a kind of outsourcing strategy. Prezzo can make contract with other outside restaurants to meet specific needs for a stated time period and thus can reduce administrative costs.
- Ensuring degree of functional flexibility by outsourcing specific functions and using part-time employee.
- Developing contractual agreement for building up transactional employment relationship.
- Training is highly necessary for external workers to introduce them with company policies, systems and procedures.
Collaborative HR strategy:
This strategy aims at developing employee’s potential values while preserving unique values. Thus Prezzo will be able to differentiate their employees in specific areas as the employees have both the general knowledge and specialized knowledge (Lawler and et al, 1998).
- Building up a partner style relationship to share their values and competencies.
- Investing on mutual relationship building program, exchange program, mentoring program and so on.
- Group-based rewards and performance appraisal system should be encouraged.
- Establishing a trusting culture to ensure a smooth flow of knowledge and experience.
Organizational strategy:
A firm’s organizational strategy focuses on following subjects (Mills and Snow, 1978)-
Prospector: It focuses on grabbing new opportunities through diversification. Prezzo can introduce continental food or other delicious menus by utilizing their employees’ competencies to the greater extent and thus can increase profit margin.
Analyzer: They fall between defender and prospector. Rather that implementing totally new menus they can improve their existing offers incrementally by changing colours, ingredients or tastes.
Defender: Under this strategy Prezzo can focus on low price, low advertising and promotional cost rather than full implementation on developing menu (Milgrom, 1995).
Reactor:Prezzo can take steps responding microenvironment pressure and thus can react to events. This strategy is less effective.
4. Contemporary Issues Affecting Strategic Human Resource Management:
4.1. Identification of the contemporary issues
Workforce is one of the key components in any business organization. Trained workforce is compulsory to formulate strategies and conduct the activities both inside and outside the organization whatever the organization is profit-oriented or non-profit-oriented (Colvin, 2007). An organization has to work on a continuous basis with human resources, and with people. That is why there is an inevitability to find out the contemporary issues regarding strategic human resource management. It helps human resource manager to utilize the human resources in the organization. Human resource management policies and practices have been forward-looking during the first decade of the twenty-first century. Many issues exist in today’s business world and have huge impact on strategic human resource management.
There are some contemporary issues facing by the HR Managers that are critically identified as following-
Source: Torrington, 2011
4.2. Analysis of the contemporary issues:
Some of the contemporary issues have been identified in the previous section. Now these issues are analyzed as following-
Productivity and competitiveness:
Getting the desired amount of output through using the resources properly is called productivity. Increasing productivity is one of the key targets of any manager in an organization. The way to sustain productivity is to manage job satisfaction as well as reduce absenteeism and turnover through the effects and stuffs that are within the mechanism (McCarthy, 2010). If the productivity is increased, it will directly affect the company’s competitiveness. Increased productivity always indicates to higher profitability and improved effectiveness. When the organization effectiveness is higher than that of competitors, it is easier to innovate and use many options for making a leading place in the competitive business world.
Increasing globalization:
Nowadays most of the businesses are conducted internationally. The companies those are not involved in international business are also affected by globalization. Globalization can affect in different ways. Outsourcing is one of that ways. Most of the companies prefer outsourcing to in-house activities (Lengnick-Hall, 2009). The major cause behind this is that many dealings can be performed in other countries at lower or limited costs. It helps to curtail the costs of the organization. If the organization fails to take this advantage, it will not be able to take a leading position in the competitive market. Competitors will go ahead clearly by following this cost curtailing approach. It is clear that the organization will have to keep pace with the worldwide workforce for continuous improvement. Organization can appoint dependable and capable workforces by recruiting and selecting personnel from many different countries. Proper understanding and modification have to be maintained to take the benefits from the increasing globalization.
Changing labour demographics:
Major demographic alterations are being faced by the HR manager nowadays. The reason is that the nature and mental attitudes of labour forces do not remain constant. Organizations are already witnessing a variety in terms of gender, age and ethnic in today’s world. The number and quality of prospective employees have been decreased comparatively than at any time in the previous (Rupidara, 2011). The absence of qualified workforces for multifaceted jobs is considered to be a notable, ongoing problem. For that reason, the organization has to deal with only the old and skilled employees. Now HR manager needs to become more culturally conscious to handle work ethics, norms as well as language.
Technology and high-performance work systems:
An organization uses computers and information technology remarkably as an ultimate part of conducting its business in the twenty-first century. The technological development is an ongoing process nowadays. That is why HR manager uses technological tools to deal with people as well business strategy. Now differentiation can be made easily in offerings utilizing new technology. Human Resource Information System (HRIS) is used by HRM to examine individual performance and keep information regarding compensations packages, training and maintenance ((Stone, 2007).
Ethical concerns:
Ethics is considered as a significant factor always that cannot be ignored. It has a great impact on business world and specifically in human resource management. The prime ethical concern about human resource management is that how black employees and white employees in an organization are behaved. No discrimination is allowed in the organization even it is highly prohibited. If any discrimination exists between black employees and white employees, it will surely spoil the goodwill and create conflicts within the organization (Winstanley, 2000). That is why the organization should be aware and responsive regarding this issue.
Recommendation:
There are some recommendations that followed by the HR manager to increase the effectiveness within the organization. These are as following-
- Strategic HRM should explore more for the political and institutional factors of HR practices to understand the strategic impact on HRM as well as to predict HR behaviour.
- The organization should use productive HR strategy and commitment HR strategy as their primary strategy and should apply these two throughout the human resource management.
- The organization can use compliance strategy as an auxiliary strategy to differentiate its position in the competitive business.
Conclusion:
Human resource management deals with the organization strategy to make an effective performance. The prime reason is that human is the key component to make the implementation of any strategy. From this assignment it is come to know how well human resource management is associated with the strategic management for facilitating the organization achieving its vision and goals. Here it has been shown clearly that which HR strategies are applicable or suitable in which situation.
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