Strategic Human Resource Management And Organizational Performance
The Focus Shift from Personnel Management to Strategic HRM
In the late 1970s for the first time strategic human resource management started getting attention from the researchers. The focus of the modern human resource practice shifted from personnel management or administration to other newer concepts that can help the organization to manage their human resource is a much better manner. Strategic planning process in human resource management in short HRM contributes in several different ways to the organization like evaluation of performance, planning, selection, training and wage management of the employees (Armstrong 2007).
In many organizations today strategic implementation process is integrated with HRM systems. The human resource departments today are learning modern strategic and proactive planning methods and thus has helped the organizations to unmitigated the function of the employees beyond their traditional activity limits. It is now believed both in the world of business as well as in the academic that a strong, motivated and well trained human resource of an organization can give them competitive edge over the others but the human resource planning should be well aligned with the strategic planning of the company (Ulrich 2007).
The success of the strategic plan of any organization greatly gets reduced when all the initiatives related to growth, merger or acquisition or providing customer services do not considerably take care of the human resource practices like that of staffing, training, rewarding, motivating and having proper communication between the employees and management (Ulrich 2007). Consistent employee performance aligned with objectives of the organization of capabilities of the organization for future to meet those objectives is not considered while looking into human resource supply demand forecast might adversely affect the company in the market. Planning is a crucial part of strategy because it helps the company to find out the gaps that exist in the present capabilities that might affect the company to successfully implement all its strategies in the market or if there is surplus in the capabilities found it helps to enhance the efficiencies and also help to check whether the valuable resources within the organization are underutilized due to inappropriate human resource practices. Thus it is quite clear that organizations today link human resource management practices with strategy in order to develop and implement the right kind of organizational initiatives and objectives (Butenski & Harari 2004).
Some authors have urged that human resource practices are critical for HR planning of an organization and are an important aspect to have clearer focus and help to understand the areas that are critical for attaining success. Several methods of HR planning have been developed and some organizations have customised them according to their requirements to attain success. It should be noted that effective planning in HR depends on the context of its usage (Ansoff 2009).
The diverse methods of proper HR planning are suitable only in the light of the specific objectives. Functional objectives look for existing capabilities and extrapolate active trends, with scrupulous stress on impending work needs. These objectives highlight the organisation’ s skill to manage implementation, using past and present HR costs to add to budgets and other organizing mechanisms. A second group of objective falls in the rubric of what textbooks classically refers to as HR planning. The principal objective of conventional HR planning is to integrate forecasts about the kinds and numbers of workforce who will be required to meet up longer-term demands, including a variety of programmes such as career development, executive training, external recruiting, succession plan, employee assessment and departure programmes (Butenski & Harari 2004).
Integrating Strategic Implementation with HRM Systems
Functional data enable HR planners to precisely forecast the costs and possibility of HR initiatives on the basis of acknowledged parameters. These data can be engaged inside HR planning to ground forecasts about demand and supply. In totting up, HR planners call for precise operational information about the employees in order to comprehend the future implication of meticulous projections. For instance, a deficit or a surplus of a particular type of ability means slight with no knowledge of how that expertise contributes to the resource transfer practice, what it overheads are and whether other expertise or technologies can be used in that place (Schuler 2009).
Both these kinds of objectives and its detailed knowledge helps the organization to successfully do its strategic planning and implement it is various ways within the realm of the organization. For instance, if a company lack in HR planning then the strategies that it has planned to adopt while there are changes in the environment like it the organization have employees with obsolete skills due to change in technologies will force the company to spend extensively in acquiring the right kind of expertise through dicey training and recruitment activities. Similarly, functional data related to the outcomes of the HR performances, appraisal practice are essential in determining whether changes are required to find potential individuals with leadership capabilities that will be required in the future if any change occur in the business environment (Ulrich 2007). The HR strategic planning process also helps the organization to determine whether with the existing resources in hand is it possible to achieve the set strategic objectives of the company. It helps the company to identify or reconsider the core functional competencies of the organization. This might also have primary implications on the overall strategic direction of the organization. A refined HR planning process can be annoying if it does not match with the overall strategic planning of the company. Thus it helps to bring the entire organizational focus to set a whole new set of objectives that are associated with the strategic HR planning process. It also involves the managers in developing and evaluating all the existing HR practices of the company. It also provides the HR planners with all the significant and constructive information that has been collected via forecasting and functional HR evaluation. This might contribute valuable insight for overall strategic planning of the organization. It also helps to have a regular communication flow with the organization between the management and the employees and helps them to keep themselves updated with the requirements of the changing environment and also seek commitments from the staffs to attain the said objectives of the companies and check priority issues (Schuler 2009).
Strategic Human Resource management and organizational performance is not as easy as it seems. The challenge of recruitment, retention, motivation, and training the employees more often than not becomes very challenging. In the case of the industry that is service oriented the onus is on the employees. Therefore the employees are expected to give service in a manner that will increase the customer base. In case of the organization that is linked with marketing, the challenge is to bring the value to the end user (Lado & Wilson, 1994). It has also been seen in researches that the HR managers find it difficult to allocate the budget on for the strategic activities and keep the pace with the finances of the organization. This is because the training and development programmes are created from the finances of the company that affects the bottom line profits in return (Simons, 2002). Now a days the challenges for the HR managers are double edged, on one hand they are expected to show the organization the worth of strategic HR activities, on the other hand they are to create the value for the investments made. This is possible with the help of the effective employee practices that create value. It is often a challenge that the organization creates efficiencies and creates competitiveness even in the industry that has lean margins.
Some of the researches on the SHRM and the Organizational performance have mentioned that the biggest challenge is the retention of the employees. The employees are often lured to new avenues for growth however retaining them is very cost effective for the company. Another challenge that is often faced by the organization is the creation of leaders and leadership qualities in the firms. The leader is a motivator and can get the work done from the employees. In the absence of the leader the vision and organizational objectives gets missed. The role of the SHRM is to develop the future leaders. Training and development of the employees is equally critical as is recruitment and selection of the employees. The recruitment and selection is the process of finding right employees meeting the organizational targets while there development is beneficial for the organizational performance.
It can be concluded that strategic human resource planning not only recognise the organization’s capabilities in terms of resources to fulfil all the set objectives but also helps the organization to have its contingent plan ready if there is any change in the business environment. It also helps the organization to have a strong and performance focused human resource that will act as a added advantage to the company along with the other resources that the company have. It also helps to identify the gaps that are present and might act as a barrier in the path of successful implementation of the strategies and also keep the HR planner ready with all the tools and methods that are crucial for the organization’s success. It should also be noted that a proper and appropriate strategic human resource planning also helps the company to fight competition in the market and stay ahead of competition in this highly dynamic and completely volatile marketing environment (Butler et.al. 2005).
- Ansoff, I. (2009). `Critique of Henry Mintzberg the design school: reconsidering the basic premises of strategic management’. Strategic Management Journal, Vol. 12, pp. 449-461.
- Armstrong, J. S. (2007). `The value of formal planning for strategic decisions: review of empirical research’. Strategic Management Journal, Vol. 3, pp. 197-211.
- Butenski, C. F. & Harari, O. (2004). `Models vs reality: an analysis of 12 human resource planning systems.’ Human Resource Planning, Vol. 6, pp. 11-17.
- Butler, J. E., Ferris, G. R. & Napier, N. K. (2005). Strategy and Human Resource Management, Cincinnati: South-Western Publishing Co.
- Lado, A. A., & Wilson, M. C. (1994). ‘Human resource systems and sustained competitive advantage: A competency-based perspective.’ Academy of Management Review, 19, 699-727.
- Schuler, R. S. (2009). `Repositioning the human resource function: transformation or demise?’ Academy of Management Executive, Vol. 4, no. 3, pp. 49-60.
- Simons, T. (2002). ‘The high cost of low trust.’ Harvard Business Review, 80(9), 18-19.
Ulrich, D. (2007). `Strategic human resource planning: why and how?’ Human Resource Planning, Vol. 10 (1), pp. 37-56.