STRATEGIC HUMAN RESOURE MANAGEMENT

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

INTRODUCTION
 There is an emerging belief in the modern business world that

Human Resources are the source of competitive advantage for the modern day business than access to capital or use of hi-tech.  Therefore attention needs to be paid about the nature of Human Resources and its management as it will impact on Human behavior and performance and will consequently affect on the overall performance of the organization.  The quality of HRM is a critical influence on the performance of the firm. Therefore HR is strategic to business success.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

STRATEGIC HUMAN RESOURCE MANAGEMENT

 Strategic HRM tends to be issue based rather than the formulation of a complete integrated strategy.  It is discovered through research that existence of an HR strategy was only a minor influence on HR policies and procedures used by an organization.  Frameworks such as the HR scorecard are aimed at least in part at facilitating the management and implementation of HR architecture of the HR function, the broader HR system, and the resulting employee behaviors' as a strategic asset.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

HUMAN RESOURCE STRATEGY

 Tyson ( 1995) defines HR Strategy as the intentions of the

cooperation both explicit and covert, toward the management of its employees, expressed through philosophies, policies and practices.  Only few companies around the world have complete HR strategy documents.  HR Strategy of an organization need not be written on a piece of paper or need not be explicit.  Mintzberg argues that strategy is formed rather than formulated and that any intended strategy is changed by events, opportunities, the actions of employees and so on - so that the realized strategy is different from the initial vision.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

HUMAN RESOURCE STRATEGY Contd

 Strategy is not necessarily determined by the top management alone but can be influenced bottom up as ideas are tried and tested in one part of the organization and gradually adopted in a wholesale manner if they are seen to be applicable and successful.  While the HR function has often found excluded from the strategy formation process, HR strategy has more often been seen in terms of the implementation of organizational strategies.  A quality of most successful organizations is the ability to turn strategy into action quickly and this indicates presence of successful HR in a firm.  A lack of attention by organizations in implementing HR strategy is notified these days which is a problematic concern. One main reason for poor implementation of HR strategy is that responsibility for implementation is unclear.
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THE LINK BETWEEN BUSINESS AND HR STARTEGY

 The nature, desirability and feasibility of the link between Business Strategy and HR Strategy is a consistent theme which runs through strategy literature.  The relationship between Business and HR Strategy is played out in different organizations. (A) Separation Model: There is no relationship at all. Organizational and HR Strategy exist in an explicit form in the organization. This was typical in most organizations about two decades ago. Now it exists only in smaller organizations.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

THE LINK BETWEEN BUSINESS AND HR STARTEGY Contd.

(B) Fit Model:

Indicates the growing recognition of the importance of people in the achievement of organizational strategy. Employees are observed important in the implementation of the declared organizational strategy. HR Strategy is designed to ensure a close fit with the Organizational Strategy. Organizations cascade their business objectives down from the Senior Management team through functions, departments, teams and so on. Then the HR function will respond to organizational strategy by defining a strategy which meets organizational demands.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

THE LINK BETWEEN BUSINESS AND HR STARTEGY Contd.

( C) Dialogue Model: This model indicates a further relationship from the Fit Model. It indicates the need for two way communication and some debate in developing both HR and Organizational Strategy. Debate will be where what is demanded in the organizations strategy is not viewed as feasible and alternative possibilities need to be reviewed. (D) Holistic Model: This shows a much closer involvement between organizational and HR Strategy. According to this model people are believed as the key to competitive advantage in an organization rather than as a means of implementing organizational strategy. No strategy can exist without a HR Strategy. All functional strategies are pieces of the jigsaw of organizational strategy.
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THE LINK BETWEEN BUSINESS AND HR STARTEGY Contd.

(E) HR Driven Model: This shows a closer involvement between organizational and HR strategy placing HR Strategy in a prime position. Organization has to build on people strengths as people are the key to competitive advantage. This identifies Hr as a driving force in formulation of strategy than as implementers of strategy.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

THEORETICAL PERSPECTIVES OF STRATEGIC HUMAN RESOURCE MANAGEMENT

 Three theoretical approaches to Strategic HRM could be identified. - Universalist Approach:  There is one best way of managing human resources to improve business performance.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

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THEORETICAL PERSPECTIVES OF STRATEGIC HUMAN RESOURCE MANAGEMENT Contd

- Fit or Contingency Approach:  Employment policies and practices of an organization need to be aligned with the requirements of the business strategy so that the business strategy will be achieved and the business will be successful.  It is assumed that different types of HR strategies will be suitable for different typesof business stratgies.

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

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THEORETICAL PERSPECTIVES OF STRATEGIC HUMAN RESOURCE MANAGEMENT Contd

- Resource-based Approach:  This is a more recent approach to Strategic HRM is derived from the resource based view of the firm and the perceived value of human capital.  Focus is on the quality of human resources available to the organization and their ability to learn and adapt more quickly than their competitiors.

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THE ROLE OF THE HR FUNCTION IN STRATEGY

 The extent to which the HR function is involved in both

organizational and human resource strategy development is dependent on a range of factors, the most often quoted being whether the most senior HR person is a member of the BOD.  HR Director plays a key role as promoting the connection between organizational strategy, culture and people strategy.  There is evidence to suggest hat over the past 20 years HR board membership has increased and around 3/5 of larger organizations have an HR Director.  HR Director being in the board is an advantage for the function as well as for the organization as it improves HRs understanding of the business context in which HR strategies need to be developed and implemented. HUMAN RESOURCE MANAGEMENT BY DBA504PRABHASHINI WIJEWANTHA 13

THE ROLE OF THE HR FUNCTION IN STRATEGY Contd

 Other factors influencing the role of the HR function in strategic concerns include the overall philosophy of the organization towards the value of its people, the mindset of the Chief Executive and the working relationships between the CEO and the most senior HR person.  Building a good working relationship with the CEO is critical for any function in a firm.  It is essential for HR Managers to prove themselves before being offered a seat in the board and building key competences is therefore important. 

DBA504- HUMAN RESOURCE MANAGEMENT BY PRABHASHINI WIJEWANTHA

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THE ROLE OF THE HR FUNCTION IN STRATEGY Contd

 It is suggested that HR Managers need to use business and

financial language: describe the rational for HR activities I terms of added value; act as a Business manager first and an HR Manager second; appoint line managers to the HR function, concentrate on priorities as defined by the business, understand the business they work in and offer well developed change management skills that can be used immediately.  As Senior Managers and Board Members appear to have limited knowledge of research linking people management and performance, there is opportunity for enthusiastic HR Managers/ Directors to feed new ideas to CEOs.  HR function needs to prepare itself by thinking strategically, identifying a functional mission and strategy involving line management in the development and implementation of HR strategy. DBA504- HUMAN RESOURCE MANAGEMENT BY 15
PRABHASHINI WIJEWANTHA

ACTIVITIES
 Read the Window on Practice on pg 31 of the Recommended

Text Book.  - Which of the approaches to HR strategy most closely fits to your organization? - What are the advantages and disadvantages of the approach used?  Read the Window on Practice on pg 33-34 of the Recommended Text Book.

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