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Strategic HRM as Means toStrategy

(The existing Views on strategic link of

HRM polices and practices withorganizational strategy)

Discussion paper Submitted to:

Ast.Prof. Fisseha Afework,AAU School Commerce, Department of

Management, Information andEconomic Sciences

Compiled By Group 4: post graduateStudents:

Alemu

BiniamD

C

Addis Ababa

March

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IntroductionStrategic Human resources Management

can be defined as an integrated approach to the

development of HR strategies. It is formulatedbased on the concept of Strategy and HRM.According to Johnson and Scholes (1993) strategyis direction and scope of an organization over thelong term that matches resources and theenvironment. Strategy determines strategic intent,resource allocation and competitive advantages.

This in turn calls for effective development oforganizational and HR capabilities. Hence, tounderstand the role of HRM as means to strategyformulation, we have to analyze the existingintegration and fit between the HRM Policies andpractices and organizational strategy. We also haveto see the existing congruence among existing

HR practices.Strategy is all about creation of mission,setting objectives, formulating policies, assurance ofpolicy implementation to achieve over all goalsunder existing internal and externalenvironment.HRM is concerned on developing,applying, and evaluating policies, procedures,

methods and programs.(Pattanayak,2009)According to Pfeiffer(1998) Human resources

practices should be linked with business objectiveand corporate strategy. According to Ulrich andLake(1990) The strategic HR frame work aims toalign HR practices to build critical organizationalcapabilities. In this discussion paper we shallreview, analyze and understand these existingviews on strategic HRM role as means to achieve

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Strategic HRM as Means toAchieve Organizational Strategy

One of the approches to achiving commitment is highinvolvement management. Thia approach treats employees asbusiness partners whose interests are respected and whohave a voice for matters that concern them. The focus here iscommunication and involment of HRM team during definingexpectations,mmiission, values and objectives. High Involmentwork practices have been identified by Pil and McDuffie(1999).The identified involment prictices were online work team, offline envolment activities,problem solving groups, job

rotation,suggestion programmes and decentralized qualityefforts. The implementation of strategic HRM is to be carriedout with in the framework of the approaches stated above.

Strategy is expressed in strategic goals and implementedthrough the process of strategic management. Strategyimplementation includes change management and planningstrategic fit with policies and practices. The implementationprocess covers matching capabilities, material resources,

opportunities, and human resources with strategy. Strategyhas no fixed meaning, there are differing theories on how itworks,(Mintzberg et al(1988). It can mean plan, pattern,perspective or a ploy. However, the concept of strategic HRMis derived from the concept of HRM and Strategy from its verymeaning.

According to recent literature review ,(Rao,1999 )strategicHRM plays important role in achieving organizational goals.This is evident from the fact that business objectives are to be

achieved by people working in the organization. Also today'sbusiness management, HR professionals are becoming apart of team who formulate business strategy. This intergratedpractice calls for and results in linkage of HR functions andcorporate strategic objectives. Further more ,strategicformulation process requires sequence of questions toanswer across the stages in which HRM processes areinvolved as indicated on table below.

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Sequence of questions

across Strategyformulation stagesStage Question

Analysis What are the problems?

Diagnose What are the causes ofproblems?

Conclusion andRecommendation

What alternative strategiesare available for theproblem solution?

Action planning What problems may wemeet ahead and how willwe overcome them?

Resource planning How will we obtainresources?

Employee Benefit Plans How do we benefit

Individual Employees?

Source : Hand Book Of Strategic HRM ,MichaelArmstron,Crest Publishing (2003)

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The above raised questions indicatethe need to implement strategic HRM in

all HR systems and subsystems. Thevital point here is that strategic HRMfunctions are strategic staffing andstrategic HR development. Other relatedfunctions such as performance

management, compensationmanagement and reward systems arealso important functions in HRM that areclosely related to strategic planningconsiderations. Hence ,corporate

strategy formulation and functionalstrategy formulation are mutuallyinteractive. This Indicates strategic link ofHRM.

Structural approaches to strategyformulation need to consider thestrategies of competitors. For this reason,lot of commonalities in terms of businessenvironment and, opportunities exist

among organizations. But still morecustomized Strategy formulation is

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Strategic Link of

functions, Systems andPeople

Function System People/Employees

HR professionalswith strategicCompetencies

Strategicallyaligned policiesand practices

Strategicallyfocusedcompetencies andmotivations

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The linkage between HRMsystems and functions on the table

above show a paradigm shift fromtraditional HR functions to strategicHR functions in the value addingprocesses. The HR systems needs

to be developed from strategicprospective in order to create valueand reinforce policies and practices.

The main question here is that

what specific policies and practiceslead to high performance? AvailableSurvey research result on HRMsystems in public held companiesshows the following data.

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HRM Systems Study

Qualitative data

Factor/policy/practice of

interest that led to highperformance is

testedAnswers

Firm Size N0

Industry No

Age of Firm No

HRM Performance Management YesCompensation Yes

HR Professionals Yes

Strategic Communication withemployees

Yes

Focus on Empowerment Yes

Performance Orientation Yes

People Based System Yes

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Shift from Traditional

HR to strategic HR

Variable of

InterestStudied

Traditional HR Strategic HR

Accountability HR Specialist HR Specialist &Line Mangers

Importance Managing

Activities

Strategy

formulation &Implementation

Role of HR Custodian of HRPolicy

Strategic BusinessPartner

Approach reactive Proactive

Orientation Activities Results

Major Function Peopledevelopment

People &OrganizationalDevelopment

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The Seven Step Model Linkof HR with business

StrategyAnalysis of existing case studies haveshown that employee behavior is critical forachieving goals and productivity. Integratingbehavior patterns with over all efforts is realstrategic change. According to seven step

model of Becker, Huselid and Ulrich(2001),HRcan link its deliverables to business strategy inthe implementation processes as under:

1. Clearly defined business strategy providemeans of understanding roles in realizingthe goal and measuring achievements

2. Building a business case for HR as strategic

asset shows how HR Support Strategy3. Creating a strategic map gives close look at

on strategic objectives

4. Identifying HR deliverables with in thestrategy map help identify which deliverablessupport performance

5. Aligning HR architecture with HRDeliverables is most important issue toaddress structure of HR

6. Designing the strategic measurement systemhelps to identify drivers and enablers ofperformance

7. Implementing management by measurementassure strategic significance of drivers andenablers.

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HR resource score cards frommeasurement process contain

indicators for performance. The scorecard help link people, strategy andperformance.

The most recent research projects

has identified the relative importanceof the five domains of effective HRprofessionals. An effective HRprofessional needs to have knowledgeof business, HR practices, Managing

culture, orchestrating change anddemonstrating personal credibility. Todevelop these competencies, HRmangers must understand strategicmeasurement dimensions, on what tomeasure and how to measure.Currently identified strategicmeasurement dimensions are criticaland causal thinking, understanding

principles of good measurement,estimating causal relationships, and

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ConclusionIn to days fast changing business environment, sustenance of

growth and development is only possible through creatingperforming organizations and develop performing people andperforming people create organizations. This can be realized onlythrough linking people, strategy and performance. To ensure this, ashift from traditional HR function to Strategic performancemanagement function is required . HR professionals need todevelop new competencies in strategizing HR functions so as toachieve business goals and make them selves an excellentbusiness partners

Existing case studies on strategic HR identify the improved roleof HR under strategic approach. These studies point out that HRdevelopment is key consideration for ensuring over all success ofstrategy. Many case studies have come up in support of this idea.

We can therefore conclude that HRM is more crucial today forthe success of any organization than ever before. The question thatarise at this point is what measure should be considered to movetowards this goal.

Workers are not liability, but key resources which need to carefullynurtured and constantly developed. Organizations are becomingconscious of the potential of new technologies. This also requiresrealizing the crucial role that human beings play in managing thattechnology.

Strategic HRM involves the formulation and implementation of specificstrategies in each area of HRM as discussed in the literature articlereviews.

Therefore, to enhance survival in competitive environment and promoteorganizational learning as well as achieve corporate goals,Strategic HRM Must be a means to integrate, and fit HR policiesand practices with organizational strategy.

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References Pattanayak(2009),Human

Resources Management, 3rd editionPHI Learning Private Ltd,New Delhi,

PP 364-381