Strategy and Human Resource - Essay Example

Strategy and Human Resource Strategy and Human Resource When human resource managers say they are acting “strategically”, what might they mean? Illustrate your answer with examples. Human resource management is considered to involve concepts like recruitment, training and development, performance management, and rewards and compensation (Dessler and Varkkey, 2011). A significant aspect of a human resource manager’s job is to conduct hiring and firing, however, that does not describe human resource management in its entirety. Changes in the business environment have added complexity to the domain of human resource management. Workforce trends are shifting and the dynamism of the modern workplace has necessitated development of effective strategies that drive the workforce for attainment of an organization’s long term goals. So, an organization’s objectives are the core of its operations and this is resonated across all functional units including the human resource dimension. As such, human resource managers have to align their functional strategy with the broader corporate strategy. As a result, a new division has sprung up known as strategic human resource management which looks at the long term vision of an organization and is concerned with addressing the recent trends in human resource management with respect to organizational strategy (Delery, 1998; Boxall and Purcell, 2003; Truss, Mankin, and Kelliher, 2012). In short, acting “strategically” means that human resource managers are utilizing the firm’s resources through long term strategies in order to achieve organizational goals. Strategic human resource management engenders a change in traditional personnel administration practices. Strategic human resource management has surfaced in response to shifts in the external forces surrounding an organization including cultural forces and technological advancements. Therefore, strategic human resource management can be understood as the management of human assets amidst social, economic, and political setting (Salaman, Storey, and Billsberry, 2005). Strategic human resource management is responsible for the integration of human resource practices involves the integration of human resource practices and the larger business strategy (Armstrong, 2012). Therefore, when human resource managers act strategically, they take such decisions that are likely to impact organizational strategies positively. This means that decisions are undertaken in the light of organizational goals. This also implies that organizational resources are kept in consideration when deciding staff planning, training and development, and other human resource endeavors. Strategic thinking is reflected in the response of human resource managers to choices. Human resource managers consider the environmental context before arriving at a decision. The external environment plays an important role for human resource managers as they take decisions because it provides the organization’s milieu in which it operates and finds opportunities. When human resource managers design recruiting strategies, they consider the needs of the organization first. Only an appropriate number of personnel is employed which matches with the organization’s resources and requirements. This example demonstrates how human resource managers have to think strategically in order to consider their functions within the context of corporate strategy. Human resource managers have to ensure that organizational resources are efficiently utilized in order to derive the most performance out of eligible employees. This is why human resource managers spend quite heavily on training and development. So, human resource managers have to act “strategically” in order to efficiently employ organizational resources in order to meet organizational goals (Dhar, 2008). Therefore, human resources often have to act strategically in order to fulfill organizational needs and requirements. This approach extends to various functions of human resources such as hiring and selection, training, performance evaluation, and appraisal. Deb (2006) has pointed out the relationship between an organization’s business strategy and human resource strategy which must be in line so as to ensure organizational effectiveness and productivity. However, that is not to say that the human resource strategy remains constant throughout the course of time. In fact, human resource managers may change the functional HR strategy so as to meet the demands of the existing external pressures. This means that, considering changes in the business environment, functional HR strategies can be changed in order to suit the existing requirements of the environment (Deb, 2006). If the environment involves threats and uncertainties such as financial crisis, the human resource department may involve stricter policies for hiring, reduce their perquisites and benefits for employees, and reduce salaries. Similarly, in an environment of great economic boom and financial stability, human resource managers may relax their employment policies, hire more employees and make their compensation plans more generous. This example reflects how environmental changes can affect the strategies employed by human resource managers. Additionally, it shows that human resource strategies as well as corporate strategies are flexible and not fixed. Hence, this ensures that organizations are able to better deal with external forces by framing strategies that work to mitigate threats and exploit opportunities. When human resource managers act “strategically,” they also work to implement strategies within the boundary of business goals. This is done to utilize the firm’s employees for the long term success of the organization. This means that employees are trained and compensated so as to serve the purpose of the organization. If an organization has a strategy of growth in its market share and a business strategy of cost leadership, then the human resource is allocated resources that reflect this strategy. Furthermore, such an organization is likely to adopt a value chain model that aims to optimize its supply chain management and human resource management so that it is able to reduce its costs. An example of such a move includes the expansion of a business to international locations where tax rates are less and there is availability of cheap labor. The integration between the different strategies in relation with human resource allows organizations to achieve a competitive advantage by being able to address different issues (Becker and Huselid, 2006). Human resource managers who have to devise strategic plans and carry out their functions in alignment with the organizational strategy often find themselves challenged. This is mainly because of the challenging external environment which involves many risks. Hence, not all strategies may work in each situation. In fact, much of the success behind implementation of a strategy is dependent upon the acuity of human resource managers in tailoring solutions based on an organization’s specific needs. As such, organizations have different needs and organizational cultures and context. Therefore, not every strategy can be implemented in every organization. Different organizations may have different strategies that compliment their business and corporate strategies. Therefore, strategic human resource management as a discipline incorporates all the concepts that human resource managers are involved with when acting in accordance with the overall business strategy. A business making a loss is likely to cut down its costs and lay off its employees. The overall financial conditions of an organization as well as its surrounding environment are critical factors that impact strategic management of an organization. This idea extends to human resource management. Organizations who find a business opportunity in the external environment are likely to strategize their next move so as to prevent them from hurting the company’s long term interests. Being a company operating in a capitalist economy, organizations are motivated by self interest and their own profit maximization. This means that companies have to differentiate and position themselves as such in order to obtain a sustainable competitive advantage. In such a case, an organization’s human resource managers play an important role in staying aligned with overall organizational strategies so as to remain in focus. Therefore, at many instances, human resource managers have to be strategic in their decision making regarding all aspects of personnel management. These include planning and projecting the benefits or ROTI (return on training investment) of a training program so that employees can gain the most out of the trainings. In addition, strategic compensation plans could involve the relaxation or reduction in benefit plans and employee compensations at varying periods throughout the business cycle. Recruitment may seize or reduce as business landscape changes. This could be positive or negative. In severe economic crisis, organizations abstain from hiring unnecessary positions so as to reduce their costs. This action is strategically meant to benefit the organization but it also reduces the availability of jobs. Globalization has been a major environment change which has impacted many organizations and their strategies. Additionally, the trend towards a globalized economy has seriously changed workplace trends as well (Perkins, Shortland and Perkins, 2006). Following globalization, workplaces have become more diverse in terms of cultural representation. As such, practices in human resources have changed so as to strategically address the issue and turn it into its strength for organizations. Most organizations promote diversity in the workplace. However the implications of globalization have deeply impacted human resource practices. As economies become more globalized, the task of human resource managers has become more complex. They have to strategize their practices in order to ensure that the diversified workforce can efficiently and effectively carry out their operations. An organization that has adopted a plan to expand globally is likely to have its human resource strategy geared towards a diversified workforce. Human resource management is therefore closely linked with organizational strategies. Human resource managers must therefore align their functional (human resource) strategies with their corporate and business strategy. This can ensure that the organization can focus on its long term goals and vision without losing track. Doing so allows greater efficiency in organizational processes. It ensures that all functional unties of the organization are in sync with each other thereby engendering coordination. Organizations run on the long term strategies they have formulated in response to the external environment. Since organizations are impacted quite significantly by external forces, human resource managers are also quite concerned with strategic management of the workforce. In conclusion, human resource managers act “strategically” in different ways. This is because human resource is an important functional unit of an organization among other such areas such as finance, supply chain, and so on. Organizations have different business and corporate strategies that are aimed at achieving their organizational goals. Hence, having corporate, business, and human resource strategy in alignment with each other ensures that organizations attain long term goals. This also allows organizations to stay focused on their strategic positioning. If an organization focuses on differentiating its offerings, then its human resource strategy is shaped to compliment its business model. In different cases, different strategies can apply. Strategies differ from case to case. However, human resource managers are often faced with strategic decisions that impact the entire organization’s performance. In short, human resource managers may find themselves acting strategically in order to fulfill the long term needs of the organization. Hence, human resource managers’ respond strategically in many cases because doing so is critical to the long term standing of the organization. References Armstrong, M. (2012). Armstrongs handbook of strategic human resource management. 12th ed. London: Kogan Page. Becker, B. and Huselid, M. (2006). Strategic Human Resources Management: Where Do We Go From Here?. Journal of Management, 32(6), pp.898-925. Boxall, P. and Purcell, J. (2003). Strategy and human resource management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan. Deb, T. (2006). Strategic approach to human resource management. New Delhi: Atlantic. Delery, J. (1998). Issues of fit in strategic human resource management: Implications for research.Human Resource Management Review, 8(3), pp.289-309. Dessler, G. and Varkkey, B. (2011). Human Resource Management. Delhi: Pearson. Dhar, R. (2008). Strategic human resource management. New Delhi, India: Excel Books. Perkins, S., Shortland, S. and Perkins, S. (2006). Strategic international human resource management. London: Kogan Page. Salaman, G., Storey, J. and Billsberry, J. (2005). Strategic human resource management: defining the field. In: G. Salaman, J. Storey and J. Billsberry, ed., Strategic human resource management: theory and practice, 1st ed. London: Sage. Truss, C., Mankin, D. and Kelliher, C. (2012). Strategic human resource management. Oxford: Oxford University Press. Read More