Ch 01-The Strategic Role of Human Resource Management

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Copyright © 2010, VSP Rao

CH-1 The Strategic Role of Human Resource Management

Human resource Management (3rd Edition) V S P Rao

Chapter1The Strategic Role of

Human Resource Management

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“Hire the best. Pay them fairly. Communicate freely.

Provide challenges and rewards. Get out of their way. They’ll knock your

socks off.”

- Mary Ann Allison

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Nature of HRM

It is the art of procuring, developing and maintaining competent workforce to

achieve the goals of an organisation in an effective and efficient manner.

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HRM Features Pervasive force

Action oriented

Individually oriented

People oriented

Future oriented

Development oriented

Integrating mechanism

Comprehensive function

Auxiliary service

Interdisciplinary function

Continuous function

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Scope of HRM

Personnel aspect

Welfare aspect

Industrial relations aspect

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Objectives of HRM

1. To help the organisation reach its goals

2. To employ the skills and abilities of the workforce efficiently

3. To provide the organisation with well-trained and well-motivated

employees

4. To increase to the fullest the employee’s job satisfaction and self-

actualization

5. To develop and maintain a quality of work life

6. To communicate HR policies to all employees.

7. To be ethically and socially responsive to the needs of society

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Importance of HRM

1. At the enterprise level

2. At the individual level

3. At the society level

4. At the national level

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Competitive Advantage

1. Superiority

2. Inimitability

3. Durability

4. Non-substitutability

5. Appropriability

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Strategic Human Resources Management (SHRM)

SHRM is built around three important propositions: (M. Armstrong 34-45)

The human resources of a firm are a major source of competitive

advantage; in a way, people can make or break an organisation.

Successful organisational performance depends on a close fit between

business and human resource strategy (vertical fit).

Individual HR strategy should cohere by being linked to each other to

offer mutual support (horizontal fit).

Cont….

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External Environment

• Competition• Government Policy• Technology• Market Trends• Economic Factors

Business Strategy

Internal Environment

CultureStructurePoliciesSkillsPast Strategy

Laws Regulating

Employment

HR Strategy

•HR Planning•Design of jobs and work systems•What workers do•What workers need•How jobs interface with others

HR InformationSystems

HR InformationSystems

–Procurement

–Development

–Performance Management

–Compensation

–Labour relations

–Procurement

–Development

–Performance Management

–Compensation

–Labour relations

Outcomes

• Increased Performance

• Customer Satisfaction

• Employee Satisfaction

• Enhanced Shareholder Value

Outcomes

• Increased Performance

• Customer Satisfaction

• Employee Satisfaction

• Enhanced Shareholder Value

CorporateStrategyCorporateStrategy

A Model of Strategic Human Resources Management

Cont….

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Point of Distinction Traditional HR Strategic HR

Traditional HR versus Strategic HR

Focus Employee Relations Partnerships with internal and

external customers

Role of HR Transactional change follower and respondent

Transformational change leader and initiator

Initiatives Slow, reactive, fragmented Fast, proactive and integrated

Time horizon Short-term Short, medium and long (as required)

Control Bureaucratic-roles, policies,

procedures

Organic-flexible, whatever is

necessary to succeed

Job design Tight division of labour; independence, specialization

Broad, flexible, cross-training teams

Key investments Capital, products People, knowledge

Accountability Cost centre Investment centre

Responsibility for HR Staff specialists Line managers

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History of Personnel/Human Resource Management

(P/HRM)

1. The industrial revolution

2. Scientific management

3. Trade unionism

4. Human relations movement

5. Human resources approach

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Concept What is it all about?

The Commodity concept Labour was regarded as a commodity to be bought and sold. Wages were based on demand and supply. Government did very little to protect workers.

The Factor of Production concept Labour is like any other factor of production, viz, money, materials, land, etc.Workers are like machine tools.

The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room will have a positive impact on workers’ productivity.

The Paternalistic concept/ Paternalism Management must assume a fatherly and protective attitude towards employees.Paternalism does not mean merely providing benefits but it means satisfying various needs of the employees as parents meet the requirements of the children.

The Humanitarian concept To improve productivity, physical, social and psychological needs of workers mustbe met. As Mayo and others stated, money is less a factor in determining output, than group standards, group incentives and security. The organisation is a social system that has both economic and social dimensions.

The Human Resource concept Employees are the most valuable assets of an organisation. There should be a conscious effort to realise organisational goals by satisfying needs and aspirations of employees.

The Emerging concept Employees should be accepted as partners in the progress of a company. They should have a feeling that the organisation is their own. To this end, managersmust offer better quality of working life and offer opportunities to people to exploit their potential fully. The focus should be on Human Resource Development.

Evolution of the Personnel Function

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Traditional HR practice Emerging HR practice

Administrative role

Reactive

Separate, isolated from company

mission

Production focus

Functional organisation

Individuals encouraged, singled

out for praise, rewards

People as expenses

Strategic role

Proactive

Key part of organisational mission

Service focus

Process-based organisation

Cross-functional teams, teamwork

most important

People as key investments/assets

Shifts in HR Management in India

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“Case Study”“Case Study”

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“Southwest Airlines:

Wall Street’s Cinderella Story”

Ch 01-The Strategic Role of Human Resource Management

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