"Critically discuss how organisations can develop a human resource strategy"

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“Critically discuss how organisations can develop a human resource strategy”

1. Introduction

This report aims to look at ways in which organisations can develop a human resource strategy.  I will begin by attempting to define human resource strategy and assess the various approaches to strategy. Then I will suggest the steps an organisation may take to develop a human resource strategy. The report goes on to assesses whether strategy is contingent with the organisations strategy .The report also looks at contrasting strategies depending on the fit to the choices involved, this is illustrated using the case studies of McDonalds and Venture Pressings (see appendix).  It continues by examining the strengths and limitations of human resource strategies.

2. What is Human Resource Strategy?

This is a new subject area, a lot of literature on this topic has a different perspective, and therefore it is difficult to define human resource strategy. First of all I will define strategy and how it links to human resource management. Strategy is about getting from where we are now to where we want to be; it may be manifest or implicit in organisational behaviour.  Therefore HR strategy is linked to organisational strategy. I will look at various definitions, Tyson (1997) made a comprehensive definition:

“ HR strategy can be defined as a set of ideas, policies and practices that management adopts in order to achieve a people management objective”.

Ulrich’s (1997) definition proposes that,” HR strategy is the “agenda” or plan for the HR functions or for the development of HR processes. Its concern is how the various systems that are typically in the responsibility of HR will be developed and managed in the future”.  These systems include recruitment and selection, reward, training and development and performance management.

The essence of HR strategy is a sustained focus on the people who do the work of an organisation.  A HR strategy is essential for maintaining quality customer care; attracting and retaining high quality staff and ensuring continued commitment from the staff to continuously improve the organisation. It entails the development of strategies to attract the right people to the organisation with the appropriate skills and competencies and strategies to retain them once they are recruited.  Key issues in attracting and retaining staff are Recruitment and Selection, Rewards and pay, Training and development and appraisal management.  The ultimate aim of any HR strategy is to create the highest value organisation.

I have established what HR strategy is but will now look at why organisations need to develop a HR strategy.  For many organisations there is a need to develop a HR strategy due to the increasingly competitive business environment. HR strategy derives from the desire to fully exploit the potential of people as a source of competitive advantage but also to meet the needs of HR practioner’s.  The only real source of sustainable competitive advantage for many organisations is unleashing the power of its people, people and processes not only provide incredible competitive advantage, they are also difficult to copy or buy in.

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3. The approaches to HR strategy

There are various approaches to developing a HR strategy; I will look at the Harvard model, The Michigan model and the Guest model.  The Harvard approach sees employees as resources.  However they are viewed as being fundamentally different to other resources as they cannot be managed in the same way. The emphasis is on the people as human resources.  The Harvard Map as it is known in various literature outlines four HR policy areas:

  • Human resource flows – recruitment, selection, placement, promotion, appraisal and assessment, promotion and termination.

  • Reward Systems ...

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