THE STRATEGIC ROLE OF HUMAN RESOURCES MANAGEMENT EXCEL BOOKS Chapter

ANNOTATED OUTLINE 1-2 The Strategic Role Of Human Resources Management Introduction Organisations have to provide a healthy work climate in order to get the best out of people. To utilise the capabilities of people fully, you need competent leadership willing to recognise, reward and nurture talent at all levels. This is where human resource managers play a critical role by bridging gaps between employee expectations and organisational requirements by adopting appropriate human resource strategies and practices. HRM, in short, is the art of procuring, developing and maintaining competent workforce to achieve the goals of an organisation in an effective and efficient manner.

Human Resource Management: Features 1-3 The Strategic Role Of Human Resources Management  Pervasive force  Action oriented  Individually oriented  People oriented  Future oriented  Development oriented  Integrating mechanism  Comprehensive function  Auxiliary service  Inter-disciplinary function  Continuous function

Important terms 1-4 The Strategic Role Of Human Resources Management  Human resource: Knowledge, skill sets, expertise of employees, the adaptability, commitment and loyalty of employees.  Skills: The individual abilities of human beings to perform a piece of work.  Resource: The stock of assets and skills that belong to a firm at a point of time.  Capability: The ability of a bundle of resources to perform an activity; a way of combining assets, people and processes to transform inputs into outputs.  Core competencies: Activities that the firm performs especially well when compared to its competitors and through which the firm adds value to its goods and services over a long period of time.  Competitive advantage: It comes from a firm's ability to perform activities more distinctively and more effectively than rivals. To attain competitive advantage, firms need to add value to customers and offer a product or service that cannot be easily imitated or copied by rivals (Uniqueness).  Value: Sum total of benefits received and costs paid by the customer in a given situation. Clearing the Fog

Scope of HRM 1-5 The Strategic Role Of Human Resources Management  Personnel aspect  Welfare aspect  Industrial relations aspect HRM mainly covers three broad areas

Objectives of HRM 1-6 The Strategic Role Of Human Resources Management HRM aims at achieving organisational goals, meet the expectations of employees; develop the knowledge, skills and abilities of employees; improve the quality of working life and manage human resources in an ethical and socially responsible manner. Importance of HRM From an organisational standpoint, good HR practices help in attracting and retaining talent, train people for challenging roles, develop their skills and competencies, increase productivity and profits and enhance standard of living

Importance of HRM 1-7 The Strategic Role Of Human Resources Management  attract and retain talent  train people for challenging roles  develop skills and competencies  promote team spirit  develop loyalty and commitment  increase productivity and profits  improve job satisfaction  enhance standard of living  generate employment opportunities Good HR Practices help

HRM as a central subsystem in an organisation 1-8 The Strategic Role Of Human Resources Management Product Subsystem HR Subsystem Procurement Training Compensation Appraisal Rewards Marketing Subsystem Finance Subsystem Technical Subsystem

Functions of HRM 1-9 The Strategic Role Of Human Resources Management – Planning – Organising – Directing – Controlling Operative Functions P/HRM Managerial functions: Procurement Job Analysis HR planning Recruitment Selection Placement Induction Internal mobility Development: Training Executive development Career planning Succession planning Human resources development strategies Motivation and Compensation: Job design Work scheduling Motivation Job evaluation Performance and potential appraisal Compensation administration Incentives benefits and services Maintenance: Health Safety Welfare Social security Integration: Grievances Discipline Teams and teamwork Collective bargaining Participation Empowerment Trade unions Employers’ associations Industrial relations Emerging Issues: Personnel records Personnel audit Personnel research HR accounting HRIS Job stress Mentoring International HRM

Strategic Human Resource Management 1-10 The Strategic Role Of Human Resources Management Competitive advantage through people? Competitive advantage allows a firm to gain an edge over its rivals when competing. It comes from a firm’s unique ability to perform activities more distinctively and more effectively than rivals. HR can be a source of competitive advantage when the talents of people working in the firm are valuable, rare; difficult to imitate and well organised to deliver efficient and effective results.

The evolving strategic role of Human Resource Management 1-11 The Strategic Role Of Human Resources Management Strategic focus Operational focus PeopleSystem Strategic partner Change agent Administrative expert Employee champion

1-12 The Strategic Role Of Human Resources Management Realising the growing importance of HR, a new line of thinking emerged elevating the status of HR to that of a strategic partner both in the formulation of a firm’s strategic as well as in the implementation of business activities. SHRM, simply stated, is the linkage of HRM with strategic goals and objectives with a view to improve business performance and develop organisational cultures that foster innovation and flexibility. Strategic HR differs radically from traditional HR in a number of ways: Strategic Human Resource Management

Traditional HR vs. Strategic HR 1-13 The Strategic Role Of Human Resources Management Point of distinction Focus Role of HR Initiatives Time horizon Control Job design Key investments Accountability Responsibility for HR Traditional HR Employee Relations Transactional change follower and respondent Slow, reactive, fragmented Short-term Bureaucratic-roles, policies, procedures Tight division of labour; independence, specialisation Capital, products Cost centre Staff specialists Strategic HR Partnerships with internal and external customers Transformational change leader and initiator Fast, proactive and integrated Short, medium and long (as required) Organic-flexible, whatever is necessary to succeed Broad, flexible, cross-training teams People, knowledge Investment centre Line managers

EVOLUTION OF HRM The field of HRM evolved both in India and elsewhere over a number of years to present level of sophistication and use of proactive methods 1-14 The Strategic Role Of Human Resources Management  The industrial revolution  Scientific management  Trade unionism  Human relations movement  Human resources approach

Evolution of the Personnel Function 1-15 The Strategic Role Of Human Resources Management ConceptWhat 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. Cont…

1-16 The Strategic Role Of Human Resources Management The Humanitarian concept To improve productivity, physical, social and psychological needs of workers must be 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 conceptEmployees 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, managers must 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

Growth in India 1-17 The Strategic Role Of Human Resources Management  Legal phase  Welfare phase  Development phase

Personnel Function in India; Changing Scenario 1-18 The Strategic Role Of Human Resources Management PeriodEmphasis Status Roles 1920 – 30Welfare managementClericalWelfare Paternalistic practicesadministrator 1990s –Incremental productivityProactive, Developer onwards gains through humangrowth-orientedCounsellor assets Coach Mentor Problem solver 1940 – 60Expanding the role to coverAdministrativeAppraiser Labour, Welfare, IndustrialAdvisor Relations and PersonnelMediator AdministrationLegal advisor Fire fighting 1970 – 80Efficiency, effectivenessDevelopmental Change agent dimensions added Integrator Emphasis on human Trainer values, aspirations, Educator

Shifts in HR management in India 1-19 The Strategic Role Of Human Resources Management Emerging HR practice  Strategic role  Proactive  Key part of organisational mission  Service focus  Process-based organisation  Cross-functional eams, teamwork most important  People as key investments/assets Traditional HR practice  Administrative role  Reactive  Separate, isolated from company mission  Production focus  Functional organisation  Individuals encouraged, singled out for praise, rewards  People as expenses

HRM in the new millennium 1-21 The Strategic Role Of Human Resources Management Current thinking in HRM strongly supports the view that when opportunities for growth and enhancement of skills are available in an organisation, people will be stimulated to give their best, leading to greater job satisfaction and organisational effectiveness. To this end, therefore, HR managers in the new millennium are expected to successfully evolve an appropriate corporate culture, take a strategic approach to the acquisition, motivation and development of human resources and introduce programmes that reflect and support the core values of the organisation and its people.  Size of work force Demands for better pay, benefits, working conditions Cont…

1-21 The Strategic Role Of Human Resources Management   Composition of workforce Equal pay for equal work Breaking down of glass ceiling Constitutional protection to minority groups Importance to factors such as age, sex, religion, region, caste especially while dealing with multifarious, heterogeneous, culturally diverse work groups   Employee expectations Better educated, more knowledgeable, emotionally strong and demanding workforce Demand for educated, trained, experienced and knowledgeable workers growing Understand individual differences and develop appropriate policies to meet their growing expectations. Cont… HRM in the new millennium

 Changes in technology Modernisation, computerisation, sophistication increasing by the day Knowledge and skills need to be refined constantly Training, retraining and mid-career counselling important Equip employees so as to cope with dramatic challenges brought forward by rapid advances in science and technology  Life style changes  Environmental challenges  Personnel function in future Job redesign Career opportunities Productivity Recruitment and selection Training and development Rewards Safety and welfare 1-23 The Strategic Role Of Human Resources Management Cont… HRM in the new millennium

1-23 The Strategic Role Of Human Resources Management  Changes in 21 st century affecting HRM HR as a springboard for success Talent hunting, developing and retraining Lean and mean organisations Labour relations Health and benefit programmes HRM in the new millennium