What Is Strategic HR ? - CiteHR
ANTONY_XAVIER
Human Resources
Ruthcarin
Hr And Business Development Executive
Leolingham2000
Management Consultant
Shyamali
Human Resources Director
Purohitsunil
Defence Officer

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"The primary actions of the strategic human resource manager is to translate business strategies into HR priorities. - Can anyone explain more in detail. Regards
THE CONCEPT OF STRATEGY/ STRATEGIC HRM

Strategy determines the direction in which the organization is going in relation to its environment. It is the process of defining intentions (strategic intent) and allocating or matching resources to opportunities and needs (resource‑based strategy), thus achieving strategic fit between them. Business strategy is concerned with achieving competitive advantage. The effective development and implementation of strategy depend on the strategic capability of the organization, which will include the ability not only to formulate strategic goals, but also to develop and implement strategic plans through the process of strategic management. Strategy is about implementation, which includes the management of change, as well as planning.

The concept of strategy is not a straightforward one. There are many different theories about what it is and how it works.

strategy can have a number of meanings, namely:

• a plan, or something equivalent ‑ a direction, a guide, a course of action;

• a pattern, that is, consistency in behaviour over time;

• a perspective, an organization's fundamental way of doing things;

• a ploy, a specific 'manoeuvre' intended to outwit an opponent or a competitor.

The formulation of corporate strategy can be defined as a process for developing and defining a sense of direction. It has often been described as a logical, step‑by‑step affair, the outcome of which is a formal written statement that provides a definitive guide to the organization's long term intentions. Many people still believe that this is the case, but it is a misrepresentation of reality. In practice the formulation of strategy is never as rational and linear a process as some writers describe it, or as some managers attempt to make it. Strategy formulation is not necessarily rational and continuous. In theory, strategy is a systematic process: first we think, then we act; we formulate then we implement. But we also 'act in order to think'. In practice, 'a realised strategy can emerge in response to an evolving situation' and the strategic planner is often 'a pattern organiser, a learner if you like, who manages a process in which strategies and visions can emerge as well as be deliberately conceived.'

Strategy has always been emergent and flexible. It is always 'about to be', it never exists at the present time.

Strategy is not only realized by formal statements but also comes about by actions and reactions.

Strategy is a description of a future oriented action which is always directed towards change.

The management process itself conditions the strategies that emerge.

STRATEGIC HRM DEFINED

Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward and employee relations strategies, policies and practices. The key characteristic of strategic HRM is that it is integrated. HR strategies are generally integrated vertically with the business strategy and horizontally with one another. The HR strategies developed by a strategic HRM approach are essential components of the organization's business strategy.

Concerns of strategic HRM

Strategic HRM is concerned with the relationship between human resource management and strategic management in the firm. Strategic HRM refers to the overall direction the organization wishes to pursue in order to achieve its goals through people. It is argued that, because intellectual capital is a major source of competitive advantage, and in the last analysis it is people who implement the strategic plan, top management must take these key considerations fully into account in developing its corporate strategies. Strategic HRM is an integral part of those strategies.

Strategic HRM addresses broad organizational issues relating to organizational effectiveness and performance, changes in structure and culture, matching resources to future requirements, the development of distinctive capabilities, knowledgemanagement and the management of change. It is concerned with both meeting human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it will consider any major people issues that affect or are affected by the strategic plan of the organization. 'The critical concerns of HRM such as choice of executive leadership and formation of positive patterns of labour relations, are strategic in any firm.'

The focus of strategic HRM

Strategic HRM focuses on actions that differentiate the firm from its competitors . It develops declarations of intent which define means to achieve ends, and it is concerned with the long term allocation of significant company resources, and with matching those resources and capabilities to the external environment. Strategy is a perspective on the way in which critical issues or success factors can be addressed, and strategic decisions aim to make a major and long term impact on the behaviour and success of the organization.

The meaning of strategic HRM

Strategic HRM has four meanings:

*the use of planning;

*a coherent approach to the design and management of personnel systems, based on an employment policy and manpower strategy, and often underpinned by a 'philosophy';

*matching HRM activities and policies to some explicit business strategy;

* seeing the people of the organization as a 'strategic resource' for the achievement of 'competitive advantage'.

AIMS OF STRATEGIC HRM

The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed and well‑motivated employees it needs to achieve sustained competitive advantage. Its objective is to provide a sense of direction in an often turbulent environment, so that the business needs of the organization, and the individual and collective needs of its employees, can be met by the development and implementation of coherent and practical HR policies and programmes.

STRATEGIC HRM MODELS

There are three models: high performance management (high performance working), high commitment management and high involvement management. Within the framework of the concept of strategic HRM, these describe various approaches to its development and implementation.

High performance management

High performance working involves the development of a number of interrelated processes that together make an impact on the performance of the firm through its people in such areas as productivity, quality, levels of customer service, growth, profits, and ultimately the delivery of increased shareholder value. This is achieved by 'enhancing the skills and engaging the enthusiasm of employees' . The starting point is leadership, vision and benchmarking to create a sense of momentum and direction. Progress must be measured constantly. He suggests that the main drivers, support systems and culture are:

*decentralized, devolved decision making made by those closest to the customer so as constantly to renew and improve the offer to customers;

*development of people capacities through learning at all levels, with particular emphasis on self‑management and team capabilities ‑ to enable and support performance improvement and organizational potential;

*performance, operational and people management processes aligned to organizational objectives ‑ to build trust, enthusiasm and commitment to the direction taken by the organization;

* fair treatment for those who leave the organization as it changes, and engagement with the needs of the community outside the organization ‑ this is an important component of trust and commitment‑based relationships both within and outside the organization.

High‑performance management practices include rigorous recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance management processes.

The strategy may be expressed as a drive to develop a performance culture in an organization, and the following is an example of the performance strategy formulated recently by a large local authority:

The fundamental business need the strategy should meet is to develop and maintain a high performance culture. The characteristics of such a culture are:

*a clear line of sight exists between the strategic aims of the authority and those of its departments and its staff at all levels

*management defines what it requires in the shape of performance improvements, sets goals for success and monitors performance to ensure that the goals are achieved

*leadership from the top which engenders a shared belief in the importance of continuing improvement

*focus on promoting positive attitudes that result in a committed and motivated workforce

*performance management processes aligned to the authority's objectives to ensure that people are engaged in achieving agreed goals and standards

*capacities of people developed through learning at all levels to support performance improvement

*people provided with opportunities to make full use of their skills and abilities

*people valued and rewarded according to their contribution.

High commitment management

One of the defining characteristics of HRM is its emphasis on the importance of enhancing mutual commitment . High commitment management has been described as 'A form of management which is aimed at eliciting a commitment so that behaviour is primarily self‑regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on high levels of trust!

The approaches to creating a high commitment organization are:

• the development of career ladders and emphasis on trainability and commitment as highly valued characteristics of employees at all levels in the organization;

• a high level of functional flexibility with the abandonment of potentially rigid job descriptions;

• the reduction of hierarchies and the ending of status differentials;

• a heavy reliance on team structure for disseminating information (team briefing), structuring work (team working) and problem solving (quality circles).

• job design as something management consciously does in order to provide jobs that have a considerable level of intrinsic satisfaction;

• a policy of no compulsory lay‑offs or redundancies and permanent employment guarantees, with the possible use of temporary workers to cushion fluctuations in the demand for labour;

• new forms of assessment and payment systems and, more specifically, merit pay and profit sharing;

• a high involvement of employees in the management of quality.

High involvement management

This approach involves treating employees as partners in the enterprise whose interests are respected and who have a voice on matters that concern them. It is concerned with communication and involvement. The aim is to create a climate in which there is a continuing dialogue between managers and the members of their teams in order to define expectations and share information on the organization's mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved.

Five high‑involvement work practices have been identified:

• 'on‑line' work teams;

• 'off‑line' employee involvement activities and problem solving groups;

• job rotation;

• suggestion programmes;

• decentralization of quality efforts.

IMPLEMENTING HR STRATEGIES

Because strategies tend to be expressed as abstractions, they must be translated into

programmes with clearly stated objectives and deliverables. But getting strategies

into action is not easy. The term 'strategic HRM' has been devalued in some quarters;

sometimes it means no more than a few generalized ideas about HR policies, at other

times it describes a short term plan, for example to increase the retention rate of

graduates. It must be emphasized that HR strategies are not just programmes, policies, or plans concerning HR issues that the HR department happens to feel are important. Piecemeal initiatives do not constitute strategy.

The problem with strategic HRM is that too often, strategic intentions are not achieved in practice. As seen : 'One principal strand that has run through this entire notes is the disjunction between rhetoric and reality in the area of human resource management, between HRM theory and FIRM practice, between what the HR function says it is doing and how that practice is perceived by employees, and between what senior management believes to be the role of the HR function, and the role it actually plays.' The factors they identify that contribute to creating this gap include:

* There is a tendency for employees in diverse organizations only to accept initiatives they perceive to be relevant to their own areas.

* There is a tendency for long serving employees to cling to the status quo.

* Complex or ambiguous initiatives may not be understood by employees or will be perceived differently by them, especially in large, diverse organizations.

* It is more difficult to gain acceptance of non‑routine initiatives.

* Employees will be hostile to initiatives if they are believed to be in conflict with the organization's identity, as with downsizing in a culture of 'job for life'.

* The initiative is seen as a threat.

* There are inconsistencies between corporate strategies and values.

* The extent to which senior management is trusted.

* The perceived fairness of the initiative.

* The extent to which existing processes could help to embed the initiative.

* A bureaucratic culture that leads to inertia.

Barriers to the implementation of HR strategies

The barriers that can be met by HR strategists when attempting to implement strategic initiatives often result from a failure to understand the strategic needs of the business, with the result that HR strategic initiatives are seen as irrelevant, even counter‑productive. This problem is compounded if there has not been an adequate assessment of the environmental and cultural factors that affect the content of the strategies. III conceived and irrelevant initiatives, possibly because they are current fads or because there has been a badly digested analysis of best practice that does not fit the organization's requirements, will not help. Implementation will also be difficult if one initiative is taken in isolation without considering its implications on other areas of HR practice or trying to ensure that a coherent, holistic approach is adopted.

It will be very hard to implement anything if the practical problems of getting the initiative accepted by all concerned, including, importantly, top management have not been dealt with. Inability to achieve ownership among line managers, or to develop the skills they require to play their part in implementation, will be major obstacles. (The key role of line managers in making HR initiatives work is often underestimated.) It is also necessary to ensure that supporting processes for the initiative (such as performance management to support performance pay) and the financial and people resources required are available.

Overcoming the barriers

To overcome these barriers it is necessary to:

1. Conduct a rigorous initial analysis. The initial analysis should cover business needs, corporate culture, and internal and external environmental factors. The framework could be a SWOT analysis of strengths, weaknesses, opportunities and threats facing the organization, or a PESTLE analysis (the political, economic, social, technological, legal and environmental contexts within which the organization operates).

2. Formulate strategy. The formulation should set out the rationale for the strategy and spell out its aims, cost and benefits.

3. Gain support. Particular care needs to be taken to obtain the support of top managers (for whom a business case must be prepared), line managers, employees generally and trade unions. This means communication of intentions and their rationale, and the involvement of interested parties in the formulation of strategic plans.

4. Assess barriers. An assessment is required of potential barriers to implementation, especially those relating to indifference, hostility (resistance to change) and lack of supporting processes or resources. Unless and until a confident declaration can be made that the initiative will receive a reasonable degree of support (it could be too much to expect universal acclamation) and that the resources will be available, it is better not to plunge too quickly into implementation.

5. Manage change. Change management processes should be used to gain acceptance for any new initiatives contained in the strategy. The important role of the HR function in managing change cannot be over­estimated.

6. Prepare action plans. These should spell out what is to be done, who does it and when it should be completed. A project plan is desirable which indicates the

stages of the implementation programme, the resources required at each stage, and the stage and final completion dates. The action plan should indicate the consultation, involvement, communication and training programmes that will be required. It should also state how progress will be monitored, and the criteria for measuring success against objectives.

7. Project manage implementation. This should be conducted by reference to the action or project plan, and would involve monitoring progress and dealing with problems as they arise.

8. Follow up and evaluate. Nothing can be taken for granted. It is essential to follow up and evaluate the results of the initiative. Follow‑up can take place through interviews, focus groups, and desirably, attitude surveys. The evaluation should point the way to action in the form of amendments to the original proposals, the provision of supporting processes, additional support to line managers, intensified communication and training, or getting more resources.

Setting out the strategy

The following is an example of the headings under which a strategy and the plans for implementing it could be set out.

• Basis:

‑ business needs in terms of the key elements of the business strategy;

‑ environmental factors and analysis (SWOT/PESTLE);

‑ cultural factors ‑ possible helps or hindrances to implementation.

• Content ‑ details of the proposed HR strategy

• Rationale ‑ the business case for the strategy against the background of business needs and environmental /cultural factors.

• Implementation plan: ‑ action programme;

- responsibility for each stage;

‑ resources required;

‑ proposed arrangements for communication, consultation, involvement, training and change management;

‑ project management arrangements,

• Costs and benefits analysis ‑ an assessment of the resource implications of the plan (costs, people and facilities) and the benefits that will accrue, for the organization as a whole, for line managers and for individual employees. As far as possible these benefits should be quantified in terms of value added.

REGARDS

LEO LINGHAM

Thanks Leo for the wonderful explanation about Strategic HR. I just wanted to ask you one more question, Earlier HR means only Recuritment and Training, now we are talking about Strategic HR. What do you have to say about the future of HR in a company, when most of the companies are outsouring HR.
Regards
Xavier

CHANGE WILL ALWAYS BE THERE.

WE GOT TO ACCEPT IT AND PREPARE TO ADAPT THE CHANGE.

In the past,

-advertising was carried out in-house, today it is all outsourced.

-marketing research was carried out in-house, today it is all outsourced.

-sales promotion was carried out in-house, today it is all outsourced.

-merchandising was carried out in-house, today it is all outsourced.

-product development was carried out in-house, today it is all outsourced.

-recruitment was carried out in-house, today it is all outsourced.

-payroll administration was carried out in-house, today it is all outsourced.

-back office admin. was carried out in-house, today it is all outsourced.

-legal admin. was carried out in-house, today it is all outsourced.

-public relations was carried out in-house, today it is all outsourced.

As new technologies are introduced in the business process, more

business activities could be outsourced.

HR IS A SET OF SUPPORT ACTIVITIES, WHICH COULD BE

OUTSOURCED.

EXAMPLE

UNILEVER HAS DECIDED TO OUTSOURCE ALL ITS HR ACTIVITIES.

It is a matter of time others will follow.

I had posted an article some months ago on this subject.

A NUMBER OF OVERSEAS SPECIALISTS IN VARIOUS HR ACTIVITIES

WILL SET UP SHOPS AND OFFER FRANCHISE OPPORTUNITIES.

EVEN INDIAN HR COS. WILL SPREAD THEIR WINGS.

This is the ripe time for HR EXECUTIVES/ MANAGERS should

look at their future / career.

YOU MUST SPECIALIZE IN A CLUSTER OF 2/3 AREAS

AS EXAMPLE

-recruitment/selection/ head hunting

-compensation packaging/benefits planning/incentives

-training / development /coaching

-hr planning/ manpower planning

-strategic hr planning

--LEARNING AND DEVELOPMENT

-BUSINESS COACHING OF LINE MANAGERS IN HR.

etc etc

YOU MUST COME OUT OF CORPORATE HR SHELTER

AND PREPARE THE GROUND FOR CONSULTANCY.

==================================================

STRATEGIC HR will always exist in a company.

But the HR director might seek external help

with the advantage of

-external ideas plus

-workload is outsourced.

ON THIS SCORE, I MYSELF HAVE CARRIED OUT

STRATEGIC HR FOR OVER 30 COS AS AN EXTERNAL CONSULTANT.

SO, HR WILL ALWAYS EXIST AND LIVE LONG.

OPPORTUNITIES OF VARIOUS TYPES WILL CROP UP.

YOU GOT TO GRAB IT AND MAKE IT HAPPEN.

ONLY YOU CAN DO IT.

regards

LEO LINGHAM

Thanks Leo for your reply. To summarize, what I understand from your message is, in future there will be more scope for HR Consultants and hardly there will be any HR in a company. Am I right?
Xavier
Human Resources
RLICL

Dear Sir, I think I would always await to read all your posts. They are interesting and informative. Thank You So much for your efforts. Yours sincerely Shyamali
XAVIER,
YES, YOU ARE RIGHT.
IN AUSTRALIA TODAY,
-THE SIZE OF HR DEPARTMENTS HAVE BEEN SCALED DOWN.
-MAJOR COS OUTSOURCE HR REQUIREMENTS LIKE
*recruitment / selection
*payroll admn
*training / development
*performance management
*compensation packaging
*health / safety
etc etc

The trend will catch up in INDIA soon.
regards
LEO LINGHAM

:lol: Dear Leo the LION,
I must say you have done an excellent article on Strategic HRM. Thanks a lot. It will definitely help me in clarifying the concept better to my students. Thanks once again.
Lt Col Sunil Purohit

Hi Mr. Lingham,
Thank you for explaining Strategic HR. I hope to read more posts.
Can you recommend a a book or any website that is good to follow regarding strategic hr?
I am really interested in learning.

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