Importance of Aligning Human Resources with Strategy

Chapter 2Nisha Hariyani

HR’s Emerging Role

• Strategic human resource management is an approach which defines how the organization’s goals will be achieved through people, by means of HR strategies and integrated HR policies and practices.

Transition from HRM to Strategic HRM

• Changes in the business environment brought about by globalization and the development of new technology have made it mandatory for organizations to involve HRM in the strategic Decision Making Process.

• Changes in Market Conditions, economic conditions, labor markets, industrial structure, and international competition have all highlighted the importance to the management of human resources for gaining a competitive advantage.

Transition from HRM to Strategic HRM

• 5p model identifies various HR activities that must be aligned with the Strategic needs of the Business to gain a competitive advantage.

• HR Philosophy: refers to Org attitude• HR Policies: Refers to guidelines • HR Programs: Coordinated HR efforts to sustain

Change• HR Practices: includes roles that individuals

assume in an Org.• HR Processes: Involves Identification, formulation

and implementation of HR activity

Traditional HR Vs Strategic HR

• Administrative in nature• Endorsing Specialization

of work • Development of Policies

and its Functions• Ensures Adherence to the

Rules• Transactional in Nature:

routine day to day work• People Not viewed as

Competitive advantage• Change is Slow and

Fragmented.

• Empowering in Nature• Multi Tasking – Changing

according the Envi• It is More Interdisciplinary

in Nature• Rules and Regulations are

Flexible. • Focus on Short Term

Objectives of Org. • People as viewed as

Intellectual Assets.• Change is Proactive and

Systematic

Role of strategic HRM (SHRM)

• Strategic Role

• Information and Decision Making Role

• Strategic HR functional Role

• Administrative Role

Barriers To SHRM

• Focusing on Shot Term Performance• Lack of technical Knowledge• Lack of Strategic perspective• Difficulty in quantifying• Apprehensions towards training people• Resistance of employees• `

Model Integrating Strategy & HR

• Two models help us understand the relationship between HR and Strategy, they are

• Model of Best Practice

• Model of Strategic Change

Model of Best Practice

Strategic Level

Operational Level

Business Process Level

Frame policies

Recruitment and Retention

Checking equal Weight age to all

stakeholder

Models Integrating Strategic Change & HRM

The model has four basic Propositions:

1. Strategic integration

2. High commitment

3. High quality

4. Flexibility

Model of Strategic Change & HRM

Socio economic, technicalPolitico-legal

Socio economic, technicalPolitico-legal

Culture, Structure, PoliticsLeadership, task technology

Business outputs

Culture, Structure, PoliticsLeadership, task technology

Business outputs

RoleDefinition

OrganizationHR outputs

RoleDefinition

OrganizationHR outputs

HR FlowsWork systems

Reward systemsEmployee Relations

HR FlowsWork systems

Reward systemsEmployee Relations

ObjectivesProduct – market

Strategy and Tactics

ObjectivesProduct – market

Strategy and Tactics

Outer Context

HRM Context

Inner Context

Business strategycontent

HRM Content

Economic Indicators of HRM

• Investment Perspective of HR– Management Value– Organization Attitude Towards Risk– Employee skills Required– Cost benefit Analysis – Outsourcing

• Human Capital Accounting– Sources of employee value: productivity & added Value– Adding value through rewards & benefits– Adding value through attrition & recruitment

End of Chapter 2