Importance of Aligning Human Resources with Strategy

Chapter 2 Nisha Hariyani

HRs Emerging Role

Strategic human resource management is an approach which defines how the organizations goals will be achieved through people, by means of HR strategies and integrated HR policies and practices.

Transition from HRM to Strategic HRM

Changes in the business environment brought about by globalization and the development of new technology have made it mandatory for organizations to involve HRM in the strategic Decision Making Process. Changes in Market Conditions, economic conditions, labor markets, industrial structure, and international competition have all highlighted the importance to the management of human resources for gaining a competitive advantage.

Transition from HRM to Strategic HRM

5p model identifies various HR activities that must be aligned with the Strategic needs of the Business to gain a competitive advantage. HR Philosophy: refers to Org attitude HR Policies: Refers to guidelines HR Programs: Coordinated HR efforts to sustain Change HR Practices: includes roles that individuals assume in an Org. HR Processes: Involves Identification, formulation and implementation of HR activity

Traditional HR Vs Strategic HR
Administrative in nature Endorsing Specialization of work Development of Policies and its Functions Ensures Adherence to the Rules Transactional in Nature: routine day to day work People Not viewed as Competitive advantage Change is Slow and Fragmented. Empowering in Nature Multi Tasking Changing according the Envi It is More Interdisciplinary in Nature Rules and Regulations are Flexible. Focus on Short Term Objectives of Org. People as viewed as Intellectual Assets. Change is Proactive and Systematic

Role of strategic HRM (SHRM)

Strategic Role Information and Decision Making Role Strategic HR functional Role Administrative Role

Barriers To SHRM
Focusing on Shot Term Performance Lack of technical Knowledge Lack of Strategic perspective Difficulty in quantifying Apprehensions towards training people Resistance of employees `

Model Integrating Strategy & HR

Two models help us understand the relationship between HR and Strategy, they are Model of Best Practice Model of Strategic Change

Model of Best Practice

Frame policies Strategic Level Recruitment and Retention Operational Level

Checking equal Weight age to all stakeholder Business Process Level

Models Integrating Strategic Change & HRM

The model has four basic Propositions:

1. Strategic integration 2. High commitment 3. High quality 4. Flexibility

Model of Strategic Change & HRM

Outer Context Socio economic, technical Politico-legal Inner Context Culture, Structure, Politics Leadership, task technology Business outputs

Business strategy content

Objectives Product market Strategy and Tactics

HRM

Context

Role Definition Organization HR outputs

HR Flows Work systems Reward systems Employee Relations

HRM Content

Economic Indicators of HRM

Investment Perspective of HR
Management Value Organization Attitude Towards Risk Employee skills Required Cost benefit Analysis Outsourcing

Human Capital Accounting

Sources of employee value: productivity & added Value Adding value through rewards & benefits Adding value through attrition & recruitment

End of Chapter 2