Strategic Human Resource Management

Human Resource Policies & Strategies, SHRM, Objectives of SHRM,Strategic Management Process, Strategic Control, Types of Strategic Control, Operational Controls, Functional Strategy,Grand Strategies, Factors Affecting Strategic Human Resource Management

1. Prepared by Ms. Shery Asthana Asst. Prof. (Greater Noida Institute of Management) Prepared by Ms. Shery Asthana Asst. Prof. (Greater Noida Institute of Management)

2. Human Resource Policies & Strategies A policy can be defined as a formal official statement that every member of the organization must follow. It can be related to any issue that links directly to the company’s mission or goals. a set of ideas or a plan of what to do in particular situations that has been agreed to officially by a group of people , a business organization , a government . A procedure can be defined as the process of how the policy must be strategized or followed by the employees of the organization. The human resource department designs or plans all the employment-related policies and procedures for the welfare of the employees and their employment. These human resource management policies provide guidelines regarding employment policies of the company. The initial responsibility of any employee will be to get synced with the work culture of the organization, in such a case HR policies help them give an idea about the do’s and don’ts one must follow. Some of the top human resource policies are, Attendance Behaviour Requests Safety

3. Workplace Policies: Usually, an employee handbook is a documented format which comprises all the important policies of the organization. The policies mentioned should also intend to communicate the company advantages and expectations of their employees. The company handbook for employees also considers various factors like niche, size, industry and location of the company. Some other key policies are, Employee conduct, attendance and punctuality Employment classifications Meal and break periods. Leave and time-off benefits Safety and health Timekeeping and pay Anti-harassment and non-discrimination

4. Let’s understand some terms which are used in SHRM: i. Core competencies – A unique capability in the organization that creates high value and differentiates organization from its competitors. ii. Mission Statement – It explains the purpose and reason for existence, it is usually broad but does not go beyond couple of sentences and it serves as a foundation for everything that organization does. iii. Strategy – It is the company’s plan for how it will balance its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.

5. The main objectives of SHRM are the following: (a) Plan for manpower requirements for its business located in national and international markets. (b) Conduct scientific selection and appointment of employees for business operation of right type and right in number. (c) Train the employees on technology in use and working procedure for developing their skills and knowledge. (d) Place the employees at jobs according to their areas of specialization. (e) Provide opportunities for the employees deserving on the scientific basis. (f) Compensate employees according to their skills, experience and contributions. (g) Maintain employees motivated, satisfied and cooperative in organisation. (h) Improve industrial relations, industrial peace and harmony at workplace. (i) Encourage employees for their cooperation, commitments and higher performance at work. (j) Contribute through manpower in improvement of organisational performance and organisational effectiveness in business. (k) Contribute in profitability, progress and image of the organisation. (l) Stay competitive and effective in business for growth and excellence in global market.

6. Strategic Management Process Strategic management process has following four steps: Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environmental scanning, managers formulate corporate, business and functional strategies. Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources. Strategy Evaluation - Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives.

7. Developing HR strategy A well-defined strategy clarifies the role of the HR team. It determines the size, structure and cost of the resource required to deliver it and ensures that all HR activity is aligned to business need. What follows are eight key steps in the quest towards delivering a successful HR strategy. 1. Aligning business Needs and HR needs The business’ goals – that is its strategic imperatives – sit at the heart of any HR strategy and in order to align business and HR needs one key question must to be answered, “Can your organisation’s internal capability deliver its business goals?” This is where HR receives most criticism. The function is frequently accused of failing to fully understand its business, goals and strategy for achieving these goals, and its business model and how it delivers to its customers. For those who already understand the demands of their business, it is easy to identify where the business has strong core competencies and where the business is weakest.

8. 2. Developing your HR strategy Deeper knowledge and understanding of your business goals and business model can identify potential threats and opportunities in the quantity and quality of human resource required by your organisation. This in turn identifies the key components of your HR strategy and the virtuous circle of providing whatever your organisation needs for success.(SWOT Analysis) 3. Organisational performance Organisational performance is the process by which business goals and objectives are cascaded and managed across and down an organisation. It provides a link and rationale for all other HR activity and, in addition, the greatest opportunity to directly impact business success, enhancing HR’s reputation and contribution. HR needs to create and install a robust performance management process that sets out performance objectives for all levels of staff within a business. This is an opportunity to develop line managers’ skills in being able to disseminate and set stretch targets for their business.

9. 4. Organisational design and structure Organisational design is the shape, size and structure of the organisation required to meet customers’ needs. It reflects the management processes that drive the business model and determines organisational agility and flexibility. These processes can be a source of competitive advantage or sources of frustration, unnecessarily absorbing time, cost and resources. Decisions affecting the shape, size and cost of the organisation will be aligned with the business strategy. It should be relatively easy to see whether an organisation invests in marketing, sales or manufacturing, for instance, and whether the organisation is maximising its work flow capability. 5. Strategic resourcing Achieving clarity throughout the organisation’s structure is critical in order for resourcing strategies to work well. If the organisation is transparent about its key roles and accountabilities, this will define the skills and knowledge required to undertake the work and determine strategic resourcing requirements. Deciding on your resourcing strategy means identifying a number of critical components. These range from the processes needed to determine resourcing needs, the processes to attract the right people and the processes for assessing and selecting the right people. HR has a strong traditional involvement in all of the above. In addition, it is essential to ensure each stage of the resourcing activity is aligned and in direct response to the strategic imperatives.

10. Strategic Human Resource Management Strategic human resource management is the connection between a company’s human resources and its strategies, objectives, and goals. The aim of strategic human resource management is to: Advance flexibility innovation, Competitive advantage. Develop a fit for purpose organizational culture. Improve business performance. The word “strategic” literally means something done as a part of a plan to achieve a particular purpose or to gain an advantage. Strategic management may be conceived as the process of:- identifying and formulating strategic goals, selecting strategies to achieve the goals, executing the strategic plan and, evaluating its effectiveness. Strategic human resource management, thus, refers to adopting a specific plan in regard to human resources, and revamping human resource policies and practices, and developing employee competencies to cope with the special or challenging situations.

11. 6. Organisation development If strategic resourcing is about providing a pipeline for importing external talent, then an organisation’s development strategy is the way in which the HR team decides what changes and improvements need to be made to the current workforce. Usually these responses work at three levels – the individual, team and organisation – and all are geared to achieve high levels of organisational performance. It requires a close examination of the strategic imperatives and clarity about the capabilities to execute it. Development responses will aim to increase business skills, the application of business skills (sometimes called competencies) and the behavioural elements – all of which contribute to an organisation’s effective performance.

12. 7. Compensation and benefits Often called reward strategy, the purpose of compensation and benefits systems is to align the performance of the organisation with the way it rewards its people, providing the necessary incentives and motivation required for an organisation to deliver its goals. Its components are a combination of base pay, bonuses, profit sharing, share options, and a range of appropriate benefits, usually based on market or competitor norms and the organisation’s ability to pay. Typically, the components of an organisation’s reward strategy will reflect the particular performance culture of a business. 8. Organisation culture Culture is usually described as the “way we do things round here” – the way the organisation acts, reacts and interacts. The trend in the last 10 to 15 years has been to align organisational behaviour more strongly with customers’ needs, creating customer-facing units and customer-sensitive behaviours. This has been as a direct result of the increased competition around product, quality, prices and packaging. In re-aligning an organisation’s culture there can be real benefit and competitive advantage through improved service.

13. Strategic Control Strategic control is the process to control the formation and execution of strategic plans, It is a specialised form of management control, handle uncertainty and ambiguity at various points in the control process. Strategic controls are intended to direct the company towards its long term strategic direction. Focused on the achievement of future goals, rather than the evaluation of past performance. SC tracks strategy implementation, detects problems or changes in the strategy and makes necessary adjustments. SC is the critical evaluation of plans, activities and results thereby providing information for the future action.

14. SC focuses on the dual questions of whether the strategy is being implemented as planned the results produced by the strategy are those intended. SC is concerned with tracking the strategy as it is being implemented, detecting any problems areas or potential problem areas, and making an necessary adjustments. SC focus on effectiveness of organisation.

15. Strategic Control Process

16. Types of Strategic Control The four types of strategic control are premise control, implementation control, special alert control and strategic surveillance. Each one provides a different perspective and method of analysis to maximize the effectiveness of your business strategy. Premise Control:- Your business strategy is based on an assumed premise of how things will occur in the future. Premise controls allow you to examine whether this assumption still holds true once you actually put your ideas into action. Premises may be affected by environmental factors such as inflation, interest rates and social changes or by industry factors such as competitors, suppliers and barriers to entry. These controls will help you recognize changes in the premise so you can adapt your strategy accordingly. Implementation Control:- Once you design a strategy for your business, you will need to implement it. As you take the steps necessary to put your plan into action, use implementation controls to ensure no adjustments to your strategy are necessary. Two basic types of implementation controls are monitoring strategic thrusts and doing milestone reviews. The former means you analyze the tactics you're using to gain market share. The latter allows you to conduct a full-scale assessment of your business at designated points in your strategy.

17. Special Alert Control:- You will need mechanisms in place to assess the position of your business in the case of sudden events, such as natural disasters, product recalls or market spikes. Special alert controls allow you to reconsider the relevancy of your strategy in light of these new events. Prepare how you will handle these special alerts with procedures to be followed, priorities to keep and tools to be used. Strategic Surveillance Controls:- As a small-business owner, you need to protect your business from external threats that may hinder the success of your strategy. Strategic surveillance controls allow you to monitor multiple sources for these threats. Continually safeguard your strategy by following trade journals, attending conferences and keeping awareness of industry trends to meet these risks as they arise.

18. Operational Controls

19. Importance of Operational Control:- Ensuring that the business runs smoothly. Ensuring client satisfaction. Ensuring timely and quality service delivery. Ensuring that stock is readily available to clients. Delivery of your services in a timely, effective and friendly manner is absolutely crucial to the successful growth of your brand. Without effective operational systems in place to assist you in achieving complete customer satisfaction, your brand runs the risk of developing a bad reputation. Example of an operational control When performance does not meet standards, managers enforce corrective actions, which may include training, discipline, motivation, or termination. ... For example, if salespeople are not trained on time, sales revenue may fall.

20. Functional Strategy – Meaning of Functional Strategies Functional Strategies are derived from business level strategy. Remember the three generic strategy - low cost leadership, differentiation and focus strategy. For Example, take a firm pursuing low cost leadership. When the strategy is implemented, all the functional areas have to be focused on low cost structure. Strategy are as follows: 1. Corporate Strategy – It is a strategy for the company and all of its businesses as a whole. 2. Business Strategy – It is a strategy for each separate business the company has diversified into. 3. Functional Strategy – Then there is a strategy for each specific functional unit within a business. Each business usually has a production strategy, a marketing strategy, a finance strategy, and so on. 4. Operating Strategy – And finally, this is a still narrower strategy for basic operating units — plants, sales districts and regions, and departments within functional areas.

21. The activities and processes—such as human resource management, research and development, finance, production, and marketing — constitute the strategic functions of an organisation. Strategies designed to enact these strategic functions are referred to as functional level strategies. A functional strategy is the short-term game plan for a key functional area within a company. https://www.marketing91.com/functional-level-strategy/ The reasons why functional strategies are needed can be enumerated as follows: i. Aimed at making the strategies formulated at the top management level practically feasible at the functional level. ii. Provide flow of strategic decisions to the different parts of an organization. iii. The basis for controlling activities in the different functional areas. iv. The time spent by functional managers in decision-making is reduced as – a. Plans lay down clearly what is to be done, and b . Policies provide the discretionary framework within which decisions need to be taken. v. Help in bringing harmony and coordination as they remain an important part integral part of major strategies. vi. Similar situations occurring in different functional areas are handled in a consistent manner by the functional managers.

22. Functional Strategy – 1o Important Features 1. The time span of a functional strategy, as compared to a business-level strategy, is short. 2. It focuses attention on what needs to be done now to make the grand strategy work. 3. It is more specific and action-oriented because it clearly outlines what should be done in each functional area so as to achieve the corporate objectives. 4. Functional strategy pertains to the function, department, division of the enterprise. 5. It has to be in purseuanc of the overall corporate strategy. 6. It acts to achieve corporate and business unit objectives by maximizing resource productivity. 7. It is the game plan to manage a principal subordinate activity within a business. 8. Functional strategy is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage. 9. The orientation of the functional strategy is dictated by its parent business unit’s strategy. 10. Functional strategy is narrower in scope than business strategy. It contains relevant details of the overall business game plan by setting out the actions, approaches and practices which are to be employed in managing a particular function.

23. Grand Strategies Definition: The Grand Strategies are the corporate level strategies designed to identify the firm’s choice with respect to the direction it follows to accomplish its set objectives. Simply, it involves the decision of choosing the long term plans from the set of available alternatives. The Grand Strategies are also called as Master Strategies or Corporate Strategies. There are four grand strategic alternatives that can be followed by the organization to realize its long-term objectives:

24. The Stability Strategy is adopted when the organization attempts to maintain its current position and focuses only on the incremental improvement by merely changing one or more of its business operations in the perspective of customer groups, customer functions and technology alternatives, either individually or collectively. The Expansion Strategy is adopted by an organization when it attempts to achieve a high growth as compared to its past achievements. In other words, when a firm aims to grow considerably by broadening the scope of one of its business operations in the perspective of customer groups, customer functions and technology alternatives, either individually or jointly, then it follows the Expansion Strategy.

25. The Retrenchment Strategy is adopted when an organization aims at reducing its one or more business operations with the view to cut expenses and reach to a more stable financial position. when a firm decides to eliminate its activities through a considerable reduction in its business operations, in the perspective of customer groups, customer functions and technology alternatives, either individually or collectively is called as Retrenchment Strategy. The Combination Strategy means making the use of other grand strategies (stability, expansion or retrenchment) simultaneously. Simply, the combination of any grand strategy used by an organization in different businesses at the same time or in the same business at different times with an aim to improve its efficiency is called as a combination strategy.

26. Factors Affecting Strategic Human Resource Management Political, Economic, Social, Cultural, Regulatory and Technological are factors affect the Strategic Human Resource Management. Political Affect Lowering of Trade Restrictions – Introduction of globalization and liberalization in many countries has removed restrictions on trade to a large extent. Tax Regimes Becoming more Liberal – Sectors that have significant contribution to the GDP enjoy a considerable tax relaxation. Increase in Political Instability – There have been fluctuations in the political leadership across the world. Say it be the case of countries like Afghanistan, Egypt, Syria or part of Europe or be it the case of Andhra-Pradesh, where the Chief Minister changed thrice in a span of 10-12 months, there has been fluctuations everywhere. People-power (Democratization) – Politics has become more people driven after the introduction of democratic way of leading in many countries. Rise of Environmental Driven Policies – Considering the limited availability of resources and increased amount of pollution, political parties have come up with policies to have a check on the same. The concepts like carbon credits have come came into the picture.

27. Economic Factors 1. Globalization- Globalization refers to the increasing unification of the world’s economic order through reduction of barriers to international trade as tariffs, export fees, and import quotas. The goal is to increase material wealth, goods, and services through an international division of labour by efficiencies catalyzed through international relations, specialization and competition. 2. Monetary Policies- Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary policies of various countries change significantly according to the prevailing economic situation. 3. Explosion in Stock Markets- With the advent of free trade and globalisation across the world, there has been a significant change in stock markets of various countries. Due to availability of capital for companies due to portfolio investments and Flls there is an explosion in stock markets. 4. Growth of Inflation in Developing Countries- Due to growth of employment in developing countries and shift in focus of major MNCs there is a growth of inflation. Apart from that various economic policies like free trade, globalization, etc. also have an impact on inflation.

28. Social Factors:- I. Social Relations – Social relations focus on the behaviours and needs, those that primarily concern themselves with how people organise and make meaning of their world and their relationships within it. II. Social Institutions – A social institution is a complex, integrated set of social norms organized around the preservation of a basic societal value. In shorthand, the five basic institutions are called the family, government, economy, education and religion. III. Social Behaviour – It is behaviour directed towards society, or taking place between, members of the same species. IV. Social Networking – It is the practice of expanding the number of one’s business and/or social contacts by making connections through individuals.

29. Cultural Factors :- 1. Mindset Change – People have become more broad minded and more acceptable in nature and also more tolerant towards different cultures. 2. Woman Participation – The participation of women is being encouraged in organizations. They are taking up important roles and their contribution is being recognized. 3. Diversity in Terms of Work Force – The organizations are employing people from all over the globe to ensure, they have the best talent onboard, rather than restricting themselves to a particular location. 4. Orientation (Collective to Individualistic) – The workforce is now self-oriented more than collective. 5. Multilingual Acceptance – Acceptance towards other languages has increased. 6. Emergence of Online Communities – Various online communities have emerged primarily due to the social media revolution. Such communities are transnational and virtual. 7. Emergence of Aspirational Culture – The Gen Y especially is an aspirational generation. It aspires for better quality of life, better amenities, better technology & gadgets, better standard of living, better jobs & career, financial freedom, better access and no- nonsense culture.

30. Legal/Regulatory Factors:- a. Flexible in Corporate Governance and Expansion – As a result of globalization, businesses now have the opportunity to expand beyond their national boundaries and adapt to the type of regulations followed in that particular country. b. Foresight of Legal Changes – For setting up any kind of business in other nations, the business shall be much aware about the legal/ regulatory aspects. c. Employment Terms (Talent Philosophy) – Employee rights vary from country to country and it depends on the talent philosophy of the organization how they treat their employees. d. Implementation of Laws – Only understanding the laws is not important, the degree to which they are implemented needs to be known. e. Know Your Customer Rights – The businesses have to understand the rights that customers enjoy in a particular nation. However globally there is a surge in consumer rights and businesses must become cognizant of the same. f. Transparency of Information – The kind of information that is required to be exhibited in one country as a legal right may not be the same for any other country.

31. Technological Factors:- 1. Better services to line managers:- Both HR and line managers primary interest is the success of the business. The human resource’s main function is to support the workforce needs of the organization. Strategic planning between HR and line managers is important for reviewing projections concerning future business demands to determine whether to train current employees, to prepare them for promotion or to recruit candidates. 2. Effective recruiting:- Nowadays, organizations have realized that effective recruiting cannot be done without the use of IT. Organizations now use job portals on the internet to search for the best candidates for the position. The process has been made effective with the use of the internet as many people come to know of the offer and hence increases the probability of hiring efficient employees. 3. Career development and human capital management:- The career planning tool is a learning and knowledge-based system that helps successful businessman around the world to manage their personal development and career paths along with those of their employees. Performance evaluation and career progression can be a key motivating factor for the employees to work effectively and efficiently.

32. 4. A new way to brand a company Company branding is an important factor in attracting and retaining employees. Thanks to IT, companies now have an option to build strong online presence and reach numerous potential candidates with minimal effort. Thorough website branding and design, presence on major marketplaces and online communication – all these factors promote direct interaction between a candidate or employee and a company.