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LECTURE 1 THE CONCEPTS OF HUMAN RESOURCE MANAGEMENT

STRATEGIC HUMAN RESOURCE MANAGEMENT
Strategic human resource management (strategic HRM, or SHRM) is an
approach to managing human resources that supports long-term business goals
and outcomes with a strategic framework.
The approach focuses on longer-term people issues, matching resources to
future needs, and macro-concerns about structure, quality, culture, values and
commitment. It is necessarily dependent on the evolving nature of work itself,
which is explored in our Megatrends series and our Profession for the Future
strategy.
It is a complex process that is constantly evolving and the subject of ongoing
discussion by academics and other commentators.
The issue of strategic HRM initially came to prominence around the early 1990s,
at which time academics developed definitions of strategic HRM as: The undertaking of all those activities affecting the behavior of individuals
in their efforts to formulate and implement the strategic needs of business.
The pattern of planned human resource deployments and activities
intended to enable the organization to achieve its goals.

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This discipline covers the concepts and practices that guide and align Human
Resource Management philosophy, tactical planning and practice with the
strategic and long term goals of the organization, with a particular focus on
human capital. It deals with the macro-concerns of the organization regarding
structure, quality, culture, values, commitment, matching resources to future
needs and other longer term people issues.
Strategic HRM gives direction on how to build the foundation for strategic
advantage by creating an effective organizational structure and design, culture,
employee value proposition, systems thinking, an appropriate communication
strategy and preparing an organization for a changing landscape, which includes
downturns and mergers & acquisitions. Sustainability and corporate social
responsibility come within the ambit of this discipline, especially with reference to
organizational values and their expression in business decision making.
Strategic HRM emphasizes organizational codes of ethics, managing the societal
impact of business decisions, philanthropy and the role of the human resource
professional in improving the quality of life of employees, their families and the
community at large.

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MS Management Sciences

DEFINITIONS OF KEY TERMS

HUMAN CAPITAL
The set of skills which an employee acquires on the job, through training
and experience, and which increase that employee's value in the marketplace.\
TALENT MANAGEMENT
Talent management is the science of using strategic human resource planning to
improve business value and to make it possible for companies and organizations
to reach their goals.
KNOWLEDGE MANAGEMENT
Knowledge management (KM) is the process of creating, sharing, using and
managing the knowledge and information of an organization. It refers to a multidisciplinary approach to achieving organizational objectives by making the best
use of knowledge.
STRATEGIC FIT
Strategic fit expresses the degree to which an organization is matching its
resources and capabilities with the opportunities in the external environment. The
matching takes place through strategy and it is therefore vital that the company
has the actual resources and capabilities to execute and support the strategy.
Strategic fit could be classified into:
1. Market related Fits.
2. Operating Fit
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3. Management Fit.
STRATEGIC BUSINESS PARTNER
A strategic partnership is a relationship between two commercial enterprises,
usually formalized by one or more business contracts. A strategic partnership will
usually fall short of a legal partnership entity, agency, or corporate affiliate
relationship.
HARD AND SOFT HRM
Hard and Soft HRM are two contrasting styles of HRM. Unfortunately neither
approach works perfectly in reality and a good mix of both the styles must be
adopted. Few differences between them are as follows:HARD HARM
Hard HRM focuses on the

SOFT HARM
Soft HRM focuses on the interests of

organization.
Hard HRM sees people as lazy and

the employees.
Soft HRM sees people as responsible

merely resources to be utilized to

and having feelings, emotions and

further the goals of the organization.

Treats employees simply as a

motivation.
Treats employees as the most

resource of the business (like

important resource in the business

machinery & buildings)

and a source of competitive

Strong link with corporate business

advantage.
Employees are treated as individuals

planning what resources do we

and their needs are planned

need, how do we get them and how

accordingly.

much will they cost.

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MS Management Sciences

POUCHING
The term employee poaching is basically used to describe practices that involve
companies hiring employees from their competitors. Employee poaching
oftentimes occurs in high-growth industries that rely on employees with
specialized skills.
EXPLANATION
Also known as employee raiding, employee poaching is the practice of
aggressively recruiting talented employees from competitors. The term gained
notoriety in 2010 when it was revealed that a number of companies attempted to
suppress the recruitment of their high-tech employees. When an employer loses
employees to competitors, they incur a number of expenses; this includes
recruiting, retraining, as well as sign-on bonuses. Companies can attempt to
legally suppress employee poaching in a number of ways, such as:a. NON-COMPETE AGREEMENTS
A contract between the employer and employee stating the employee
agrees not to work for competitors for a certain period of time after
resigning from the company.
b. LONG-TERM INCENTIVE PLANS
Provides employees with compensation that is tied to the future success
and performance of the company. Not only do these plans afford
employees with a monetary incentive to remain with their employer, they
also make the employee feel they play a vital role in the success of their
business.
c. EMPLOYEE ENGAGEMENT
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A measure of the emotional connection an employee has with their

company. Employers will oftentimes sponsor programs or develop annual
initiatives aimed at increasing employee morale and engagement.
HUMAN CAPITAL
Human capital is a collection of resourcesall the knowledge, talents, skills,
abilities, experience, intelligence, training, judgment, and wisdom possessed
individually and collectively by individuals in a population. These resources are
the total capacity of the people that represents a form of wealth which can be
directed to accomplish the goals of the nation or state or a portion thereof.
CORE COMPETENCY
A core competency is a concept in management theory introduced by, C. K.
Prahalad and Gary Hamel. It can be defined as "a harmonized combination of
multiple resources and skills that distinguish a firm in the marketplace".
It can also be said as a unique capability that creates high value and
differentiates an organization from its competition.
Core competencies fulfill three criteria:1. Provides potential access to a wide variety of markets.
2. Should make a significant contribution to the perceived customer benefits
of the end product.
3. Difficult to imitate by competitors.
STRATEGIC BUSINESS PARTNER
A strategic partnership is a relationship between two commercial enterprises,
usually formalized by one or more business contracts. A strategic partnership will
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MS Management Sciences

usually fall short of a legal partnership entity, agency, or corporate affiliate

relationship.

HUMAN RESOURCE MANAGEMENT

Human resource management (HRM or simply HR) is the management of human
resources. It is a function in organizations designed to maximize employee
performance in service of an employer's strategic objectives.
Human resource management is to make the most productive use of human
resource to the greatest benefits of the organization and individuals.
Human Resources Management (HRM) is the design of formal systems in an
organization that ensure the effective and efficient use of human talent to
accomplish organizational goals. It is said that People are not your most
important asset, the right people are.
HR departments and units in organizations typically undertake a number of
activities, including employee benefits design, employee recruitment, "training
and development", performance appraisal, and rewarding (e.g., managing pay
and benefit systems). HR also concerns itself with organizational change
and industrial relations, that is, the balancing of organizational practices with
requirements arising from collective bargaining and from governmental
laws. According to R. Buettner, HRM covers the following core areas: Job design and analysis
Workforce planning
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MS Management Sciences

Recruitment and selection

Training and development
Performance management
Remuneration
Legal issues
HR is a product of the human relations movement of the early 20th century, when
researchers began documenting ways of creating business value through
the strategic management of the workforce. The function was initially dominated
by transactional work, such as payroll and benefits administration, but due
to globalization, company consolidation, technological advances, and further
research, HR as of 2015 focuses on strategic initiatives like mergers and
acquisitions, talent management, succession planning, industrial and labor
relations, and diversity and inclusion.
MAJOR ROLES OF HRM
The role of human resource management is to plan, develop, and administer
policies and programmes designed to make expeditious use of an organisations
human resources. It is that part of management which is concerned with the
people at work and with their relationship within an enterprise. Its objectives are:
1. Effective utilization of human resources
2. Desirable working relationships among all members of the organisation
3. Maximum individual development
The major functional areas in human resource management are:1. Planning
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2. Staffing
3. Employee Development
4. Employee maintenance

STRATEGIC ROLES OF HRM

1.
2.
3.
4.
5.

Workplace Safety
Compensation and Benefits
Employee Training
Recruitment and Selection
Employee Relations

OPERATIONAL ROLES OF HRM

1.
2.
3.
4.

Recruitment
Interviewing
Hiring
Risk Management

ADMINISTRATIVE ROLES OF HRM

1.
2.
3.
4.

Continued Administrative Support

Familiarity with Legal and Transactional Aspects
Better Administrative Skills
Managing Knowledge Strategically

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Asad Haroon
SM15-ES-0026
MS Management Sciences

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DUTIES OF HR MANAGERS
There are three significant functions of HR Managers:a. LINE FUNCTIONS
Line authority entitles a manager to direct the work of an employee. It is
the employer-employee authority relationship that extends from top to
bottom. A line manager directs the work of employees and makes certain
decisions without consulting anyone. Line emphasizes managers whose
organizational function contributes directly to the achievement of
organizational objectives.
b. COORDINATIVE FUNCTIONS
The authority exerted by a personnel manager as a coordinator of
personnel activities. Here the manager acts as "the right arm of the top
executive.
c. STAFF FUNCTIONS
Staff managers have staff authority. A manager's function is classified as
line or staff based on the organization's objectives. As organizations get
larger and more complex, line managers find that they do not have the
time, expertise, or resources to get their jobs done effectively. They create
staff authority functions to support, assist, advice, and generally reduce
some of the informational burdens they have.

Strategic HRM

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Asad Haroon
SM15-ES-0026
MS Management Sciences

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TYPES OF ORGANIZATIONAL ASSETS / RESOURCES

Organizational resources are all assets that a corporation has available to use in
the production process. These are combined and used to create finished
products. Assets are persons or things that can produce value. People can be
assets because of the value they bring to a relationship or organization. Things
which are assets have value for the owner because they can be converted
into cash. Cash on hand is also considered an asset. Primarily, there are four
types of organizational assets:a. PHYSICAL ASSETS
A physical asset is an item of economic, commercial or exchange value
that has a tangible or material existence. For most businesses, physical
assets usually refer to cash, equipment, inventory and properties owned by
the business. Physical assets are the opposite of intangible assets, which
are non-physical assets such as leases, computer programs or
agreements.
b. FINANCIAL ASSETS
A financial asset is a tangible asset whose value is derived from a
contractual claim, such as bank deposits, bonds, and stocks. Financial
assets are usually more liquid than other tangible assets, such as
commodities or real estate, and may be traded on financial markets.
c. INTANGIBLE ASSETS
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An intangible asset is an asset that is not physical in nature. Corporate

intellectual property, including items such as patents, trademarks,
copyrights and business methodologies, are intangible assets, as are
goodwill and brand recognition. Intangible assets exist in opposition to
tangible assets which include land, vehicles, equipment, inventory, stocks,
bonds and cash.
d. HUMAN ASSETS
Human Assets or Human Capital is a collection of resources, that includes
the knowledge, talents, skills, abilities, experience, intelligence, training,
judgment, and wisdom possessed individually and collectively by
individuals in a population. These resources are the total capacity of the
people that represents a form of wealth which can be directed to
accomplish the goals of the nation or state or a portion thereof.

Strategic HRM

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Asad Haroon
SM15-ES-0026
MS Management Sciences

13

THE CHANGING ROLE OF HUMAN RESOURCES MANAGEMENT

HR staff used to be seen as the administrative enforcers of the business
management team - executive-centric and reactive, hindering the other
employees in performing their jobs with complex layers of bureaucracy.
These days, there is a clear move away from seeing HR as a purely
administrative activity, and towards appreciating it as complex, interpersonal and
consultative work that requires a wide range of skills, from counselling and
communication to business planning and strategy.
SUPPORTING THE BUSINESS
The HR function must adapt to what the modern business needs - a highly
dynamic employee management and planning team that can react and adapt to
the rapidly changing requirements of the organisation.
EMPLOYEE ENGAGEMENT
HR should no longer be seen as an employees last resort in the case of negative
encounters - in fact, modern HR should be defined by active engagement with
employee issues, championing staff members in the workplace, listening to
concerns, and building a partnership between HR, employees and managers.
CHANGE MANAGEMENT
Change management is the process in which HR managers ensure that
employees have the necessary skills and information when an aspect of their
work environment changes - for example, that everyone is trained to operate a
new software package that is being rolled out throughout the company. A good
change management process ensures that the change goes smoothly, with
minimal interruption and maximum buy-in from the staff.
Strategic HRM

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0345-8252111

Asad Haroon
SM15-ES-0026
MS Management Sciences

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Strategic HRM

asadharoon1923@gmail.com
0345-8252111

Asad Haroon
SM15-ES-0026
MS Management Sciences