Strategic role of Human Resource in business dicisions - Essay Example

Human Resources are widely believed to be the most important assets of an organization and therefore the role of Human Resource Department or Human Resource Management is very significant in making strategic business decisions. Human resources can enable an organization to gain a distinct sustainable competitive advantage over others. This factor is highly predominant for various service organizations such as consulting firms, banks, insurance firms, IT and ITeS organizations. These organizations are knowledge intensive and their progress is highly dependent upon their human resources.

The role of human resource in taking business decisions lies both in strategy formulation and implementation. However, strategy implementation is more significant and human resource has a great role to play in it because human resources are more flexible than organizational strategies (Sluijs, Klyutmans). Traditionally, Human Resource was considered to be an administrative department only with almost no role to play in business planning and decisions. Gradually, the function evolved and played its role in performance management, managerial development, competency mapping, succession planning, change management and business networking.

Inputs from HR started being a part of business decisions. Today, administration and line management is only one of the roles of HR. Human Resource has evolved to become an essential component of management teams for decision making. Many of the line management tasks in Human Resource have become transactional in nature and are therefore controlled by information systems. For example, there are information systems for recruitment, Learning & Education, Employee benefits, Payroll, Performance management and Expenses.

Therefore, the role of HR has been oriented more towards strategic planning and change management. The line management part of HR has been replaced by her which a company can even afford to outsource to an It organization or internal IT team but it is the strategic part where key inputs are required from Human Resource (Edward, 2001).Inclusion of Human Resource in strategic decision making leads to greater profitability of the firm. HR being a strategic partner ensures higher management support in training and education activities which leads to increased productivity and workforce engagement.

HR can justify required fund allocation for various activities such as training, recruitment, increasing salaries and benefits. These activities help a firm in retaining existing talent, improving the employee skill-sets and attracting new talent. These factors are very vital for a firm’s long term sustainability.Human Resource is perceived only as a cost center by many organizations. Including HR in key strategic decisions would go a long way in changing this perception. It would bring a greater balance to organizational decisions.

The decisions would not only be taken on the basis of organizational vision and goals but also on the basis of resource constraints. This would save unnecessary cost and keep the expectations high but realistic (Ruth). In a nut shell, it is imperative for an organization to integrate Human Resource with strategic business planning and decision making in order to derive internal benefits as well as a sustainable competitive edge.References:Sluijs, Ed Van., Kluytmans, Frits. Business Strategy and Human Resource management: Setting the Scene.

Retrieved online March 20, 2012 from Lawler, Edward. (2001). Linking Business Strategy and Human Resources Management. Center for Effective Organizations, Marshall School of Business, University of Southern CaliforniaMayhew, Ruth. Why is it important for HR management to be a Strategic Business partner?. Retrieved online March 20, 2012 from