Difference between the Operational and Strategic Approach of HR Management - Case Study Example

Human Resources Introduction The research paper has evaluated the transformation of human resources management (HRM) from being administrative and operational to become a strategic contributor to the organization. The study has discussed the history of HR practices and supported it with several examples. It has elaborated the current transformation of human resources management as the strategic contributor of organizations. The research paper has further stated the importance of the HRM transformation to the HR department and the business. The report has demonstrated different examples of the transformation of HR strategies of Ford Motor Company to support the view and argument. Ford Motor Company is a global automobile company headquartered in Michigan, USA. The organization was established on 1903 by Mr. Henry Ford (Gearen, et al., 2006). Background of human resources history and administrative and operational HRM Human resources management is considered as a business function that manages, facilitates and leads the human capital of any organization. The human resource management procedure was introduced with the evolution of large factories in the 18th century (Mabey & Salaman, 1995). Organizations understood the necessity of the employee satisfaction with the increase of their workforce. Another development of human resources started in the 20th century when a number of organizations introduced personnel management program. Those departments were responsible to introduce new laws as per the requirement of workforce and to deal with recruitment issues. The human resources managers were more focused towards the productivity of the employees. The actual human resources revolution started at the end of 20th century with the rise of technology and globalization (Hendry & Pettigrew, 1990). Most human resource management functions initialed utilization of Human Resources Information Systems (HRIS) in gathering information about employees. All the aspects of core HRM practices were simply dependent on the paper works for hiring employees and handling employee compensation and insurance. For a very long time organizations were following the operational and administrative HR management procedures. This procedure generally looks after the essential day-to-day operation to meet the requirements of employees. Human resources authorities are considered as the top –level administrator of organizations. The operational tasks accomplished by the HR departments are very visible to all the levels of employees in the organization as they deal with the ongoing needs of the workforce. The operational and administrative work of HRM involves various important tasks of any organization such as recruitment, interviewing, hiring, payroll management and risk management. Operational human resources management principally deals with issues in organization like compensation, performance and health related issues. This process involves employee coaching and counseling, employee reward programs and initiation of social programs to engage the employees (Koch & McGRATH, 1996). Attending various meetings with the line managers and implementing different training programs are also a vital part of operational HRM. The major function of operational HR is to keep the track of employment law and to ensure that these laws are followed by all the employees of the organization (Koch & McGRATH, 1996). The recruiting process of Ford Motor Company is mainly based on the internal sources of the organization such as internal job posting and employee referral. The organization feels obliged to the referral of the hard working and well trained employees (Gearen, et al., 2006). In their recruitment process the organization generally circulate employment notice all across the organization. The notice includes department name, title, job summary, salary structure and qualification. Initially the organization had very limited number of training options that were designed to develop the skills and compatibilities of the workforce (Gearen, et al., 2006). Due to the changes in the economical conditions the quality of services are becoming more important to gain the competitive advantages in the ever changing market. HRM is transforming to be more strategic contributor to the organization to increase the value of the human capital and to accrue competitive advantage. Strategic contribution of human resources and its importance over operational and traditional approaches The current business scenario depicts that the strategic human resource management is one of the major fundamental approaches of organizational HRM. Transforming the functions of HR into a strategic contributor can assist any organization to enhance the value of their human capital and to take the organizational strategies to higher level. Strategic human resource management helps any organization to gain added advantages in the competitive market (Beer, 1997). For the successful implementation of strategic HR management professionals need to consider the overall picture of the business practices and their growth ratio. This helps organization in implementing various techniques for achieving their long-term goal. In the strategic procedure the HR authorities tend to focus on the future needs of the business and work hard to improvise the current workforce and services to achieve that goal (Wright & McMahan, 1992). HR authorities, who are working strategically, mainly focus on the improvement of employee productivity and return on investment of the organization. The ambition of the strategic approach of HR management is to achieve a higher position in the market and to maintain the position for a long time. To achieve the target, the HR stuffs generally evaluate the external and internal economical situation of the organization. They also review the various technical expertise of the current workforce to achieve the required economical growth (Wright & McMahan, 1992). The strategic contribution of HR management also involves planning of different strategic restructuring programs and collaboration with other similar businesses. The strategic contribution of HR management provides competitive advantages, labor cost-efficiency, executive succession, funding opportunities and profitability (Beer, 1997). Administrative HR procedures generally use arbitrary metrics to design the compensation and pay rise of the workforce. This procedure mainly focuses on the compensation procedure as per the work duration of the employees in the organization. Strategic HR department design the compensation policies of employees as per their performance and contribution towards the organizational goal. Strategic HR management ensures that the highest performers are getting rewarded. This procedure helps the organization to maintain healthy competition among the workforces which assist the management to attain competitive advantages (Beer, 1997). The transformation of HR management of Ford Motor Company was started in the mid of the 1990s. The HR division of the organization had worked really hard to develop a global HR operating model. This strategic HR approach helps the organization to become a multinational entity. Before that phase, the HR of the organization was only focusing on the local market for their talent search. The new and modified HR strategies of the organization were focused towards distributing their operations throughout the developing countries across the globe. The human resources authorities had broaden their horizon by recruiting employees from different social and cultural background. These strategies of the HR department of Ford help them to increase their financial status by welcoming different foreign investments (Gearen, et al., 2006). In the year of 2012, Ford Motor Company has redesigned the compensation policies to motivate the hard working employees of the organization. The hard working employees of Ford Company are entitled to receive bonus equal to 15% of their salary as per their performance. This compensation plan helped the organization to increase their revenue by 5% in 2012 (Automotive news, 2014). Ford has also adopted different restructuring plans to simplify the firm’s operations. The restructuring plan of the organization was mainly focused toward the consumer relationship and improvement of the manufacturing procedure (Pace, 2005). The strategic HR management is mainly focused on different training and development procedure to enhance the skills of the workforce as per the requirements of the new job roles. The restructuring plan also influences the HR authorities to change the leadership roles of the employees. The implementation of these restructuring plans has helped the organization to gain a huge profit by increasing the sales of their products. Due to this initiative the organization has witnesses’ $2.3 billion sale only for Land Rover and Jaguar brand (Pace, 2005). The strategic HR management procedure is not only bound by the day-to-day paper work of the organization, it also takes active participation in the development of the business process by outsourcing different responsibilities. The strategic HR approaches of Ford Motor Company have initiated the outsourcing program of different operations of the organization to reduce the cost of the company. This outsourcing plan has assisted the organization to increase their customer satisfaction as well as their annual revenue (Gearen, et al., 2006). Different examples of the transformation of the HR management of Ford Motor Company has established that strategic contribution of HR department brings profitability, healthy competition, employee satisfaction and cost efficiency to the organization. This also results in the increased competitive advantages of the organization in the global market. Conclusion The research report has conveyed the difference between the operational and strategic approach of HR management in different organizations. The report has also discussed the importance of all the different HR approaches. The administrative and operational approach of HR helps an organization to maintain their day-to-day work efficiently. It helps organization in the recruitment, compensation and training and development procedures. Conversely, strategic approach of HR management ensures profitability, labor cost efficiency, competitive approach and employee motivation of any organization. Therefore, various examples of the study have strengthened the point that the strategic contribution of HR management is necessary for globalization and competitive advantage of any organization. References Automotive news, (2014). Fords Fields starts new job with 9% raise in annual salary. Retrieved from http://www.autonews.com/article/20140702/OEM02/140709952/fords-fields-starts-new-job-with-9-raise-in-annual-salary. Beer, M. (1997). The transformation of the human resource function: Resolving the tension between a traditional administrative and a new strategic role. Human Resource Management, 36(1), 49-56. Gearen, J., Hines, S., Hobstetter, D., Jayagopi, S., Meissner, N., Nothwang, J., Putterman, K. & Yamamoto, M. (2006). Strategic Transformation of Ford Motor Company. Retrieved from http://deepblue.lib.umich.edu/bitstream/handle/2027.42/48792/FMFinal_121306.pdf;jsessionid=4A8E54EC381AE2E6244CA586971C6B97?sequence=1. Hendry, C. & Pettigrew, A. (1990). Human resource management: an agenda for the 1990s. International journal of human resource management, 1(1), 17-43. Koch, M. J. & McGRATH, R. (1996). Improving labor productivity: Human resource management policies do matter. Strategic Management Journal, 17(5), 335-354. Mabey, C. & Salaman, G. (1995). Strategic human resource management. Oxford: Blackwell. Pace, G. (2005). Ford Considers Restructuring Plans. Retrieved from http://www.cbsnews.com/news/ford-considers-restructuring-plan/. Wright, P. M. & McMahan, G. C. (1992). Theoretical perspectives for strategic human resource management. Journal of management, 18(2), 295-320. Read More