In the late decade of 1980, the organisations realized the significance of their employees as a capital asset or human resources; and by adopting and implementing a set of HRM practices (such as recruiting, training and developing people etc. ) aimed to succeed a sustainable competitive advantage based on a business strategic view by making the employees’ involvement the main key point of the new human resource management into the business process; and by establishing the organizational culture that they are part of the organization (Kaufman 2001: 506).
During this period, the HRM is transformed into a Strategic HRM approach in order to sustain in these modern business challenges. Although, the new concept of HRM, as a strategic approach may not differ significantly than the traditional personnel management (Legge 1995), Storey (1989) identifies that strategic HRM is a dimension of the model of personnel management which focuses on organization as a whole, which emphasized on strategic integration, employee commitment and flexibility. The responsibility for human resource is often decentralized to line management.
As proposed by Wright (1998), the fundamental of human resource is that employees are regarded as valuable resources and strategic HRM aims to manage these human resources through a set of HR policies or practices to support the overall strategic plan of the organization. Nowadays, as the economy has moved more to an outsourcing shared service and information economy, the competition for people with high qualifications and knowledge into the organizations has become more intense (Ha 2006).
Although, the recruitment and the retention may be one of the most pressing challenges which organizations face today, successful companies are these which are able to engage and retain employees with high professional skills. In order for that to happen, companies must be able to combine completely what the employee wants with what the company on the same side wish to offer (Aghazadesh 2003: 202). According to Taylor (2007), “It’s a business objective, rather than an individual one, geared towards one thing: ensuring hat an organisation is able to do what it sets out to do in the present and in the future plans, respectively. And this assumes that capability is based on an organisation’s sole source of value and competitive advantage in a developed economy: its people (Taylor 2007)”. In other words, organizations which are engaged in talent management face human resources as their strategic and sustainable competitive advantage. They recognize their personnel as the soul of their business.
In addition, they adopt a set of practices and innovative technologies which are designed to develop, deploy and connect employees with professional skills and knowledge in order to achieve business priorities which represent the performance at an individual level (performance management) and as a consequence of that, the business performance (Deloitte 2007). Despite of the fact that HRM has taken several shapes, could be defined from the literature as a ‘soft’ and ‘hard’ approach. The ‘hard’ approach of HRM focuses on the business performance by giving a slight emphasis on employees’ needs.
Moreover, the ‘Michigan Model supports this version of HRM model by focusing on the organization’s profitability and welfare through a strategic point view (Radcliffe 2005). However, the ‘soft’ approach of HRM known as ‘Harvard model’ emphasizes on the importance of high commitment, involvement, training of its employees and open-mind leadership (Bratton and Gold 2003). Although these two versions of HRM are completely different, Edgar (2003) supports that the organizations are possible to take into account elements of both models in their HRM practices.
This is owed to the fact that roughly in all cases, the overall business objective is the performance improvement of each organization, which could be achieved through the adopting of the ‘hard’ approach (Edgar 2003). However, based on a previous survey, it is discovered that companies have also the tendency to implement and combine these two approaches for better results on human resource management into them (Radcliffe 2005). 2. Understanding Strategic Human Resource Management (SHRM) Human resource as a strategic partner in an organization means accepting the
Human Resource functions as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies. In particular, human resource are recruiting, selecting, training and rewarding personnel to increase the capacity of a business to execute its strategies, HR needs to understand on knowing how to measure the monetary impact of their actions, so they can be able to demonstrate the value added contribution of their functions. Primary actions of strategic human resource should convert business strategies into HR priorities.
In any business setting environment, whether it’s a corporate, functional, business unit or product line, a strategy is always there either clearly in the formal process or document or completely through a shared agenda on priorities. Human Resource as a strategic business partner identifies the HR practices that make the strategy happen. This whole process of identifying HR priorities is called organizational diagnosis through which an organization is able to determine it strength and weaknesses.
The important areas in organization that reflects any organizations productivity and developments of growth are training and development, compensation and benefits and employee relations. By effectively working in these areas can reflect on strategic human resource. Training and developing are essential elements that should be provided to employees in any organization. Knowledge is a key to success and is acquired through training in some form. Training allows an employee to develop skills and abilities that will be used in the workplace.
And development is the continuous training and learning that enhances the employee’s talent and knowledge. That is why human resource needs to increase this asset by making an investment in training employees. Research suggests that the investment made by company in training their employees strengthens a firm’s technical excellence and innovative capabilities (Sack, 2007). Some businesses don’t have large budget to put into training like many large firms, but if done properly they can still be able to get most out of their training dollars.
In order to provide these benefits in organization that help keeping employee productivity and helps grow the business, HR leaders should know different ways to manage the difficult situation. For example in a case of labour costs, as we all know labour costs are often the most expensive part in a company. It includes payroll, benefits and training. And in any situation, despite the fact that employees are a critical component in an organization, they are the first target in a cost reduction program, where these reductions may be based on arbitrary, authoritarian dictates.
In this process human resource system of retaining, developing, recognizing and rewarding employees also are decimated. Employee who survives becomes depressed scared and dissatisfied which causes them with low enthusiasm and productivity. These situations come when there is no strategy which requires a commitment and empowered work force. To avoid these circumstances organizations all over the world aligns their HR strategies with their overall business plans. They are the one who is most likely to emerge from crisis stronger than their competitors.
As business strategies change, well designed HR strategies can be flexible as well. As a business grows from a regional to a national one, the human resource management function must take on a new and broader perspective. As a national company expands overseas, first with a sales operation, then to production facilities cities and fully expanded operations or to international joint ventures, the human resources function must adapt to a changing and far more complex environment. In today’s rapidly changing and highly technological world the management of human resource has become very important.
In order to realize the dreams of organizations being leaders in their respective businesses, the HR department has to understand the organizational framework. Its strategies, objectives and goals have to be incorporated in every aspect of strategic human resource planning. This would keep their focus intact and result in the identification of specific workforce needed to carry out organizational goals. Consequently, organizations would take up job analysis to look up for potentialities regarding the carrying out of jobs. This procedure would help n getting a workforce cable of responding to the organizations objectives in an effective and efficient manner. Thus, the strategic human resource development would materialize in a more comprehensive way. Training and development is a continuous process and its importance can never be underestimated. It has to go hand in hand with the job analysis methodologies. However, proper linkage of organizational objectives with employment planning would reduce organizations costs manifold both in tangible and intangible terms. 3. Analysis of HRM Practices of Large and Small-Medium Enterprises
It is clear that the strategic HRM is highly significant that not only in improving the of organisation’s performance but also differentiating their products or services from their competitors. Moreover, the effective HRM also makes the best understanding among the management to their employees that they are the organisation assets not just only resources. However, the HRM practices are broadly seen in most large enterprises rather than small and medium-sized business which are found an unsophisticated human resource management activity (Bacon & Hoque 2005).
Generally, most large organisations usually have their own human resource department to be involved in the sphere of human resource management functions regarding employment, orientation and training, performance appraisal, motivation, remuneration and organisational research and development (Hartel et al. 2007) whereas small and medium-sized enterprises that are lack of well-established human resource department would build numbers of negative outcomes, such as unsecured employment (Marlow cited in Bacon & Hoque 2005) and lack of skilled labours in an industry (Small Business Service cited in Bacon & Hoque 2005).
In Hospitality and Tourism industry, the HRM practices are varied according to the bodies of organisations. Most serviced large firms have developed their HRM practices regarding an internal process to provide a good-quality service to their customers, especially in the service industry firms as Knox & Walsh (2005, p. 71) stated “Employers were seeking to strengthen their internal labour markets through improvements in training provision, functional flexibility initiatives and career development programmes. For example, to identify the internal factor in the international five-star hotel like Crown Hotel and Complex, they offer numbers of benefits to their employees, such as good wages, free uniforms, free meals during working time, training and learning support unit, rewards, secured and stable job, and many more retention programmes since they need to maintain the service quality and enjoyable working environment to their employees in return (Crown Melbourne 2008).
In the meantime, to compare with a small restaurant which is recognised as a “family business”, such as Mai Thai Restaurant, all staffs have fewer skills, less security, lower payment and lack of retention acknowledgement due to the absence of sophisticated HRM practices. This could lead to the result of poor work quality and motivation among the employees.
Additionally, to pinpoint the external factor, Crown Hotel and Complex have their own sophisticated HR department which is able to assist the management team in producing the strategic HRM which is seeking the development and sustainability of high service quality (Nickson 2007) whilst the owner of Mai Thai Restaurant would develop their strategic HRM model by their own contribution.
The roles of human resource management are considerably changed to not only take care of employee activities but also be involved in an organisation strategic development. Their responsibilities are seen to produce the organisation’s competitive advantage over their competitors. In regard to the practices of human resource management, the strategic human resource management is the key performance which comprise of three steps – HR planning, HR implementation and HR appraisal.
Those HRM strategies would portray the step-by-step outlines to HR manager and practitioners in managing their resources areas – internal and external. The effective human resource management practice is also highlighted in assisting the HRM measurement which the criteria is consisting of the achievement of goals, the resource quality, the internal operational approach, the stakeholders’ satisfaction, and the reflection of competing management values in organisation.
However, the HRM practices are more extensive within the large organisation than SME business. In small and medium-sized business, the HRM practices are significantly found pessimistic results like the employment insecurity and poor expertise in labour market. Arther and Hendry (1990) and Storey (1999) explain the ‘economies of training’ by the fact that small firms have a higher probability of labour turnover, because they offer less opportunity to career development.
As a result, better trained employees will choose for opportunities elsewhere leaving the small firm behind with its less trained employees and a depleted training budget. A proposed solution to this problem would be to use company specific (on-the-job) training, which has little value to other firms. Other interesting differences concern small firm recruitment policies. Small firms make extensive use of job try-outs (Duberley and Wally, 1995), which are inexpensive and very well suited to evaluate the actual fit of a person with the (implicit) demands of the job.
The personal atmosphere of small firms is reflected in the high use of informal procedures like job posting and bidding. To identify the comparison between Crown Hotel and Complex and Mai Thai Restaurant, it is clear that the HR practitioner in the large firm can build the well-organised HRM system to make profits to their organisation in platform of internal and external process while the small business is lack of HR professional ability to carry out the effectiveness of HRM exercise. . Analysis of Siemens AG 4. 1 Background Information Siemens AG is an international organization which operates in more than 190 countries worldwide (The World Bank n. d. ) and employs just under half of a million people (approximately 417,000) in all over world. Siemens has its headquarter in Munich, Germany while in the UK the centre of its operation is in Bracknell, Berkshire and has roughly 100 places across the UK employing 20,000 human resources (theTimes100 2007).
At the same time, Siemens’ products play an important role in our daily life with several ways as its portfolio consists of six business areas such as information and communication technology, automation and control, medical imaging technology, transportation and household appliances (hrSPECTRUM 2007). Siemens believes that its corporate culture is the only way to achieve its goals. In addition, it is considered that this culture could be developed over the period of time as it could be shaped by its company’s human resource, its leadership and the people who work for it.
Following this idea, Siemens’ high performance culture could be succeed only in the case that all into the organization share and work closely under the same vision and objective by trusting and adding value each other’s involvement (theTimes100 2007). 4. 2 Human Resource Development Strategy Siemens AG realizes that the development and the training of its human resource is a long-term investment which could contribute to the company’s efficiency and quality of products and services which are offered (The World Bank n. d. ).
Based on that, Siemens introduces and adopts a human resource development strategy which is considered as its vital element to guarantee personnel with professional skills and knowledge (The World Bank n. d. ). Human Resource Development (HRD) could be defined as the individual and organizational growth which might be achieved by their fullest potential throughout continuous training and learning (Kousiouris 2000). Furthermore, HRD is concerned by motivating people to find ways in order to improve their career and as a result of that the business performance.
Although, Siemens is an organization which is widely recognized that consists of the most efficiently and well motivated workforce, it is committed to its personnel who are employed in a wide range of tasks such as information technology specialists, researchers, administrators, etc (theTimes100 2007). For this reason, Siemens organizes training sessions (online or technical) around the world and supports its partners through training programmes (The World Bank n. . ). Siemens is convinced that ‘excellent people’ need to be managed with an ‘excellent way’. This means that people who are suitable managed, they are more able to encourage themselves to perform well. Thus, Siemens focuses on the full engagement of people in the business environment which could combine obligation and organisational nationality. According to that, the company needs to follow a strategic business plan which could lead the action to a result.
Another essential element of its strategy is the way that it manages, develops and motivates its personnel (theTimes100 2007). 4. 3 The importance of HR As it is referred, the main aspect of the Siemens’ business strategy is its ‘people excellence’. At the heart of ‘people excellence’ is the establishing of a high performance culture based on the assumption that nothing helps an individual more than to be given to him the responsibility and the sense of trust.
Something which is widely recognized by some HR theorists who support that each individual could be more motivated only if he feels that his effort is recognized as valuable and meaningful by the organization. This can explain why ‘people excellence’ is an important cornerstone for Siemens AG (theTimes100 2007). However, Siemens considers its human resources as well as its technology and innovation the key point of its competitive advantage (hrSPECTRUM, 2007).
In order to gain this sustainable advantage, Siemens needs to ensure that its employees work closely on developing the company’s heritage of innovation. Siemens also considers that there are variable ways in order to make its personnel to feel useful and engaged which include a personal letter or a special mention in a meeting, a promotion or a higher salary. Siemens by creating the feeling of belonging into a successful team they feel valued and willing to involve to the business success (theTimes100 2007). 4. 4 High Performance Culture Siemens promotes a culture based on team collaboration.
The global Chief Executive Officer of Siemens, Klaus Kleinfeld reported that ‘an individual can make a perceptible difference, especially when he joins in a great team and that the quality of its people and as consequence of that its teams is its most worthwhile resource, particularly nowadays where the business world changes rapidly as the knowledge flows in all over the world with lightning speed and is easily available’ (theTimes100 2007). At the same hand, Siemens desires its entire workforce to be truly involved into the business and to feel that contributes to its success.
With this in mind Siemens establishes a clear mission. Objectives for individuals are interrelated to objectives for the entire organization while everyone plays a significant role in achieving great results (hrSPECTRUM, 2007). Thus, Siemens states that ‘its organisational success depends on the performance of each individual, its teams and the whole organisation’ (theTimes100 2007). A high performance team represents a group of people that all members collaborate and work towards shared goals while they have a sense of shared responsibility for the best results that the team should achieve.
As the performance of the team rises over the period of time the organization achieves better results (theTimes100 2007). As ‘people excellence’ is the part of its strategic business plan consists of four main elements: the achievement of a high performance, the increasing of a global talent pool, the strength of the expert careers and Siemens’ Leadership Excellence Programme (SLE). The high performance culture is based on the way of how the employees work at Siemens and it involves everyone personally.
The global talent pool includes all Siemens’ employees who have the chance to improve their qualifications and to gain further expertise. In addition, the SLE programme provides a highest quality of leadership and management training (theTimes100 2007). 4. 5 Performance and Talent Management Although ‘people excellence’ involves the development and training of each individual, Siemens by implementing the talent management approach ensures that in everyone is given the right guidance and support in order to achieve their full potential.
This forces them to work for the best result. On the same side, all the employees work closely with the aim to achieve the organisation’s vision, meeting and satisfying firstly their own personal objectives. According to this culture, everyone shares the same vision and target by making them to contribute and take on greater responsibility within the organization (theTimes100 2007). For Siemens AG everyone has professional skills and knowledge.
By matching these skills and using the right person for the right job, Siemens achieve a sustainable competitive advantage. Therefore through talent management and Siemens’ belief that talent is ‘the future differentiator’ (hrSPECTRUM, 2007), everyone is motivated to undertake extra tasks and responsibilities in an existing job and to work more for further rewarding while at the same time the existing job is extended to give a wide range of responsibility, plus extra knowledge and skills development.
Talent management is a worldwide approach which is a key part of supporting each of the elements of the Siemens’ business strategy and enables the leadership of Siemens organization to engage and involve personnel throughout the organisation (theTimes100 2007). However, Siemens has established a standard process in order to manage and measure the performance and development of all its employees. This is referred to as ‘Performance Management’.
Based on that process, Siemens creates a direct link between its strategy of the whole organisation and the plans for each individual. Everyone has his targets which are based on his role and his responsibility within the organisation. According to this, meeting personal targets and presenting a good performance they give to Siemens the opportunity to take the advantage by achieving its mission (theTimes100 2007). Performance management is a process which creates trust, open dialogue etween each team member and its supervisor and also commitment by including target agreement, assessment of the individual’s progress and perspectives; and related measures for training and professional development (theTimes100 2007). At Siemens’ case the performance management is the mechanism which leads talent management. It is the essential element of its corporate culture and ensures that everyone has the obligation about the entire performance moving toward an organizational vision. Everyone has also a clear image about their performance and development (theTimes100 2007). . 6 Conclusion Nowadays as the business world changes rapidly as a result of the globalization and the rapidly increasing of technology innovation, the organizations in order to gain a sustainable competitive advantage focus on the importance of human resource. In order to accomplish this, the organizations implement HRM approaches such as Talent Management which manages and develops the employees of each organization by implementing training programmes in order to increase individual’s performance and satisfaction; and as consequence of that the performance of the entire company.
An example is the case of Siemens’ organisation which provides training and development opportunities to its staff and by integrating a high performance culture based on collaboration between the members of the team and the supervisor respectively ensures that the ‘people excellence’ is managed and developed with an ‘excellent way’. 4. 7 Recommendations As Siemens organization has adopted the idea that its human resources perform well only if they are operated in a collaborative culture which through guidance, support and development they can satisfy their individual’s needs and to succeed a high performance for them and the whole company espectively. Siemens via the integration of high performance culture provides a framework and supports in which high performance people can present their commitment and involvement into a high performance organisation. As happening in many industries the competition of the companies to attract people with talent and to create and employ a valued proposition philosophy is in a high level. In order to achieve this purpose a strong emphasis needs to be given in the way that the Siemens organization promotes itself to future employees.
In general the company should market itself by having strong relationships with educational institutes and universities so as to the students become well educated and potential employees after their internships, recruitment fairs etc. At the same time, another way to improve its human resource is to be strictly selective in the employees hired and an emphasis to be put on the specific cultural characteristics the whole applicant sample, which is about to hire, has. In addition, throughout the Information Systems Technology Siemens organization could transmit its brand and global practices.
Also, Siemens in order to attract and develop people with high qualification skills could cooperate closely with high educational institutes or public organizations in the countries that they extend their company, so as to make sure that the employees into all the levels of the organization are well educated and developed in order to cover their position’s needs and as a consequence of that, to improve the performance of the whole organization achieving the goals which the organization has set throughout a human resource development strategy. 5. Conclusion
Today and tomorrow, success for organizations is being increasingly seen as dependent on effective HRM and effective HRM positively affects performance in organizations, both large and small. 6. Recommendation Human Resource Management Areas The Human Resource Management function has achieved great prominence of late especially in technology intensive industries and come to the forefront of organizational activities, from being a personnel department to a core business function. It acts as a catalyst in enabling an organization to become a high performance work system to achieve its strategic goals.
This gets reflected in each of the following key Human Resource Management areas. The future of any organization lies in its ability to grow and harness the talents of its people. Learning is a continuous process, particularly in business and organizations where yesterday’s innovative techniques are today’s outmoded procedures. In any organization the Human Resources department is responsible for helping individuals to adjust to the changing demands of the organizations in which they work.
One way to achieve this is to provide training and development programs in order to meet the strategic business objectives of the organization. According to Schermerhorn, Hunt and Osborn, in the book entitled Organizational Behavioral (6th edition), training is a set of activities that provides the opportunity to acquire and improve job-related skills. Training occurs not only initially but also whenever improved skills are needed to meet changing job requirements. CONCLUSION
Organizations are experiencing major environmental upheavals such as increased globalization, competition and technological advances. Translated through major changes in organizational strategy, structure, shape and technology, these environmental forces require speed, quality, innovation and globalization for firms wishing to survive in the battlefield of international arena with a competitive edge. These environmental forces have given rise to the need for understanding and utilizing knowledge in strategic human resource management.
In response to this dynamic change, HR managers must approach the recruitment and selection process from a strategic perspective. Recruitment and selection strategies and policies must integrate within both HR and organizational strategies. In turn, HR and line managers must successfully source and attract potential employees in a highly competitive environment as well as abiding by legislation. Motivating methods encourage employees to contribute their ideas for improving their organization. Implemented on their own, each of those practices would have limited impact.
The key is to use a multifaceted approach that continually reinforces the fact that employees’ ideas are welcome, valued, and rewarded. It would be awesome to see how much an organization’s effectiveness could be improved if all managers were to systematically seek out and implement these kinds of suggestions from front-line employees. By helping the management team optimize employee emotions, they will be helping the organization make a significant impact on the primary sources of competitive advantage in today’s marketplace. Theoretical Perspectives of Strategic Human Resource Management
The focus of Strategic Human resource Management is to demonstrate the importance of effectively managing the human resources of organizations. Contributions of SHRM to organizations has been highlighted, but has not fostered sound theoretical development. Universalistic arguments are the simplest form of theoretical statement in the SHRM literature because they imply that the relationship between a given independent variable and a dependent variable is universal across the population of organizations. The first step: important strategic HR practices must be identified.
Secondly, arguments that relate the individual practices to organizational performance must be presented. According to theoretical works by Osterman (1987), Sonnenfeld and Peiperl (1988), Kerr and Slocum (1987), and Miles and Snow (1984), seven practices that are consistently considered strategic HR practices can be identified. These would be: internal career opportunities, formal training systems, appraisal measures, profit sharing, employment security, voice mechanisms, and job definition. Basically all of these are also among Pfeffer’s (1994) 16 most effective practices for managing people.
We view these seven practices as critical characteristics of employment systems in organizations and will use these practices individually and in combinations as the basis for hypotheses that are consistent with the alternative theoretical perspectives investigated here. And this seven practices listed above appeared to have the greatest support across a diverse literature. Thus, in the interest of parsimony, we restricted our arguments and analyses to these seven practices. Indeed, the human resource management practices demonstrate the significant contribution within organizations.
Nevertheless, how to judge whether the human resource practices are successful is regularly posted by human resource managers and practitioners. Hence, in this essay, it will be discussed the human resource practices relations with the strategic human resource management inclusive planning, implementation and appraisal that seems important to create the organisation advantage and also reviewed effective performance of human resource management practices of two-sized enterprises – large and small-medium – which the human resource management appears to indicate their high and low performance.
The strategic human resource management is the key performances in HRM practices that help orgnisations in differentiating themselves from their competitors. It means that a vital strategic HRM is able to create the competitive advantage to its firm. In term of “Strategic Human Resource Management”, it is deal with the overall human resource strategic development and activities regarding recruitment, selection, training and rewarding personnel. The procedure of Strategic Human Resource Management is HR Planning, HR Implementation and HR Appraisal.
To begin with, HR Planning is involved in an initiative strategic plans which HR is required to identify the orgnisation’s internal and external environment. The internal areas are seeking the strengths and weaknesses of their resources while the opportunities and threats are the external areas which HR management examines the competitive information and plans being used by their competitors. Next, HR Implementation is the phase that HR operates their day-to-day work according to the HR strategic planning.
Lastly, HR Appraisal is the process to evaluate whether their HR implementation process could meet their objectives and goals (Dessler et al. 2004). To sum up, it is clear that the strategic human resource management is focal point that cannot be ignored when the organisation strategies would be initiated. Yet the strategic HRM seems less important if there is lack of efficient HR practitioners. Therefore, the effective performance of HRM will be argued in the latter stage.
It is clear that the potential HRM is highly significant that not only in improving the of organisation’s performance but also differentiating their products or services from their competitors. Moreover, the effective HRM also makes the best understanding among the management to their employees that they are the organisation assets not just only resources. However, the HRM practices are broadly seen in most large enterprises rather than small and medium-sized business which are found an unsophisticated human resource management activity (Bacon & Hoque 2005).
While discussing about Human Resource Management, as a concept, it is important to shed light on the HRM function as a strategic function. It is being increasingly recognized that a firm can gain competitive advantage with a high quality workforce which will enable the organization to compete in the global markets on the basis of market responsiveness, product and service quality, differentiated products and technological innovation.
Strategic human resource management has been defined as “the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility‘(Jones, 1999). Strategic HR implies the acceptance of the HR function not merely as a cost centre but as a strategic partner in the formulation as well as implementation of the company’s strategies through various HR activities. Strategic HRM means the recognition of HR’s role as a partner in the strategizing process. Human Resource Management has a significant role to play in ensuring that heir organization and employees have some form of balance to adjust to the changes. HR must be in the business of changing people’s performance, assisting managers to face the ongoing changes leading to organizational benefit. HR professionals should focus what is important to the organization. Technology and outsourcing services available can be utilized for completing transactional and administrative tasks such as payroll, maintenance of employee records and majority of HR time and resources must focus to optimize workplace performance in order to maximize the results of the organization.
Starting with recruitment and selection of the right people to their retention and training in order to develop the requisite skills become a part of the strategic function of the organization. How to select the right people in the organization, how to train them to suit the organizational requirements and most importantly how to retain them are all discussed and handled at the strategic level. Retention is usually done by the way of increasing the happiness quotient of employees – the underlying assumption being that the happier the employee with the organization more likely he is to continue with the job.
It is not just about monetary incentives but also about perks like better facilities in the organization, involvement of spouses and various other welfare activities which all form a part of the Human Resource Management. HR professionals need to know which of the major environmental shifts through technology or globalization are likely to have the biggest impact on the business strategy and then put actions in place to equip the organization for change (Holbeche, 2001).
HR practices are required to develop and build strategic relationships with organizational initiatives to integrate people initiative in support of the organization’s business plans. Strategic HRM plays an effective role in helping the organization come out of the vicious cycle. Apart from performing the transactional work, SHRM helps the organization by 1. Training the managers to effectively handle subordinates 2. Creating awareness regarding the importance of various means of effective communication 3. Planning an efficient and most importantly fair rewarding system 4.
Preventing the phenomenon of square pegs in round holes 5. Maintaining motivational levels of employees at an optimum 6. Taking appropriate steps to counter tardiness, absenteeism and high turnover 7. Aligning employee goals with the organization 8. Quantifying the contribution of employee costs to the total costs of the organization and taking steps to optimize them 9. Proactively identify the strategic needs of the organization Strategic HRM systems are inimitable. The question arises why it is so. There are two key factors for it – Casual ambiguity and path dependency.
Casual ambiguity implies that it is difficult to grasp the precise mechanism by which the interplay of human resource practices and policies create value. Without understanding how the elements react to each other it is not possible to implement the systems. Also simply by hiring one or two top executives you cannot expect results as understanding is an organizational capability that is spread across the firm and cannot be obtained by just hiring a few of the top management. The second factor that plays an important role is that the HR systems and policies are path dependent.
Policies are developed over time and cannot be purchased off the shelf. There is a limitation on the competitor’s ability to replicate culture and interpersonal relationships. In other words you can implement the same strategies, have the same policies but the culture and the interactions that really make these a success won’t be there in the new organization. Differences represented below show how tasks are performed differently in personnel management and Human resource management. It also describes different approaches to people management.
When it comes to time and planning the personnel approach is short-term planning for a certain case. Being reactive, rather than proactive is something that differs to Human resource management. HRM is a strategic approach with long-term planning. Concerning the psychological contract the approach in personnel management is more about fulfilling certain rules and in a case of HRM it is more about commitment and responsibility. When comparing structures and system it is found that in personnel management the common structure is more formal and centralised rather than organic and flexible like it is in HRM.
Regarding employee relations in personnel it is more a pluralist approach with low trust and in HRM it is more about individual and high trust. Strategic Planning Through effective strategic planning and direction and flexibility and adaptability to change, Foster’s has been able to successfully consolidate its position as Australia’s largest alcohol company and achieving total revenue nearly $1. 6 billion. Strategic planning and direction have been important for Foster’s group Limited to have consolidated its position as the largest Australian alcohol company.
Currently, Foster’s has continued building and managing their diverse portfolio of excellent brands, improve brand investment and new product development. Their key focus in 2006 was the Integration of three different businesses in three geographies, realising synergies, establishing innovation priorities, and building the capabilities that will strengthen their growth in 2007 and beyond. Consolidation of their sales forces, customer and distributor relationships, and management structures will further improve their capabilities in production, distribution and customer service.
As stated in “Human Resource Management in a Business Context“ by Alan Price, Human Resource Planning is the process which anticipates and maps out the consequences of business strategy on an organisation. This is reflected in planning of skill, competence needs and total headcounts. Human Resource Planning describes how companies ensure that their staff are the right staff to do the jobs. Strategic planning is vital for any organization and offers many advantages. So, what is strategic planning and what benefits can it bring?
Strategic planning is a long-term effort to determine where you’re going. At first glance it may seem that the task is impossible to fulfill, because sometimes it’s even difficult to predict what will happen next minute. Moreover, some people regard planning as a daunting, time-consuming activity that usually ends with nothing. However, many sociologists and management consultants state that planning can be quick and easy, so it can not only help to eliminate uncertainty and avoid unpredictable results, but also save your time and money. And the list can be continued.
So, what other benefits can strategic planning exactly bring? First of all, it’s allows to draw a clear picture of our preferred future, to create our personal vision. It also gives us an ability to adapt to changing circumstances, and change direction if necessary without any serious consequences. Secondly, planning helps to analyse future career prospects and to be better prepared to face and overcome obstacles more effectively. Thirdly, planning provides us with an opportunity to build a balanced life, that is to combine your personal aspirations and purposes with social ones.
It can also enable us to involve others in our decisions, and consequently make the planning process more efficient. And finally, planning can help people to prepare for retirement; it raises confidence in your future, so you don’t always count on good luck. So, it’s worth the effort. Considering the first reason, of course everything is changing, and we can’t predict what will happen, but on the other hand, planning doesn’t provide us with specific information, it just gives us a foundation, allows us to be flexible and adapt to changing conditions.
A lot of writing on strategic HRM has emphasized the significance of HRM and people as a source of competitive advantage. (Lawler, 1991; Barney 1991; Snell et al 1996) Together they suggest that greater emphasis should be placed on the development of human capital. This is essentially because the more management believe that HRM contributes towards success as a company, the more its role will be recognized as important, and the more it will be integrated into the companies strategic long-term planning.
Snell et al (1996) argued that adaptation of so-called flexible forms of work is correlated with firms operating in a competitive market, having technology which requires high levels of skill, engaging in customized production, and following a strategy that emphasizes variety and quality an contrast to low cost. Thus, offering skilled employees high level of involvement, autonomy, training, good wages and benefits can be seen as a way to attract, motivate, and keep qualified employees who will be committed to the long-term goals of the company.
It is often argued that the effects of a flexible, competent and committed workforce results in a highly productive organisation, which in turn gives the employees job security and a decent standard of living. Thus, the relationship between HRM strategy and company performance is heavily linked with labour market flexibility. It is essential for a company to have staff that are flexible in every different way, if they are going to respond competitively to the market. Begin (1992) identified four different types of flexibility required.