6. Strategic Human Resource Management. SHRM is all about aligning human resource employment and activities with the overall organizational strategy for realization of its goals and objectives. The strategic direction of a business entity is decided by defining its mission/goals and in depth study of its external and internal environment to determine threats/opportunities and weaknesses/strengths respectively. In such a complex business environment, aligning Human Resource Management with Strategic Management is easier said than done. While deciding a strategic business direction in an ever increasing competitive environment, an organization has to find answers to ‘Where to compete? How to compete? And With what to compete.’ The earlier two relate to product & market while the third relates to the skills and abilities of its human resource besides technological resources/fixed assets. Any miscalculation in arriving at correct decisions with regard to these questions will have serious repercussions.HRM professionals can assist in strategic decision by identifying skills needed by its human resource for the selected strategy, if required skills and expertise is available or could be developed/acquired in the human resource. Otherwise, the strategic managers would need to have a relook and reevaluation of its strategy. Organizational resources, which must be used effectively for successful business operation, include (1) Technology and fixed assets used to manufacture a product or deliver a service (2) Financial resources at its disposal and (3) the skills and talent of its human resource. An ideal strategic plan should encompass and all these resources integrating these with the overall vision/mission of the organization.
(By Andrea Sober, 2011, HRVoice.org)
7. The integration/linkages between Strategic Management and HRM can be categorized into 4 different levels (Strategic HRM, Chapter 2):-
a. Administrative Linkage. This is the lowest level of integration in which the HR function is restricted to monitoring the day to day activities and has least opportunity towards taking a strategic view of its function. Hence, it has no meaningful role in strategy formulation or strategy implementation.
b. One Way Linkage. The strategic plan is developed by the top management and shared with HRM. It left to the HRM to design systems and or programmes for execution of the strategic plan. This level of integration does not assure successful implementation of the strategic plan.
c. Two Way Linkage. It allows consultation of HR while formulating a strategic plan. The HR function gives its input for the various possible strategies. Based on this input, strategic decisions are made and the strategic plan is passed on to HR for implementation.
d. Integrative Linkage. It provides a continuous and uninterrupted interaction between the Strategic Management team and the HR professionals through integration of HRM executive with the strategic planning team. This provides direct HR input in the process of strategy formulation and implementation.
8. Changes in Roles-HR Professionals. In today’s competitive environment, organizations are increasingly looking forward to ways and means to achieve and sustain competitive advantage for profitable returns. The competitive advantage could be in terms of technology/innovation and quality of its human resource. An organization’s business strategy is shaped considering all such and other factors. In such a dynamic environment, HR has to adopt practices involving changes in its ‘Roles’ to enhance the performance of organization and create sustainable competitive advantage. There is no universal model for SHRM, organizations have been modifying their structures and practices aimed at achieving optimal performance levels. These changes differ widely from one organization to the other as each one operates under a specific and peculiar environment. The identification of ‘HRM’ as a critical for integration of business strategy with people management has exposed HR professionals to new role demands and professional challenges (Cadwell, 2003). Being a ‘weak occupational group’, HR professionals face challenges that relate to role ambiguities (Friedson, 1993). These include ‘Powerlessness’ specially at strategic level, Inability to prevent encroachment through managerial interventions, Inability to quantify outcomes or contribution of personnel function and Being in the middle of conflicting interests of the management and employees. Under these challenging circumstances surrounding the transformation of HR practices into SHRM, a number of studies have been undertaken to understand its true essence.
9. In the early 1990s, Storey conducted an empirical study on changes in HR practices in the United Kingdom and proposed a fourfold typology of personal roles, Advisors, Handmaidens (Service Providers), Regulators and Change Makers through a case based research into 15 leading UK firms and public sector organizations. However, within a decade, significant changes in the nature of four personnel roles suggested by Storey started emerging. This led to a prescriptive model by Ulrich giving a US perspective through Human Resource Champions-1997. It provides a framework for capturing emergence of new HR Roles and strongly propose HR professionals to become champions of competitiveness to deliver value or else get ready for extinction (Ulrich 1997). It identifies two roles as part of business process i.e. Strategic Partner and Administrative Expert, and other two purely individual i.e. Change Agent and Employee Champion. However, his model has been criticized for downplaying Role Conflicts/Ambiguities.
10. Skill Sets-HR Professional. Moving HR to a more critical role would also increase expectations for its contribution (Baill, 1999). For a changing role of HR, a new set of competencies is required in order to fulfill the expected role of HR. Major competencies as listed by Brockbank, Ulrich & James (1997) are Strategic Contribution, Personal Credibility, HR Delivery, Business Knowledge and HR Technology. Becker et al. (2001) included strategic performance management as an additional competency. The alignment of all functions of organization with its strategic objectives is crucial for its success. HR should ensure the availability of human resources for implementation of business strategy.HR should further ensure the alignment of its policies with the overall business strategy. To have a strategic input and act as a business partner, HR should have enough knowledge of strategy, markets and economy (Ulrich, 1998). All such areas of strategic contribution, business knowledge and HR technology would accelerate the role of HR as Business Partner (Brockbank et al., 1997). HR professionals should recognize the importance of all such fields as accounting, marketing and other functional areas in order to devise and implement useful strategies.
11. In spite of all these things, HR still lacks in adopting strategic role in organizations and is seen to be involved in more transactional works (Sunil J. Ramlall, 2006). To ensure this strategic role of HR, critical competencies need to be developed. Several methods can be adopted for this purpose such as on job training or formal HR education.
12. Devolution-HR Practices. Devolution is defined by Cascon-Pereira et al. (2006) as “the re-allocation of personnel tasks or activities and the related decision making power, financial power and expertise power required to carry out these tasks, from other agents to line managers” (P. 147) where line managers are those responsible to achieve the objectives of organization. A major reason of conflict between HR and line is due to the fact, that, sometimes HR policies are not so productive practically and reduce the decision making power of line managers. (Whittaker & Marchington, 2003 ). Line managers should be given more authority in employee related issues as they can more effectively develop people working with them directly. (Heraty & Morley, 1995). Devolution would also have a positive effect on HR construed image and help to enhance their effectiveness (Baruch, 1997 ; Tsui, 1987).
13. Another aspect of devolution is that line managers do not possess necessary skills to handle HR related issues (Kulik 2004). Moreover, the transfer of HR operational work to line would threaten the existence of HR (Cunning-ham & Hayman, 1995 ; Renwick, 2003) and therefore, HR is reluctant to shift people management activities to the line (Harris, at all). Line managers perceive this transfer of activities as a measure to cut cost. This may lead to organizational cynicism (Dean, at all) effecting the people management activities eventually. In some cases, HR is willing to shift more people management activities to line and want their greater involvement, while line managers appear unwilling to take more responsibilities of HR related work especially in case of “Hot Potatoes” (Kulik & Hugh, 2006).
14. Devolution should be accompanied with a clear communication by the top management in order to remove concerns of line managers. Organizations should convey the clear vision for devolving people management activities to line. This is crucial to win the confidence of line and to ensure the quality of HR related work performed by the line. Further, HRBP model should be adopted to assist line managers in HR related work. Further, devolution would change the nature of work of HR (Kulik & Hugh, 2006). It would spare HR for more strategic work and be helpful to align HR policies with the business strategy.
15. New Structures-HR Function. There has been an increased tendency amongst organizations to adopt a standard HR Model comprising a Corporate Centre, Shared Services, Business Partner and Center of Expertise (SHRM Book, Chapter-6):-
a. Corporate Center. Its configuration depends upon the size and degree of complexity and the operating structure (centralized/decentralized) of an organization. It primarily looks after internal governance functions and some key tasks at policy level. In addition, following are some of the activities which might be assigned to Corporate Center:-
(1) Guardian of organizational values/culture and HR operating model.
(2) Budget holder and resource allocator for HR Function.
(3) Conciliator or Arbitrator in disputes.
(4) Render advice to strategic management on HR issues.
b. Shared Services. The technological advancements and resultant rise of e-HR has enabled service to dispersed population from a remote common source has given birth to the idea of Shared Services. However, it could be applied more conveniently for ‘vanilla service’ where customers get a common product / service as compared to ‘differentiated’ products/services. Centralization of services results in economy of scale and cost reduction but results in remoteness from the customer. If properly instituted it could bring cost savings through a certain degree of centralization and better decision making through corresponding decentralization. It has large number of critics as well like Penny (T-Mobiles) who is of the view that consultants and academia are over projecting its benefits while organizations are following the trend of shared services as a fad.
c. Center of Expertise. Due to immense competition amongst the rival firms, increasing number of organization is focusing on growing in house expertise to deal with challenges of competitive environment. In order to enhance motivation and skill levels of its workforce, organizations look forward to the expert skills to engage in activities associated with training and development of human resource. Some of the important decisions for assigning functions of Center of Expertise are:-
(1) Specific areas of expertise.
(2) Degree of participation in decision making.
(3) Degree of responsibility for implementation of policy decisions.
(4) Combining regulatory role with regard to people management and
advisory role for business partners.
(5) Interaction with line managers, either direct or through business partners.
(6) Do they have a reactive or proactive role.
d. Business Partners. In simplest of terms, HR Advisor to a business unit is called a Business Partner. The primary duty of business partner is to work with managers to build a framework of to help them manage their workforce (Andrew Mayo, 2005). Due to diverse nature of activities, a good business partner should be an analyst, a facilitator, a friend, a project manager and a consultant simultaneously. There are certain essential characteristics of a Business Partner, which include:-
(1) Its role should be aligned with the organizational business.
(2) Its tasks should flow from organizational needs.
(3) Should be able to work in close harmony with other business colleagues.
(4) Should be able to contribute strategically.
16. Conclusion. Despite immense transformation in HR functions from Personnel Management to Strategic Human Resource Management, management professionals are still facing serious challenges as to how to improve HR functions and its image. There are no role models to be applied universally, organizations and HR professionals are experimenting with a mix of role/structure changes, devolution for optimizing its performance. While a right mix of these aspects could be extremely beneficial for a particular organization, others would require to discover what works best for them. In view of the complexities of the contemporary business and competitive environment this process of experimentation is likely to continue for a while till universally accepted models and practices are evolved.
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