Discuss organizational goals and core competencies and the importance SHRM In our

organization.

Organizational goals

Organizational goals are strategic objectives that a company's management establishes to outline
expected outcomes and guide employees' efforts.

Organizational goals are created in an attempt to achieve a desired state of profit and success.
General organizational goals are found in the mission/vision statement of the company, but
details of those goals are defined in the business plan.

Types of Organizational Goals

I. Official Goals:

Official goals are the goals which are publicly announced and are contained in the character
of company. These are in the form of policy statements which are stated by the officers of the
company. Official goal of a manufacturing enterprise may be stated in the form of say 100
metric tonnes of paper per day. These are the official goals.

II. Operative goals

Operative goals are those goals which could be implemented into actual practice. Though
operative goals are based on official goals, but a wide discrepancy may exist between the official
goal and the operating goal. For instance, it may be an ideal situation to increase production to
100 metric tonnes per day, but actually it may not be operative.

The reasons may be internal constraints of resources in terms of manpower or equipment or

external limitations of the government’s policy and other social forces. In any case, it is the
operative goal which has greater relevance to individual or group behavior in a work situation.

III. Operational goals

Operative goals become operational when they are actually implemented into actual practice. A
manufacturing enterprise has an operative goal of increasing production by 10% in one year.
Mere decision on this account will not make it operational; it will be operational when actually
implemented.

Operative goals become operational when there is an agreement among all concerned regarding
the activities and the programmes to be undertaken in relation to these goals. In other words,
goals are said to be operational when there is “agreed upon criteria for determining the extent to
which particular activities or programmes of activity contribute to these goals.”
Operational goals relate to the means’ used to accomplish them. Means which are available and
which are acceptable to the members of organisation and even the social and other forces
operating outside the organisation. If the means present constraints, the goal will cease to be
operational. Thus, goals may be (i) operational and (ii) non-operational. Goals which become
non- operational are soon converted into a set of sub-goals. It is these sub-goals which may
provide a basis for carrying on individual actions by members of organisation.

It may be stated that each goal which is developed in an organisation may be considered a goal in
itself and a means to achieve other goals also.Operational goals are set by and for lower-level
managers. Operational goals are usually made to tackle shorter-term issues associated with the
tactical goals and lower-managers are responsible for their attainment.

IV. Tactical Goals

Tactical goals are set for middle managers. These goals focus on how to operationalize actions
necessary to achieve the strategic goals.

Middle managers of various departments are usually responsible for their attainment.

Tactical goals are set by the middle managers, but often top-managers set tactical goals for the
middle managers.

V. Strategic Goals

Strategic goals are goals set by and for top management of the organization. These goals are
made by focusing on broad general issues.

Strategic goals or strategies are usually long-term and from this goal, other goals are made and
set for different time-frames and areas.

Importance and purpose of organizational goals

I. Goals Provide Guidance and Direction

Goals provide guidance and a unified direction for people in the organization.

They show the employees where the organization is going and why getting it is important.

Goals simply define what the organization wants.

Goals Intensely Planning and Actions

Goal-setting does intensely affect aspects of planning. Effective goal setting facilitates good
planning and good planning facilitates future goal setting.
Goals are desired outcomes for organizations and plans are the best-perceived ways to reach
them. So a proper goal helps set a proper plan.

II. Goals Motivate

Goals also can serve as a motivational source for employees. Goals should be specific and
moderately difficult can inspire people to work harder, especially if attaining the goal is going to
result in rewards.

For goals to be a tool of motivation; the organization requires an effective reward system and a
friendly work environment.

III. Goals Help in Control

Goals act as a mechanism for control and evaluation. Performance can be measured and
evaluated in the future in terms of how successfully today’s goals are accomplished.

Goals can serve these purposes and much more; if people in charge of setting goals can
overcome the barriers and set them properly and effectively.

IV. Focus Attention of Individuals and Groups to Specific Activities and Efforts of
Organizations:

When organization’s goals are known to individuals and group, it will help them in channelizing
their activities towards attaining organization’s goals. In other words the goals prescribe the
course of action to individuals and groups which will be helpful and complementary to the
achievement of organization’s goals.

V. Provide a Source of Legitimacy to Action by Members:

Once this course of action has been decided for the individuals and the groups within the
framework of organizational goal, it will promote legitimacy and justification to individual’s or
group’s actions and decisions.

VI. Serve as a Standard of Performance:

Goals provide a measure of individual’s or group’s performance. They may help the organization
members to evaluate the level of their performance in the perspective of organization’s goals.

VII. Affect the Structure of Organization:

Goals and structure are intimately related to each other. The relationship among people in the
form of authority and responsibility or the positions to be created at different levels has to be
decided on the basis of organizational goals. In other words, what the organization proposes to
do will be determined by the organizational setup it will structure. Similarly, it will be the
structure also which will influence the goals.
VIII. Provide Clues about the Nature and Character of Organization:

The nature and character of an organization may be known by its goals. For instance, the goal of
maintaining the quality of product without much regard to return on investment may help the
outsider to hold the organization and its members in very high esteem.

Peter Drucker emphasises the point that goals are important in every area of enterprise more
specially when performance and results are directly related to its survival and prosperity.

In these vital areas, goals will enable managers to:

(i) Organize and explain the whole range of business phenomena in a small number of general
statements

(ii) Test these statements in actual experience

(iii) Predict behaviour

(iv) Appraise the soundness of decisions when they are still being made and

(v) Analyze their own experience and as a result improve their own performance.

Drucker suggests eight specific areas in which goals have to be set in terms of performance and
results.

These are:

(1) market standing,

(2) innovation,

(3) productivity,

(4) physical and financial resources,

(5) profitability.

(6) Manager performance and development,

(7) worker performance and

(8) public responsibility.

Core Competencies

Core competencies are unique abilities that a company acquires from its founders or develops
and that cannot be easily imitated. Core competencies are what give a company one or more
competitive advantages, in creating and delivering value to its customers in its chosen field.
Core competencies are the collective learning of the organization, especially how to co-ordinate
the diverse production skill and integrate multiple stream of technologies. A company, if it has
identified its core competencies, will be capable of creating more value. Core competences must
coalesce around individuals working in the organization. These people should recognize their
effort in building and strengthening these core competencies.

Importance of core competencies

i. The most important advantage of having core competencies is having a long term
competitive advantage. These competencies help in bridging the gap between
performance and opportunity, thus helping a company in being a potential leader in the
industry. By linking traditional business to products and service of the future, the
company acquires greater opportunity for success. This also helps in activation of the
company by acting as a guideline for diversification.
ii. Core competencies are also an indicator that resources are being used in the right places
in the right amount. An organization should focus on outsourcing all non-core
activities which will streamline the operations to encourage learning environment
congruent to their competencies.
iii. Core competencies also help in the development of core products. They should have
access to all the primary component of a complex product which can help in long term
foothold in that particular industry. This complex product can then be used to create a
pipeline of products.
iv. Core competencies are meaningful if they are related to an attribute valued by the market.
Customers need to perceive a consistent difference in important attributes between the
producer’s products or services and those of its competitors. Intel particularly uses this.
Their core competence lies in developing an array of microprocessors in very short time.
With the proved attribute of speed and quality against other competitors, this core
competency provides a distinctive competitive advantage.
STRATEGIC HUMAN RESOURCE MANAGEMENT

“Strategic human resource management means formulating and executing human resource
policies and practices that produce the employee competencies and behaviors that the company
needs to achieve its strategic aims.”- Gary Dessler

“Strategic human resource management is an approach to making decisions on the intentions and
plans of the organization concerning the employment relationship and the organization’s
recruitment, training, development, performance management, and the organization’s strategies,
policies, and practices.” (Armstrong,2006)

Wright and McMahan (1992) defined SHRM as ‘the pattern of planned human resource
deployment and activities intended to enable the firm to achieve its goals’.

Strategic HRM focuses on actions that differentiate the firm from its competitors (Purcell, 1999).
It is suggested by Hendry and Pettigrew (1986) that has these meanings:

1. The use of planning,

2. A coherent approach to the design and management of personnel,
3. Systems based on an employment policy and workforce strategy and often underpinned
by a ‘philosophy’,
4. Matching HRM activities and policies to some explicit business strategy, structure, and
culture, organizational effectiveness and performance, matching resources to future
requirements, the development of distinctive capabilities, knowledge management, and
the management of change. It is concerned with both human capital requirements and the
development of process capabilities, that is, the ability to get things done effectively.
Overall, it deals with any major people issues that affect or are affected by the strategic
plans of the organization. As Boxall (1996) remarks: The critical concerns of HRM, such
as choice of executive leadership and formation of positive patterns of labor relations, are
strategic in any firm.’

Given the increasingly significant role of human resources in an organization, HRM has become
strategic in nature. Strategic human resource management (SHRM) is concerned with the
relationship between HRM and strategic management in an organization.

Strategic human resource management is an approach which relates to decisions about the nature
of employment relationship, recruitment, training, development, performance management,
reward, and employee relations.

Components of Strategic Human Resource Management

1. It focuses on an organization’s human resources (people) as the primary source of competitive

advantage of the organization.
2. The activities highlight the HR programs, policies, and practices as the means through which
the people of the organization can be deployed to gain competitive advantage.
3. The pattern and plan imply that there is a fit between HR strategy and the organization’s
business strategy (vertical fit) and between all of the HR activities (horizontal fit).
4. The people, practices, and planned pattern are all purposeful, that is, directed towards the
achievement of the goals of the organization.

On the whole, SHRM is concerned with people issues and practices that affect or are affected by
the strategic plan of the organization. The critical issues facing an organization in the
contemporary environment are mainly
human issues, such as ensuring the availability of people, retaining, motivating, and developing
these resources.

To stay ahead of its competitors, an organization will continuously look for ways to gain an edge
over others. Today, an organization competes for less on products or markets, and more on
people.

In the 21st century, there is increasing recognition among management thinkers and practitioners
of the potential of human capital resources in providing a competitive advantage. Two
organizations using the same technology may show different levels of performance.

Essential Features of SHRM

The key characteristic of strategic HRM is that it is integrated. HR strategies are generally
integrated vertically with the business strategy and horizontally with one another.

The HR strategies developed by a strategic HRM approach are essential components of the
organization’s business strategy.

The fact that SHRM has emerged at all, indicates that there is some qualitative difference
between HRM and SHRM.

SHRM is regarded as the overarching concept that links the management and the individuals
within the organization to the business as a whole and to its environment.

In this way, the essential features of SHRM can be summarized as follows:

1. There is an explicit linkage, of some kind between HR policy and practices and overall
organizational environment.
2. There are organizing schema linking individual HR interventions so that they are
mutually supportive.
3. Much of the responsibility for the management of human resources is cascaded down the
line.

Principles of SHRM

Price (1997) mentioned ten principles of SHRM, which he claimed are measurable in some way
and can be used for ’benchmarking’.
These are given below:

1. Principle of Comprehensiveness: HRM should be closely matched to business

objectives.
2. Principle of Coherence: Allocation and activities of HR integrated into a meaningful
whole.
3. Principle of Control: Effective organizations require a control system for cohesion and
direction.
4. Principle of Communication: Strategies understood and accepted by all employees,
open culture with no barriers.
5. Principle of Credibility: Staffs trust top management and believe in their strategies.
6. Principle of Commitment: Employees motivated to achieve organizational goals.
7. Principle of Change: Continuous improvement and development essential for survival.
8. Principle of Competence: Organizations competent in achieving their objectives-
dependent on individual competence.
9. Principle of Creativity: Competitive advantage comes from unique strategies.
10. Principle of Cost-effectiveness: Competitive, fair reward and promotion systems.

Essential Elements of SHRM

The above-discussed theoretical perspectives have identified six key elements necessary in
developing SHRM within the firm.

Transforming HR Staff

There exists a significant difference in the skills needed by HR staff in the traditional and
strategic orientations to HRM. In traditional HRM staff had to be specialized in certain
functional areas like interviewing, recruitment and training.

The strategic HRM role played by HR professional is “change management”, involving strategic
planning, team building and having a global perspective.

Most HR units will face a significant transformation in order to manage human resources with a
new strategic view.

Transforming the Organizational Structure

In transforming the HR structure from traditional to SHRM, it is common for the organizational
unit to restructure.

The major issue in designing a new strategic HRM unit is to determine whether to centralize or
decentralize HR function. The relevant structure for the HR function depends on the nature of the
firm’s business, size of the firm and the firm’s overall business strategy.
In some organizations, centralized structure for the HR unit would be appropriate and in some
highly decentralized HRM may be necessary.

Regardless of which particular structure has used the key element in the successful
transformation from traditional HR function to SHRM is to find a structure that meets the
pressing needs of business strategy and allow the HR unit to provide services designed to help
the firm achieve strategic objectives.

Enhancing administrative efficiency

Dave Ulrich (1996) suggested that one of the key roles of HR staff is to be “administrative
experts”.

As administrative experts, HR staff members must take an active role in engineering,

administrative and other processes within the firm and find ways to share services more
effectively throughout the organization. The objective is to increase HR service efficiency and
save money.

Several processes are needed to enhance the administrative expertise of HR units. The first
focuses on:

Improving administrative efficiency by targeting current processes for improvement, by

examining the gaps between the “as is” process and what the system “ needs to be.”

Administrative efficiency can also be enhanced by the development of centralized HR services

that are shared throughout an organization.

The ultimate process involves HR staffs to rethink how they create value to the firm in terms of
value perceived by the customers rather than perceived by the provider of the program.

Integrating HR into the strategic planning process

The strategic integration of HR requires strategic planning process and the involvement of HR
managers in that process. The development of a strategic plan involves top management, with the
help of outside consultants, to go through and analyze the current and future condition of the
organization.

To achieve full integration, HR managers should not only have the ability to influence the
development and selection of information used in decision making but should also have the
ability to influence decision making.

Linking HR practices to business strategy and to one another

This issue of fitting HR practices to business strategy is becoming increasingly important and
relevant HR issue for HR staff and line managers.
HR fit involves making sure HR activities make sense and help the organization achieve its goals
and objectives.

The three aspects of HR fit are:

1. Vertical fit

This aspect of vertical fit concerns the coincidence between HR practices and overall business
strategy.

2. Horizontal fit

This relates to the extent to which HR activities are mutually consistent. Consistency ensures that
HR practices reinforce one another.

3. External fit

The third aspect concerns how well HR activities match the demands of the external
environment. Ensuring these aspects of fit requires HR practice choices. The challenge is to
develop internally consistent configurations of HR practice choices that help to implement the
firm’s strategy and enhance its competitiveness.

There is a need for strategic flexibility along with a strategic fit for the long-term competitive
advantage of the firm.

The fit is defined as a temporary state in an organization, whereas flexibility is defined as the
firm’s ability to meet the demands of the dynamic environment.

The two types of flexibility identified are:

Resource Flexibility

Resource flexibility is the extent to which a firm can apply its resources to a variety of purposes.
It also involves the cost, difficulty, and time needed to switch resources from one use to another.

Coordination flexibility

Coordination flexibility concerns the extent to which an organization has decisionmaking and
other systems that allow it to move resources quickly from one use to another.

This task is accomplished by having an effective partnership between HR managers and line
managers.
Importance of Strategic HRM

i. When a human resource department strategically develops its plans for recruitment,
training, and compensation based on the goals of the organization, it is ensuring a greater
chance of organizational success. Let's think about this approach in relation to a
basketball team, where Player A is the strategic HR department and Players B through E
are the other departments within the organization. The whole team wants to win the ball
game, and they all may be phenomenal players on their own, but one great player doesn't
always win the game. If you've watched a lot of sports, you understand that five great
players won't win the game if each one of those five great players is focused on being the
MVP.
ii. That's not how a basketball team wins, and it's not how an organization wins either. A
team wins when its members support each other and work together for a common goal.
Player A, our strategic HR department, must work with players B, C, D and E, our
different organizational departments. They must run plays that they have planned out
beforehand, assist when necessary to help another player get the basket, and compensate
for the weaknesses of one in order to create a stronger team as a whole. When a team
works together to reach that common goal, only then can they be truly successful.
iii. You could also look at strategic HRM as the team captain or coach, as his or her
responsibilities are a little bit different from those of the other players. Human resources
departments are charged with analyzing the changes that need to occur with each 'player'
or department and assisting them in strengthening any weaknesses.