Importance and types of strategic human resource management

Introduction

Human resource management is including recruitment, selection, training, development, retention, evaluation and promotion of personnel within an organization which is important for every company to achieve success. Progressive HRM activities are now considered to be major sources of competitive advantage and a growing body of research support these view.

In recent years, human resource management (HRM) has been combined with the process of strategic management. Linking HRM to organisational strategy moved into the foreground with the rise of resource-based view of the firm. The aim of this increasing attention to this aspect was to:

1. Enable human resource to be analysed as a strategic factor for inputting managerial strategy into effect.

2. Make it a source of sustainable competitive management.

In other words, the idea was formulated that proper operated HRM strategy could move up organisational performances significantly;

“Strategy” comes from Greek word and it means generalship. The simplest definition for strategy is just “goals and a plan”. When people in organizations talk about strategy, they typically mean business strategy, which defines how organizations compete against competitors in their environment.

‘Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviours the company needs to achieve its strategic aims’. (Dessler, 2007)

Nowadays, in order to achieve companies’ strategic goals and objectives, high position managers follow human resource management strategies.

The main purpose of this assignment is to show what human resource management is and how it helps to improve companies. The human resource management actions like hiring, training, compensating, appraising, and developing employees are the part of every experienced company’s manager’s job. The human resource manager is a separate part of company, with its own human resource or “HR” manager.

What does Human Resource Management mean? Some experts’ believe that there are five basic points that all managers perform. These are: planning, organizing, staffing, leading and controlling. Combined, these points represent the management process. Human Resource Management is the process of acquiring, training, appraising, compensating employees, and attending to their labour relations, health and safety, and fairness concerns. (Dessler 2007)

The Human resource management is important for all managers because, it is essential to choose a right person for right position. For example, if you hire wrong person for the job, you do not only waste time with useless interviews, but you end up with people who do not do their best at work.

According this theory, human resource management is very important and it will help companies avoid mistakes like these.

Strategic HR management

Strategic human resource management is the practical management of people. According to Russell (1998), it’s the link between human resources and the goals of company. It serves to improve the functional abilities of company and make performance more efficient. It requires thinking ahead, and setting up strategies for company to satisfy employees more and for the employees to meet the requirements of the company. Step like this needs to improve different procedures such as training, hiring and etc.

The process of Strategic Human Resource Management can be divided into three stages:

1. The first stage is to theorize the organisational strategy and transform it into the human resource management objectives;

2. The second stage is to use HRM systems established on HR strategy.

3. The final strategy is to evaluate the progress and strategic combination of the HRM systems.

Before HR manager will formulate final strategy, she/he must report to the top management the policies and changes which are required for effective business strategy. The written policies must be related and derived from organisation culture and its behaviour. HR manager should also be able to consider the changes in the external environment; for example these changes may be occurred in labour market;

Human Resource Management strategic objectives are determined from business strategy, and this strategy may be like innovation, cost reduction or quality improvement.

What are HR strategies?

HR strategies set out what the organization plans to do about its human resource management policies and practices and how they should be integrated with the business strategy and each other. They are described by Dyer and Reeves (1995) as ‘internally consistent bundles of human resource practices’, and in the words of Peter Boxall (1996) they provide ‘a framework of critical ends and means’. Richardson and Thomson (1999) suggest that ‘A strategy, whether it’s an HR strategy or any other kind of management strategy, must have two key elements: there must be strategic objectives and there must be a plan of action’.

Recently there are various kinds of organizations and they have completely different kind of strategies. There is no such thing as a standard strategy. Research into HR strategy conducted by Armstrong and Long (1994) and Armstrong and Baron (2002) revealed many variations

Why is HR management important?

Linking business strategy to human resource practices is important and helps a company in three ways:

Firstly, the business can adjust to transfer because the period from the conception to the implementation of a strategy is shortened;

Secondly, the firm can better understand and satisfy customers demand because customer service strategies have been connected to the special policies and practices;

Thirdly, the company can reach high financial performance through its more efficient execution of strategy.

Employee development is also one of the basic points of strategic human resource management. This kind of procedure starts when an organization is recruiting and interviewing potential employees. Developed interviewing methods can help to reject candidates which may not be a suitable for the organization structure.

HR strategy samples

The following are some examples of HR strategy:

Albertsons’ directors believe that their Human Resource Managers will help the company to improve business performance and will develop organization cultures to achieve company’s goals and objectives. How could the group of the companies human resource managers support the company power costs and employ customer-focused candidates and then stimulate them?

It could be via training, pay and other human resource structures’ and policies that helped director’s strategic goals and objectives.

Dell’s competitive strategy always was to be inexpensive leader. Human resource managers of this company use diverse HR strategies to help Dell’s achieve inexpensive goals. For instance, Dell distributes most of its human resource services, not via a conventional Human Resource department, but through the Net. The intranet of Dell’s Manager Tools section includes about 30 web applications (including executive search reports, hiring tools, and automated employee referrals).This allows managers to perform human resource tasks that previously required costly participation by human resource personnel. The intranet also lets Dell employees’ check job posting. These significantly reduce the number of human resource people required to administer these activities, and thus the cost of doing so. That in turn supports Dell’s low cost strategy.

Culture plays an important role in competitive advantage for Southwest Airlines .The firm’s top management says, success can be attributed to the personality of the company, they believe that their employees will do whatever they can to satisfy the desire of the customer. For them the most important selection is the process of hiring flight attendants who are responsible for the fun image of the airline. Applicants must go through a casting call type exercise, interviewed by the panel .The applicants tell their embarrassing stories in front of the panel and also other applicants .Those, which do well will undergo psychological test.

Not only this selection process, employees are equipped to create an entertaining travelling environment by a strong organizational culture that values customer satisfaction .This powerful selection process and strong organizational culture made southwest Airlines the most financially successful airline over the past 20 years and also made the best Airlines with only less complaints from the customers.

Seeing the financial success of this airline other Airlines such as continental Airlines, United Airlines started competing with southwest but they are unable to because they were unable to imitate the culture of the southwest Airlines. In other words, the Human resources of Southwest Airlines create value, are rare, and are virtually impossible to imitate.

Two motor firm companies: General motors and Ford have recruited assembly line workers from the same basic labour market. It is known that the skill level of ford is higher compared to GM and also ford is more successful in developing a cooperative team based culture. These two auto makers set out to develop employee involvement program during the late 1970’s and early 1980’s. FORD has successfully changed the culture and HR system. They value employee opinion and let them participate in decision making. The GM has no such system. So Ford moves toward hiring even more highly skilled employees through an extensive assessment process than GM.

The idea of HR is to make people the best at work that they can be. Human resource managers’ function is to guarantee Barclay’s that the company has the best people in the right position that doing their best on the work, which creating benefits for employees, shareholders and customers in a similar way. HR team works closely in partnership with the business units and functions, enabling them to reach their strategic goals.

For companies like BMW, the product is all about customer satisfaction. The design, features and benefits is all about making the product more attractive to buyers. This requires modernizes services. BMW has flexible organizational structure to easily appeal to such changes. The HR policies are rather significant in the organisations structure, conduct and performance.

Human Resource is a business, such as any other department of the Royal Bank of Scotland group. The basic point of the human resources for The Royal Bank of Scotland Group (RBS) is that helps to the Group’s ongoing business success and achieves strategic goals and objectives. They offer products and services to the Group and their customers, and they have to distribute them professionally and efficiently.

Tesco’s Human Resource strategy turn around work generalization, challenging unwritten rules, rolling out core abilities to all head-office staffs and show management related to achieving controls targets. This underlines the way in which Tesco’s business measures are closely related to performance management. Tesco beliefs that every member of staff has the opportunity to realize his or her personality role in contributing to the company core success and values.

Longo’s Human Resource group has one of the famous strategy in which its helps competitive strategy of serving a greatly various customer support by employing and improving salespersons who speak every languages.

One of America’s top-grossing auto dealers may be now become Longo via following this kind of human resource strategy. This company has 60 salesman which speak more than 20 languages

Nowadays HSBC has more than 260, 000 member of staff. The company employs and manages various kinds of persons all over the world. This is the basic point of Human Resource management of the company. Because they think that diverse kind of employs can give them a balanced and well rounded organization.

FedEx: Fred Smith, the CEO and founder of the firm says “We discover a long time ago that customer satisfaction really begins with employee satisfaction,” (Waterman, 1994). It means value is created by focusing on employees first. This value illustrated by their annual attitude survey. The attitude survey is a part of the annual managerial evaluation and reward process. The survey is about atmosphere of an individual’s immediate work group, the immediate manager, the managers at levels higher in the organization and the overall company’s atmosphere.

TNT operates in 63 countries around the world and have around 161 500 employees; this company has extremely diverse customers and to reach all customers satisfaction they built diversity within their organisation. They focus on forming a comprehensive culture, by holding workers with different background and beliefs.

“People are the heart of our company; our people are the key determinants of our continuing success” – this is company’s point of view, because of this TNT offers several trainings at varied levels to require full use employees abilities and to get the best from them. And even complex years, all this helps company to systematically reach profit and value target.

Selfridges top management belief that SHRM plays a bigger role of in driving business performance. Using this method company becomes more strategically aligned to achieve their goals.

Sinopec HRM thinks about their staff as treasure resource for support the company’s development. The Company makes the best value and encourages staff broad development as the goal. The Company forms increase ways appropriate for career improvement of all employees, developing different kinds of talents can stand out and fully display his capability, and analyzing professional improvement of human resources.

STARBUCKS top management recognize that the key role in the development of the company play their employees. Starbucks look them like ‘partners’, it does not make sense in which position he or she occupy. The main require for every employees is that to finish an extensive training program which contains product expertise, a commitment to customer service, and well-developed interpersonal skills. When employees finish the training he or she gets full information about coffee or company.

Waitrose one of the Human Resource strategies is that to introduce a new ‘essential Waitrose ‘range, put in 47 million in decrease prices.

Being part of John Lewis Partnership means that profits generated are paid back to all employees.

A global management consulting firms, Hay Group, Human Resource strategy is that to transfer strategy into reality. They help organisations to support business models with strategy. They improve management and aptitude and provide payment information and reward services to help motivate.

Conclusion

To conclude, there are no such a company, which has difficulties to achieve organizational goals and objective for using SHRM. After implementing HRM with strategic goals and objectives they will help to gain innovation and flexibility as well as obtain better organizational culture itself.

It is significant to discover organisation’s business goals and the industry in which company is operates, before choosing a strategy. If you select the most strategic one, which you suppose is the best, for example to develop a SHR function within a commodity business, it can be a mistake. HR manager should always remember that building and choosing strategy in human resource, it must have a direct impact on business progress and success. Thus, selection of strategy should be derived from this point of view, which will have meaningful affect on profit and workforce productivity.

A meeting between managers and employees during some period is also important. Managers should manage workers in the direction of the firm’s benefit, besides help them to increase their enthusiasm. It is good also for company to find out employee’s ideas and this may help managers to improve organisation’s performance and to build correct strategies. So, most businesses would genially benefit from better communications between the employer and the employee.

In summary, as is shown above given examples, the different organisations have different kinds of human resource strategy, but the aim is the same. Therefore, main target is to increase profit and values by linking human resource management to strategic goals.

References

Books:

1. Armstrong, Michael (2008) Strategic Human Resource Management: A Guide to Action (4th Edition) Kogan Page, Limited Pp.54-55

2. Armstrong, Michael (2008) Strategic Human Resource Management: A Guide to Action (4th Edition) Kogan Page, Limited Pp.57-58

3. Bernardin. .J.&Russell, Joyce E.A. (1998), Human Resource Management, 2nd edition, Irwin McGraw-Hill Publishing.Pp1-7

4. Dessler, G (2007) Human Resource Management, 11th edition, Pearson Prentice hall, London, Pp1-5

5. Dessler, G (2007) Human Resource Management, 11th edition, Pearson Prentice hall, London, Pp76-87

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