Strategic Human Resource Management

INTRODUCTION:

Strategic Human Resource Management (SHRM) is a subject that is in continues phase of transition, from its first emergence in the mid-1980s. In past two decades many authors, theorists and consultants suggested variety of theories and models which can be practically applied in the organization to manage people more effectively. However, according to Legge (1995) and Grantton et al (1999) cited by (Michael Armstrong 2004: 1) “there is often a gap between rhetoric of SHRM and reality”. Therefore, the main emphasis of this assignment is on the practical execution of these theories and models with the particular reference to Telenor Pakistan – (Subsidiary of Telenor ASA, Norway).

For the better understanding of the Strategic HRM it is essential to know the basic concept of HRM: it can be defined as “strategic and coherent approach to the management of an organization’s most valuable assets – the people working there who collectively and individually contributes to the achievement of its objectives”. (Armstrong and Baron 2003: 3).

Development of SHRM:

In the last 15 years SHRM has grown considerably. According to Schuler et al. (2001) the development of SHRM is two phased transformation: from personnel management to traditional human resource management (THRM), and then from THRM to SHRM.

To survive in the cut-throat competition, organization HR must focus on a new set of priorities, which are more business and strategic oriented such as flexible workforces, quality improvement, team-based job designs, employee empowerment and incentive compensation.

Definition of SHRM:

Strategy is derived from the Greek word strategia, which means “Generalship.” The term strategic has been borrowed from the military and modified for the use in business. “In business, as in the military, strategy bridges the gap between policy and tactics. Together, strategy and tactics bridge the gap between ends and means”. (http://home.att.net/~nickols/strategy_definition.htm)

In spite of high focus paid by different scholars the term SHRM still remains unclear. Some theorists have suggested SHRM as an outcome, others have suggested it as a process, and other scholars have recommended it as a combination of both: outcome and process.

As an outcome, (Wright and McMahan 1992) cited by (Armstrong 2004: 41) defined SHRM as “the pattern of planned HR deployments and activities intended to enable a firm to achieve its goals”. Likewise, (Snell et al 1996: 62) described SHRM to be “organizational systems designed to achieve sustainable competitive advantages through people”.

As a process, (Ulrich and Lake 1991) defined SHRM “a process of linking HR practices to business strategy”. Furthermore, (Bamberger and Meshoulam 2000) suggest that SHRM is a “competency-based approach to personnel management that focuses on the development of durable, imperfectly imitable, and non-tradable people resources”. Cited by (Chang and Huang 2005: 436)

Truss and Gratton (1994) Considered SHRM both: process and outcome, and defined SHRM as the linkage of HR functions with strategic goals and organizational objectives to improve business performance and cultivate an organizational culture that fosters innovation and flexibility. Cited by (Chang and Huang 2005: 436)

Michael Armstrong ultimately defines strategic HRM as an approach to making decisions on the intentions and plans of the organisation in the shape of the policies, programmes and practices concerning the employment relationship, resourcing, learning and development, performance management, reward and employee relations. (Armstrong, 2006: 115).

In the absence of a common definition, broadly theorists and Authors have been reached to an agreement on its basic function of SHRM, which encompasses “designing and implementing a set of internally consistent policies and practices that ensure the human capital of a firm contributes to the achievement of its business objectives” (Schuler & MacMillan 1984, Baird & Meshoulam 1988, Jackson & Schuler 1995) cited by (Wei, L. 2006: 49).

APPLICATION OF MODELS AND THEORIES:

The chosen organisation is Telenor Pakistan – (100% owned subsidiary of Telenor ASA, Norway). The Human Resource department is known as “Human Capital Division” at Telenor; Company regards employees as “human capital” from which a return can be attained by investing prudently in their development. This concept of managing people is also supported by authors like Fomburn at el 1984 and Guest 1999 cited by (Armstrong 2004: 7)

Background of Telenor Pakistan:

Telenor Pakistan is one of the leading mobile networks in the country, 100% owned by Telenor ASA-(Norway) and adds on to its operations in Asia together with Thailand, Malaysia and Bangladesh. Telenor launched its operations in March 2005 headed by the CEO Tore Johnson as the single largest direct European investment in Pakistan.

Telenor spread across Pakistan, creating 2,200 direct and 20,000-plus indirect employment opportunities.

(www.telenor.com.pk)

Key facts about Telenor-ASA Group:

Employs more than 34,000 people worldwide.

Ranked as 7th largest mobile operators in the world.

Ranked 5th in Business Week’s 2007 global ranking of the top 100 performers in the technology industry, beating Microsoft, Apple and Nokia

Recorded revenues of NOK 91.1 billion (USD 15.9 billion) at the end of 2006 – a 37% increase compared to 2005

(www.telenor.com)

Telenor PK has been consistently profitable with highest customer satisfaction. This success is reflected in the Revenues increased by 31% and estimated market share increased by 4%. In the year 2007 Telenor has won many prestigious awards like “PSHRM (Pakistan Society of Human Resources Management) Preferred Graduate Employer Award 2007”, the best brand award, and the most Innovative Mobile Operator at the 6th SAARC Communication Industry Conference 2007,

The above landmarks are the true reflection of motivated and well developed human recourse. This can be associated with the dedication and professional excellence of Telenor employees towards the ultimate goal – customer delight!

(www.telenor.com.pk)

Practical Application of Valuing HR:

To get the insight of how Telenor Pakistan practices Strategic HRM, first it would be appropriate to know the meaning of SHRM. In 1986 Hendry and Pettigrew suggested that strategic HRM has four meanings:

The use of planning;

A coherent approach to the design and management of personnel systems based on an employee policy and manpower strategy with underlying philosophy;

Matching HRM activities and policies to some explicit business strategy; and

Seeing the employees as a “strategic resource” for the achievement of “competitive advantage”

(Cited by Armstrong, 2006: 114).

As the test of fire can only produce the fine steel the application of Hendry and Pettigrew can be reflected by the real example when implementation of planning, good management of human resource brought the Telenor back on track: right after the cartoon controversy of Prophet Muhammad (PBUH) in Jan-06, things got worse for Telenor Pakistan. This incident caused outrage in the Islamic world resulting in consumer boycott for weeks, numerous demonstrations and other protests. In Pakistan due to the western image of Telenor, it became one of the earliest victims of this incidence, resulting drastic slump in sales, and complete abandon of all marketing campaigns.

The situation was so critical that Telenor has to make some important decisions as the company had to announce annual salary increments and yearly bonus due after the performance appraisal of past year. Due to the heavy losses and limited funds, it was tough for thee management to pay out the annual bonus to staff. However, analysing the situation closely company decided to pay it out, since it was the right of employee who worked hard in past year.

This action of Telenor really standout as other companies has decided otherwise. This made the employee more faithful and loyal towards the company.

Furthermore, company was in big dilemma to go for downsizing or not. Lay off would be the common way for other but Telenor decided to retain all the employees; this was even against the employee’s expectation, as most of the sales people has nothing to do at that time. Yet again to encourage the employees’ moral and develop their faith in the organization took this bold step. These practical examples can be seen as true picture of how Human capital division regard the people as the most valuable assets for the organisation.

Creating Conducive Environment:

McGregor in 1960 at the MIT Sloan School of Management came up with two sets of assumptions about human nature (see the Table below). McGregor called these two contrary sets Theory X and Theory Y: with the assumptions underlying that people at work are negative for theory X and people at work are positive and progressive for theory Y.

Table of Assumptions – “Theory X and Theory Y”

Outdated – (Theory X)

Modern – ( Theory y)

Assumptions about people are:

Assumptions about people at work:

Most people dislike work; they do avoid it when they can.

Work is natural activity, like play or rest.

Most people must be coerced and threatened with punishment before they will work. People require close direction when they are working.

People are capable of self-direction and self-control if they are committed to objectives.

Most people actually prefer to be directed. They tend to avoid responsibility and exhibit little ambition. They are interested only in security.

People generally become committed to organisational objectives if they are rewarded for doing so.

The typical employee can learn to accept and seek responsibility.

The typical member of the general population has imagination, ingenuity and creativity .

Source: http://www.netmba.com/mgmt/ob/motivation/mcgregor/

Being one of the modern organizations Telenor PK human capital division operates with the norms of theory Y. In one of the interviews, CEO Telenor Pakistan Tore Johnsen said: “At Telenor Pakistan our philosophy is to unlock the hidden human potential by building expertise and by providing an energizing environment. Telenor is a young organization with an average employee age of 27 years – which means that we are interested in finding young talent and equipping it with the competencies that the fastest growing network requires in one of the fastest growing mobile markets in the world”.

(http://www.telenor.com.pk/pressCenter/pressrelease.php?release=97&lang=en)

Telenor HR managers always put high emphasis on incessant customer-centred and employee-driven expansion; such kind of encouraging atmosphere makes employees more confident and allowed them to work freely, whereby they can take their own initiatives to set future direction for the organization which attains competitive advantage.

Benefiting Employees to Create Competitive Edge:

SRHM is developed in three important phases. All of them hold vital importance to understand the subject and these three phases were: the human relations movement, the total quality management movement, and the contingency approach to management.

Theories forwarded by Elton Mayo, Douglas McGregor and Mary Parker Follett were most influential in the human relations movement. Mayo suggested managers to look deep into the emotional side of the employees. On the other hand Follett argued that managers should inspire and stimulate job performance instead of simply demanding it. She also emphasised on quality circles employee empowerment.

(http://books.google.com/books?id=AiIPAAAACAAJ&dq=Mary+Parker+Follett&ei=2U0qSMj6GJXEyQTUyYmnCg)

These viewpoints instigate new way of thinking about human nature & behaviour. HR managers in Telenor Pakistan hold tight to these views by providing flexible working environment to staff and hiring only those employees who can understand the company’s strategy. Staffs are benefited by profit sharing and incentive schemes which can keep them focused to work more efficiently.

Taking the high care of emotional side of employees, one of the benefits that company provides is the free medical treatment policy which is exactly the same for all the staff e.g. from president to junior officer all are entitled for same health benefits.

Talking to the local press Nayab Baig (VP HCD) said: “we believe in continuous improvement of employees and taking the standards of service to the utmost levels of excellence”. (www.telenor.com.pk)

Management skills: According to (Kreitner and Kinicki 2004: 6) there are 11 skills exhibited by effective managers, as shown below:

In Telenor above mentioned skills are often displayed by the HR managers to deal with the employees in order to induce high performance and employee morale. Moreover these skills also play a vital role in building the climate of trust and motivation among the team members.

Lower turnover rate from all the departments of the company as compared with other telecom operators and consistency with higher employees’ satisfaction, are the factors that exhibit the high involvement and administrative expertise of HR managers in Telenor.

To set every staff member in the same direction Human capital Division uses the technique known as “Hochin” which means compass to check the direction. To enhance the communication level Telenor operates “Open environment” in offices, whereby there are no cabin for senior staff and every employee from president to junior officer need to work on the same floor. This also inculcates fun and informal culture in the company.

With the help of clear communication managers make sure that company’s vision and mission, as well as job description are clear to the employees. To provide the feedback on employees’ performance there is automated IT-system known as TDP (Telenor Development process). This helps company to use performance relationships that can achieve the purpose SHRM – to create competitive advantage.

Employee Motivation:

Terence Mitchell in 1972 proposed a model that provides the basis for how motivation among staffs influences job behaviours and performance. Following is the model which combines the elements from different motivational theories to explain the relationship between motivation and job performance. As mentioned in the below diagram, employees bring set of unique characteristics to the work place, such as their ability, emotions, moods, job knowledge, traits and values, these individual set of skills are then enhanced by the motivational process and transformed into the job performance.

Individual inputs

Ability, job knowledge

Dispositions and traits

Emotions, moods, and affect beliefs n value

Skills

Motivated behaviour

Focus: direction, what we do. Intensity: effort, how hard we try

Quality: task strategies, the way we do it.

Duration: persistence, how long we stick to it.

Performance

Motivational Process

Arousal Attention Intensity

and Direction persistence

Job context

Physical environment

Task design

Rewards and reinforcement

Supervisory support ancoaching

Social norms and organisation culture

Enable, limit

Source: TR Mitchell, “Matching Motivational Strategies with Organisational Contexts,” in Research in Organisational Behaviour, Vol19, ends LL Cummings and BM Staw (Greenwich, CT: JAI Press, 1997) P 63.

To motivate the employees at all levels Telenor offers competitive pay, excellent benefits and exceptional advancement opportunities. With the caring atmosphere Telenor provides relaxed and enriching working environment. Furthermore, training and further education programs ensure a high professional standard amongst all staffs.

Task 2:

Role of the HR Function:

According to (Armstrong 2003: 38) “The role of HR function is to enable the organization to achieve its objectives by taking initiatives and providing guidance and support on all matters relating to its employees”. Moving one step further Michael Armstrong emphases on basic aim of HR function which is to “deal effectively with everything concerning the employment and development of people and the relationship that exist between management and workforce”.

As the personnel standards (Lead Body 1993) cited by (Armstrong 2003: 39) suggested that “Personnel management is exercised as a part of full management process and cannot be viewed in isolation. Although a support activity it must be proactive. It must promote business solutions that take advantage of opportunities stemming from business issues just as it must find solutions to apparent constraints”.

Activities of HR functions:

According to (Mithis and jackson 2006: 6) the HR function becoming transactional as organizations compete globally. Furthermore they have suggested seven key HR activities which ideally the every FR function should perform in the organization, those activities are as follows:

Strategic HR management

Equal employment opportunity

Staffing

HR development

Compensation & benefits

Health, safety and security

Employee and labour relations

By combining the HRM function with business strategy, SHRM creates more efficient and effective arrangement and utilization of human resources to attain the organizational goals, and which helps organization to gain a competitive advantage.

Telenor Pakistan has developed strong relationships among teams, which helps in creating high levels of coordination and therefore instigating high levels of quality and performance efficacy. This is only possible because of HR function is performing the required tasks within the organization.

All the HR activities mentioned above are critical for the success of Telenor and theses activities are often displayed by the Telenor leadership at the top and the frontline managers, to create an environment in which employees can achieve the level of excellence, by not only performing their jobs effectively but also developing their skills and capabilities to the ever changing demands of contemporary organization.

The main focus of SHRM is to develop the firm’s capability in order to deal with changes in an external environment through a better utilization of human resources. Telenor Pakistan has embedded this strategy in their core business, so the company can respond quickly to external changes.

HR Function Models:

There have been many attempts to categorize the work of the HR function in order to analyze its verity, diversity and complexity. One of the oldest and perhaps one of the best models was proposed by Karen Legge in 1978 cited by (Marchington and Wilkinson 2005: 131). In 1986 Tyson and Fell came up with their own “building Site” analogy in which they have identified three roles for the personal function. However, Tyson and Fell (1986, p24) rejected the assumption that “HR assumes great maturity as it develops along the continuum”.

Storey (1992) forwarded another model which was updated by Caldwell (2003). This model proposes “fourfold map” based on two dimensions: “the degree to which HR is strategic or operational, and the extent to which it intervenes and has a high profile. (Marchington and Wilkinson 2005: 131-132)

Author (date)

Categories for the HR roles

Reasons for differentiation

Legge (1978)

Conformist innovator

Deviant innovator

Problem-solver

Relating the work of HR to the values and norms of the organisation

Looks for new innovation often based on social values not economic ones

Identifying and resolving problems

Ways to gain power and influence

Tyson & Fell (1986)

Clerk of the works

Contracts manager

Architect

Predominately administrative serving the needs of line managers

Often where systems and procedures and heavily formalised involving industrial relations

Greater integration into corporate strategy HR planning and development are important

Time-span for decision-making

Degree of discretion

Involvement of HR

Story (1992)

Caldwell (2003)

Handmaiden

Regulator

Adviser

Change-market

Provide a service to meet the demands of the line managers

Mainly concerned with managing problems and discontent

Operate at strategic level, provide support for line-managers and work to help shape policies and practices

Internal consultant leaving much of HR practice to line managers

Level-strategic or tactical

Degree of interventionism

Ulrich (1998)

Administrative support

Employee champion

Change agent

Business partner

Improving efficiency within function and organisation

Improving contribution commitment and engagement of workforce

Improving the organizations ability to transform and change

Implementing and developing the strategic plans of the organisation

Level, focus and time-frame

Managing processes for people

(Armstrong, 2006, pp. 76-81)

Ulrich in 1998 pointed out that there is sort of disconfirmation between the activities that HR perform and the real work of organization. He believes that “HR should not be defined by what it does but by what it delivers”. Furthermore he proposed that HR can deliver excellence in for in four different ways: (a) Business partner (b) Administrative support (c) Employee champion (d) change agent.

Ulrich model for the HR function:

Source: (Marchington and Wilkinson 2005: 135)

Application of Models:

All of the above stated models hold great value in present world, but the model that fits the Telenor Pakistan HR function is combination of these;

Proposed Paradigm:

Deviant Innovator

Architect

Regulator

Change agent

Employee champion

Deviant innovator:

Here the HR looks for new innovation driven from social values rather than economic ones. Telenor Human Capital Division plays this role by providing equal opportunities to all employees and providing flexibility in working hours where the staffs is studying or doing some other courses. Empowerment is the key in this role of HR, in Telenor Pakistan line managers are encouraged to delegate authority to their lower level, where by encouraging junior staff to gain confidence and develop their capabilities to cope the future demands.

Architect:

According to Tyson and Fell this is the most sophisticated role of Hr function it is concerned with “grand designs at a senior level and the integration of HR into the broader business plans”. Telenor HR managers display the quality of architect by creating the right culture in the organization e.g. open environment to promote speedy work and higher level of communication. Secondly operating as business managers rather than personnel professionals, those can proactively work to analyse the present and future needs of employees.

Regulator:

Telenor HR work as regulator by managing and resolving departmental conflicts, for example, different incentive plans for Sales and Customer services department can create discontentment among the employees, such issues are regulated by HR to compensate the staff equally. Moreover, HR develops policies & practices, and level of hierarchy at which decisions are taken.

Change Agent:

This role of HR seeks to develop new processes & culture and providing new vision to the company. Human Capital Division in HR work as change agent in a manner that it develops the organizations ability to sustain the change forces and transform vision into reality. For instance the service centres operations timings were increased from 9:00am to 9:00 pm to cater the changing demand of customers. However, to facilitate employees company has provided conveyance allowance with higher rate of pay to keep the workforce motivated.

Employee Champion:

HR in Telenor performs this role by working as a representative of employees by conveying the concerns of the employees to the higher management. Furthermore, as suggested by Ulrich, HR department keep regard of things by which employees are kept motivated and will to work beyond contract when needed. For example in Telenor there is IT regulated system know as service desk, if any employee has any issue he/she can log that complaint on the system and HR will take care of that issue.

Source: (Marchington and Wilkinson 2005, pp 132-135)

Horizontal & vertical Integration:

HRM Align:

Alignment of Human resources simply means integrating people management decisions with a core business strategy of the organization. By align or integrating human resources management into the organisation’s planning process develops and promotes strong relationship between HR and management. By this action of management it ensures that the management of human resources contributes towards the achievement of desired goals of company and for any shortcomings managers are held answerable for their HRM decisions.

In contemporary organization like Telenor Pakistan, in routine the work requires high level of coordination and most of the work is interdependent among the employee groups. To facilitate high level of coordination and to generate quick response all the Telenor employees are trained for multitasking with very little job description, which clearly mentions one thing at the end: “Working for Telenor is better than working for department”.

This kind of HR structure prevents “it’s not my job” attitude and the absence of rigid work roles develops strong partnerships between different departments and create efficacy.

Why to align?

Study of (Miles & Snow 1984, Baird & Meshoulam 1988, Wright & McMahan 1992) related to SHRM put high emphasis on creating ‘fit’ between HR practice and business strategy. Implementation and execution of effective HR policies and the design of a HR system align with the firms overall strategy, are vital for the successful implementation of business strategies which can gain competitive advantage.(Lengnick-Hall & Lengnick-Hall 1988).

HR alignment increases the firm capabilities to better serve and anticipate its customers’ needs, aggrandizes the organisation’s strength to implement strategic business goals, and provides decision-makers with vital information for resource provisioning.

Finally, it is important for the firm’s accountability. By regularly defining, maintaining, assessing and communicating HR goals throughout the organisation ensures that the management of human resources contributes towards the mission accomplishment. For any shortcomings managers will be liable for their HR decisions.

There are the other areas as well where HR office contributes to align with mission accomplishment, such as HR function working as a consultant, for instance Telenor Pakistan’s HR office provide consultation to the manager rather than telling manager what he/she can or cannot do. (Wei, L. 2006)

Horizontal Integration:

One of the vital roles of Strategic HRM is create horizontal integration which aims to ensure that the different elements of the HR strategy fit together and are mutually supportive. (Hendry C and Pettigrew A, 1986: 2), also cited by (Michael Armstrong, 2006, p156).

(Walker, J. W. 1992), described strategic HRM as the means of aligning the management of human resources with the strategic content of the business.

Vertical integration:

Vertical integration focuses on developing a reciprocity or two-way communication between strategic planners and human resource planners in organisations (Milkovich et al., 1983).

Walker, J. W. 1992 in his book “Human resource strategy” suggested that vertical integration is necessary to provide congruence between business and human resource strategy so that it supports the accomplishment of the business.

Such two-way methods of communication results in meaningful information regarding human resource being fed into the strategic planning process. Following is the graphical presentation of how the Horizontal and vertical integration creates an overall fit for the organization.

Determinants of Both Types of Fit:

In Telenor Pakistan Integrative strategies are executed by involving the coordination of human resource planning and the personal functions such as recruitment, training, and career management.

These strategies are also practiced to minimize the cost and to instigate efficient coordination of resources to obtain their maximum output. Telenor horizontal and vertical integration goes a long way in building a team that is vibrant and well coordinated for achieving the corporate objectives and long-term goals.

Moreover, Telenor practice Vertical integration, to emphasise the congruence of a HR measures with the strategy the firm is pursuing. This in long term can gain a competitive advantage for the organization. Telenor HR exercise vertical and horizontal integration by the help of following Hr tools:

Clarifies goals and objectives

Encourages participation

Planning and organises

Facilitates work

Provides feedback

Empowering and delegates

Recognises good performance

In practice Telenor HR in many ways influence the achievement of horizontal fit and vertical fit, as achieving both kinds of fits are necessary for company to performance efficiently. More importantly the vision of Telenor is HR and customer oriented which embraces the theories and models discussed above:

“Our vision is simple: We’re here to help. We exist to help our customers get the full benefit of communications services in their daily lives. The key to achieving this vision is a mindset where every one of us works together: Making it easy to buy and use our services. Delivering on our promises. Being respectful of differences. Inspiring people to find new ways”.

Source: www.telenor.com.pk.

Recommendations:

Follow are the recommendations to improve the vertical and horizontal integration:

(a) There is nothing permanent except change; likewise the top management role in Telenor should not be restricted to integration of departments or employees. HR should develop a concept of team building, which can handle implement the desired changes successfully.

(b) The management of Human capital pool needs to be systematic and long term in order to enhance the organisational competitiveness.

(d) Any implementation within organization should be managed by Telenor’s Top and mid level management together and junior staff must be well informed with the proper communication and as to why such implementation is necessary.

(e) Evolving nature of the HR’s role calls for attention of HR managers to evaluate and measure the impact new activities, that they can possible have on the organization as a whole.

Reasoning:

Above recommendations are made in the light, that Telenor operates in very versatile economy where HR managers need to focus of changing needs of the employees with the change in economy. Moreover, rapid change can cause chaos within the organization; Telenor HR managers should take into consideration that thing to manage the chaos.

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