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Shrm notes mod 1

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strategic hrm
kerala university
mod 1

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Shrm notes mod 1

  1. 1. 1 Unit I: Concept of SHRM-- Definition, objectives, scope, functions; Strategic role of SHRM; Difference between traditional HRM and SHRM; Essential elements of SHRM; Approaches to SHRM; Strategic fit; Application of SHRM in changing organization scenario. Unit 1 CONCEPT OF SHRM-- DEFINITION, OBJECTIVES, SCOPE, FUNCTIONS Strategic Human Resource Management or SHRM is a strategic approach to HRM, referred to as managerial process requiring human resource (HR) policies and practices to be linked with the strategic objectives of the organization.  Strategic HRM‘ is an outcome: ‗as organizational systems designed to achieve sustainable competitive advantage through people Strategic HRM has been defined as the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility. According to Jeffery A. Mello, ―The development of a consistent, aligned collection of practices, program and policies to facilitate the achievement of the organizational strategic objectives.‖ According to Schuler, “Strategic human resources management is largely about integration and adaptation. Its concern is to ensure that: (1) Human resources (HR) management is fully integrated with strategy and the strategic needs of the firm; (2) HR policies cohere both across policy areas and across hierarchies; and (3) HR practices are adjusted, accepted and used by line managers and employees as part of their everyday work.‖ According to Truss &Graton, ―SHRM is defined as the linking of HRM with strategic goals and objectives in order to improve business performance and develop organizational cultures that foster innovation and flexibility.‖ Thus, SHRM, in general can be defined as the process of linking the human resource functions with the strategic objectives of the organization in order to improve performance. Some theorists describe SHRM as „the process by which organizations seek to link the human, social, and intellectual capital of their members to the strategic needs of the firm‟. Strategic HRM defines the organization‘s intentions and plans on how its business goals should be achieved through people. It is based on three propositions: first, that human capital is a major source of competitive advantage; second, that it is people who implement the strategic plan; and, third, that a systematic approach should be adapted to defining where the organization wants to go and how it should get there. Strategic HRM is a process that involves the use of overarching approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another. These strategies define intentions and plans related to overall organizational considerations, such as organizational effectiveness, and to more specific aspects of people management, such as resourcing, learning and development, reward and employee relations.
  2. 2. 2  The Meaning Of Strategic Hrm Strategic HRM focuses on actions that differentiate the firm from its competitors. It is suggested by Hendry and Pettigrew (1986) that it has four meanings: l the use of planning; l a coherent approach to the design and management of personnel systems based on an employment policy and workforce strategy and often underpinned by a ‗philosophy‘; l matching HRM activities and policies to some explicit business strategy; l seeing the people of the organization as a ‗strategic resource‘ for the achievement of ‗competitive advantage‘. Strategic HRM addresses broad organizational issues relating to changes in structure and culture, organizational effectiveness and performance, matching resources to future requirements, the development of distinctive capabilities, knowledge management, and the management of change. It is concerned with both human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it deals with any major people issues that affect or are affected by the strategic plans of the organization.  Importance of SHRM.  Identifies & analyzes external opportunities and threats that may be crucial to the company‘s success.  Provides a clear business strategy and vision for the future.  Supplies competitive intelligence that may be useful in the strategic planning process.  Plays vital role in recruiting, retaining and motivating manpower.  Ensures that people development issues are addressed systematically.  Supplies information regarding the company‘s internal strengths and weaknesses.  Meets the expectations of the customers effectively.  Ensures high productivity.  Ensures business surplus through competency.  Four Components of SHRM
  3. 3. 3  OBJECTIVES OF SHRM 1. To ensure the availability of a skilled, committed, & highly motivated workforce in the organization to achieve sustained competitive advantage. 2. To provide direction to the organization so that both the business needs of the organization & the individual & collective needs of its workforce are met.  Key Features of Strategic Human Resource Management The key features of SHRM are • There is an explicit linkage between HR policy and practices and overall organizational strategic aims and the organizational environment. • There are some organizing schema linking individual HR interventions so that they are mutually supportive. • Much of the responsibility for the management of human resources is devolved down the line.  FUNCTIONS OF SHRM 1. Workplace Safety Creating a work environment free from unnecessary hazards is a strategic role of every human resources manager. Strategic development for workplace safety entails risk management and mitigating potential losses from on-the-job injuries and fatalities. Workers' compensation insurance is an area in which a strategic plan helps lower company expense for insurance coverage. Reducing accidents through training employees on the proper use of complex machinery and equipment is one of the functional tasks associated with creating a safe work environment. 2. Compensation and Benefits An employer's compensation and benefits structure partly determines the company's business reputation and image. In addition, the decisions that human resources managers make regarding pay scales and employee benefits can impact employee satisfaction, as well as the organization‘s ability to recruit talented workers. Job evaluation, labor market conditions, workforce shortages and budget constraints are factors that HR managers consider in a strategic plan for pay and benefits. A strategy includes weighing an employer‘s choices between satisfying its workforce and pleasing the company‘s stakeholders. 3. Employee Training Human resources managers‘ strategic role with respect to employee training and development prepares the workforce for future positions within the company. Succession planning, promotion-from-within policies and performance evaluation factor into the human resources manager‘s role. Training and development motivate employees, and in some cases, improve employee retention. 4. Recruitment and Selection Employee recruitment and selection is as much a part of employee relations as it is a separate discipline unto itself. Therefore, a human resources manager‘s strategic role is to combine elements of employee relations into the employer‘s recruitment and selection strategy. Integrating employee recognition programs into promotion-from-within policies is an effective form of employee motivation that combines the employee relations and recruitment and selection areas of human resources.
  4. 4. 4 5. Employee Relations Some human resources managers believe that strengthening the employer-employee relationship rests solely in the employee relations areas of the HR department. This isn‘t true. Nevertheless, employee relations is such a large part of every discipline – including salaries, benefits, safety, training and employee development – that sustaining an employee relations program is an important element of human resources strategy. Implementing a workplace investigation process and enforcing fair employment practices are two components of an employee relations program. The strategic role of a human resources manager is to determine how to identify and resolve workplace issues, as well as how best to attract a diverse pool of applicants through effective recruitment and selection processes. DIFFERENCE BETWEEN TRADITIONAL AND STRATEGIC HUMAN RESOURCES Difference b/w SHRM & HR Strategy
  5. 5. 5  ESSENTIAL ELEMENTS OF SHRM: – Internally transforming HR staff and structure: • Transforming HR staff • Transforming the organizational structure – Enhancing administrative efficiency: • HR staff is to be ―administrative experts‖ • Improving administrative efficiency • Enhancing Administrative efficiency • Creation of Value – Integrating HR into the strategic planning process – Linking HR practices to business strategy and to one another • Vertical fit • Horizontal fit • External fit • Resource Flexibility • Coordination flexibility -Developing a partnership with line management: o Step 1. Provide the business with good human resource databases o Step 2. Alter the senior management role when it comes to human resource management o Step 3. The line organization must alter its incentive and control -Focusing on the bottom-line impact of HR and measurement of that impact: • Customer/stake holder • HR impact • Money value of HR programs • Benchmarking HR practices APPROACHES TO STRATEGIC HRM There Are Five Approaches To Strategic HRM. These Consist Of 1. Resource-Based Strategy,
  6. 6. 6 2. Achieving Strategic Fit, 3. High-Performance Management, 4. High- Strategic HRM: Concept And Process Commitment Management 5. High-Involvement Management STRATEGIC FIT: A CONCEPTUAL FRAMEWORK The strategic fit proposes that if an organization seeks to maximize its competitive advantage, it must match its internal resources and skills with the opportunities available in the external environment. When an organization attempts to implement new strategies with outmoded or inappropriate HR strategies, it can face problems. Strategic human resource management is largely about integration. Guest (1989) emphasized that it is important to ensure that HRM is fully integrated into strategic planning. In 1997, Guest identified the following five types of fit (Figure 1.6): 1. fit as strategic interaction (best fit approach)—HR practices linkage with the external context 2. fit as contingency—HR approaches to ensure that internal practices of the organization respond to external factors such as the nature of the market, skill availability, etc. 3. fit as an ideal set of practices (best practice approach)—there are ‗best practices‘ which all firms can adopt 4. fit as gestalt—emphasizes the importance of finding an appropriate combination of practices 5. fit as ‗bundles‘ (the configuration approach)—suggests a search for distinct configuration or bundles of HR practices that complement each other, in order to determine which ‗bundle‘ is likely to be most  The strategic fit proposes that if an organization seeks to maximize its competitive advantage, it must match its internal resources & skills with opportunities available in the external environment. Three of the above five types of fit provide the following possible approaches to SHRM: _ the best fit approach _ the HR bundles or configuration approach _ the best practice approach  Best Fit Approach The focus of the best fit approach is on the linkage of HR strategies with business strategies. This linkage is also referred to as external fit or vertical integration. Differences in business orientations or
  7. 7. 7 strategies of organizations give rise to the need for different types of people as well as diverse approaches towards investment in human capital. Best fit also means that HR strategies should match the stages of development of the firm, namely start-up, maturity, decline or degeneration, and regeneration or transformation. Business strategies, and therefore HR strategies, differ between a Greenfield firm and one that is in the transformation stage. Whenever an organization embarks upon a change or a transformational programme as part of its business strategy, appropriate change strategies need to be developed. Human resource strategies, supportive of business initiatives, should be developed to manage the organizational transition from the present state to the future state. Thus the Best Fit Approach/Contingency Model emphasizes on the importance of ensuring HR strategies which are appropriate to the circumstances of the organization, including its culture, operational processes, and external environment. HR strategies should bridge both organizational needs and its people. Vertical fit occurs where HR strategies are congruent with business strategies; match the firm‘s stage of development, take care of organizational dynamics, and are in the line with the characteristics of the organization. i) Congruence with business strategies - The whole concept of strategic HRM is predicted on the belief that HR strategies should be integrated with corporate or business strategies. Miller believes that for this state of affairs to exist, it is necessary to ensure that management initiatives in the field of HRM are consistent- consistent with those decisions taken in other functional areas of the business, and consistent with an analysis of the product-market situation. The key is to make operational the concept of fit‟- the fit of human resource management with the strategic thrust of the organization. The development of operational links is an important characteristic of strategic HRM. Congruence with business strategies may mean aligning HR strategies to the strategic orientation of the firm. Different orientations establish the need for different types of people and require changes in approaches to investing in the firm‘s human capital. ii) Matching firm’s development stages - Matching the stage of the firm‘s development means aligning HR strategy to the business strategies appropriate at each stage of the life cycle of the business- introduction, growth, maturity, and decline. iii) Dynamics - The dynamics of organizational change exert a market influence on HR strategies. A transformational program in any part of the life cycle will indicate what specific organizational development and culture management strategies the organization should adopt. Managing the transition between the present state and a future state will mean the development of change strategies and , possibly, new strategic approaches to the employment relationship.HR strategies may have to be developed to support business initiatives in such areas as total quality, customer care, organizational re- structuring, process re-engineering, product/market development, and require the introduction of new technology or production systems, e.g., computer-integrated manufacturing or just-in-time production. iv) Organizational Characteristics - An alternative way of determining HR strategy requirements is to relate them to the overall characteristics of the organization. The most familiar classification is that produces by Miles and Snow who distinguishes between defenders, who seek stability and believe in
  8. 8. 8 strict control, prospectors ,who seek new opportunities, focus on continuous development and believe in flexibility, analyzers ,who seek to incorporate the benefits of both defenders and prospectors.  Problems in practicing Best fit/contingency model  Vertical integration (strategic fit between business and HR strategies may be desirable but for a number of reasons it is not easy to achieve. Such reasons include:  The diversity of strategic processes, levels and styles.  The complexity of the strategy formulation process.  The evolutionary nature of the business strategy.  The absence of articulated business strategies.  The qualitative nature of HR issues.  Differing definitions of what there is to integrate with.  The ‘HR Bundles’ Approach Bundling refers to the development and implementation of several HR practices together so that they are interrelated and internally consistent. Each HR practice complements and reinforces the other. MacDuffie referred to ‗bundling‘ as the use of ‗complementarities‘, while Delery and Doty (1996) called it the adoption of a ‗configurational mode‘. In general terms, the bundles approach is also termed as internal fit or horizontal integration. The purpose of bundling is to bring about coherence between HR practices. Coherence exists when a mutually reinforcing set of HR practices is developed to contribute to the strategic objectives of the organization, so that these practices ensure the matching of resources to the needs of the organization, and bring about improvement in performance and quality. Coherence is achieved when the firm has an overriding driving force or strategic imperative. For example, the driving force for a firm may be quality, or high performance, or it could be the development of competencies. This driving force leads to various HR practices that are designed to operate in concert with each other to achieve this imperative. If high performance is the driving force, recruitment standards can be specified, development needs identified, and the required standards of behaviour and performance specified.  The Best Practice Approach Contrary to the internal and external contingency perspectives, is the view that organizations should adopt the best practice irrespective of the context. According to this view, superior management practices are readily identifiable and are transferable across organizations. An organization, therefore, should identify any organization with a reputation for excellence in some function, and copy its practices in order to perform well. That is, all organizations can attain performance improvements if they identify and implement the best practice or benchmark. It was an important theme in personnel management literature in the 1970s. i.e. The Best-Practice Approach is base on the belief that there is a set of best HRM practices and that adopting them will lead to superior organizational performance. It is often associated with the high-
  9. 9. 9 performance model. Perhaps the best known set is Pfeffer‟s list of seven HR practice of successful organizations i) Employment security ii) Selective Hiring iii) Self-managed Teams iv) High Compensation Contingent on Performance v) Training vi) Reduction of status differentials vii) Sharing information Problems in practicing Best Practice Approach i) Few Best Practice ii) Ambiguity on Goals iii) Lack of Adaptation Application of SHRM in changing organization scenario. The Changing Role of Strategic Human Resources Management The role of human resources management (HRM) is changing in business, particularly in international business. The strategic approach to HRM—strategic human resources management (SHRM)—means going beyond administrative tasks such as payroll processing. Instead, as shown in the opening case on Enterprise, managers need to think more broadly and deeply about how employees will contribute to the company‘s success. SHRM is not just a function of the human resources (HR) department—all managers and executives need to be involved because the role of people is so vital to a company‘s competitive advantage The most successful organizations manage HR as a strategic asset and measure HR performance in terms of its strategic impact. When each piece is in the right place, it creates a high- performance work system (HPWS)—a set of management practices that attempt to create an environment within an organization in which the employee has greater involvement and responsibility. Today's HR professionals contribute to creating engagement capital, or building engagement over time, to improve employee effort, retention, and key business outcomes. As we balance short-term improvements with engagement drivers that sustain engagement over time, there is a greater alignment of the HR function to an organization's strategic needs. The idea of SHRM is to promote high performance workplaces and human capital management. SHRM can be defined as the linking of human resources (HR) with organisations‘ strategic goals and objectives so as to improve business performance and develop organisational culture that nurture innovation, flexibility and competitive advantage. In an organisation, SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company‘s strategies through HR activities such as recruiting, selecting, training and rewarding personnel. It basically centers on HR programs with long-term objectives i.e. instead of focusing just on internal HR issues, the major focus is on addressing and solving problems that affect people management programs in the long run. Therefore, the primary goal of strategic HR is to increase employee productivity and to identify key HR areas where strategies can
  10. 10. 10 be implemented in the long run to improve the overall employee motivation along with productivity. Strategic orientation of human resource management (HRM) is important for all organizations irrespective of its size and domain. It simply requires the alignment of every HR function with business strategy. It establishes relationship between HRM and strategic management of the organization and facilitates the HRM to change its image as a ―cost center‖ to that of a ―strategic business partner‖. Thus, the SHRM can be defined as the organizations action plan to align HRM with strategic business objectives so that the competitive advantage can be achieved through its skilled, committed and well-motivated workforce. This can only be possible if every HR function is strategically aligned. E-Learning. Ans: Meaning and Definition of E-Learning Virtual learning is defined as the delivery of learning through electronic mediation which bridges the gap caused when the instructor and student are separated in either time or place. The range of electronic mediation includes voice, video, data, and print through such formats as radio, television, web-based programming, and streaming audio and video, as well as a variety of recording technologies. Balanced Scorecard Perspective – The HR Balanced Scorecard is a framework developed by Kaplan and Norton in Harvard USA which balances the value of strategic inputs (“leading indicators”) with financial outputs (“lagging indicators”) to enable an organization to improve the way it plans, measures and communicates success. It is now being applied by hundreds of successful organizations, in the public and private sectors, to align people, strategy and performance. The balanced scorecard framework and its information foundation can be created using the following steps: i) Building the business case. ii) Identifying strategies. iii) Identifying Tactical Objectives. iv) Identifying performance measurements. v) Identifying data Sources. vi) Creating the data warehouse. vii) Selecting information technology. viii) Creating the Balanced scorecard ix) Managing the strategy x) Refining and Reusing