CHAPTER ONE

Introduction to
Strategic HRM
 Management and
HRM
Management ◦ Refers to the process of
achieving
organizational objectives
with and through the
effort of people and other
◦ Is the process or processes by
resources.
which the resources
available to an
organization are
rationally and
systematically put
together in order to
achieve pre-
determined organizational 5
 Management and
HRM…
The Human Resource is an important (critical) resource
in coordinating the non human (i.e. Money, and
resource Material
Machinery).

“Take our 20 best people and I will tell

away that Microsoft would you
become
unimportant
Company
”
Bill Gates

7
Management and
HRM…
 It is this human resource which is
paramount importance in the success
of
any organization.

The top challenge of managers
in the twenty first century is
managing human resources –
which is the source of

competitive advantage.
Most of the problems in
organizational settings are
human and social rather than
physical, technical or economic.
8 8
Definition Of HRM
 HRM refers to the utilization
of
human resource to achieve
organizational mission, goals
or
objective.
 It is also defined as a
strategic
approach to the acquisition,
motivation, development
and
management of the
organization’s human11 11
Definition Of HRM Cont…
• Human Resource Management includes all
activities used to attract & retain employees
and to ensure they perform at a high level in
meeting organizational goals.
• It is a management function of identifying the
need for acquiring, optimally utilising and
finally discharging the human factor back to
society in a responsible and ethically
acceptable way
 Essenti Featur Of HR
al es M

HRM is a universal since all types of organizations

activity
firms, NGOs, government(business
organizations, etc.) need to
manpower
conduct their activities.

HRM is the for achieving organizational

basis goals.

17 17
 Definition and background…
Manager
– The person responsible for accomplishing the
organization’s goals, and who does so by managing
the efforts of the organization’s people.
Who is human resource manager?
• A human resource manager is an individual who
normally acts in an advisory, or "staff", capacity, working
with other managers to help them deal with human
resource matters.
• The human resource manager is primarily responsible for
coordinating the mgt of human resources to help the
organization achieve its goals.
 Objectives of HRM
The principal objectives of HRM
• The primary objective of HRM is to ensure the availability of a
competent and willing workforce to an organization.
• To help the organisation reach its goals
• To employ the skills and abilities of the
workforce efficiently
• To provide the organisation with well-trained
and well-motivated employees
• To increase to the fullest the employee’s job
satisfaction and self-actualisation
• To develop and maintain a quality of work life
• To communicate HR policies to all employees
• To be ethically and socially responsive to the
needs of society
 Importance of HRM

 It is easier to answer why HRM is important by listing some of

the personnel mistakes you don’t want to make while
managing:
 Hire the wrong person for the job
 Experience high turnover
 Find your people not doing their best
 Waste time with useless interviews to select employees
 Have your company taken to court because of discriminatory actions
 Have your company cited for unsafe practices
 Have some think their salaries are unfair and inequitable relative to
others in the organization
 Allow a lack of training to undermine your department’s
effectiveness
 Commit any unfair labor practices
 Trends in HRM - Organization of HR
departments

Period before industrial revolution – The society was primarily an

agriculture economy with limited production.
• Number of specialized crafts was limited and was usually carried out
within a village or community with apprentices assisting the master
craftsmen.
• Communication channel were limited.
Period of industrial revolution (1750 to 1850) – Industrial revolution
marked the conversion of economy from agriculture based to industry
based. Modernization and increased means of communication gave way
to industrial setup. A department was set up to look into workers’
wages, welfare and other related issues. This led to emergence of
personnel management with the major task as
 Worker’s wages and salaries
 Worker’s record maintenance
 Worker’s housing facilities and health care
 Cont….
• Post Industrial revolution – The term Human resource
Management saw a major evolution after 1850.
• Various studies were released and many experiments were
conducted during this period which gave HRM altogether a
new meaning and importance.
• A brief overview of major theories release during this period
is presented below
• Frederick W. Taylor gave principles of scientific management
(1857 o 1911) led to the evolution of scientific human
resource management approach which was involved in
– Worker’s training
– Maintaining wage uniformity
– Focus on attaining better productivity.
 Personnel
Management
Human Resourc Vs Managemen
e t
Personnel management Human resource
Advisory and administrative management
Strategic
Personnel activity in the HR activity in the organization
organization is marginalized is fundamentally inked to the
and not seen as central to the corporate plan
corporate
Personnel plan
as a mediating role HRM as a central management
between management and the role
workforce
Emphasis on written Flexibility more important than
rules and systems
procedures
Collective rewards and benefits Individual rewards and benefits
People as input in the production People as valuable resource
process
A command and control A team-based management
management system
hierarchy 34
Human Resource Management
Functions

• Acquisition

• Fairness • Training

• Human Resource
Management
• Health and (HRM)
• Appraisal
Safety

• Labor Relations • Compensation

 HRM Functions…
Training and Development
Training: Providing learners with knowledge and
skills needed for their present jobs
Development: Offering learning that goes
beyond present job
• Long-term focus
 HRM Functions…
Compensation
• All rewards that individuals receive as a result of
their employment
• Compensation consists of direct financial
compensation, indirect financial compensation,
and nonfinancial compensation.
 HRM Functions…
Performance Appraisal
• Performance appraisal is a formal
system of review and evaluation of
individual performance.
• Sometimes it also includes team
performance.
• It affords employees the opportunity to
receive feedback on their strengths and
areas for development.
• Performance appraisal helps
employees stay on track
 HRM Functions…
Safety and Health
Safety: Protecting employees from injuries
caused by work-related accidents
Health: Employees' freedom from illness
and their general physical and mental well-
being
Employees who work in a safe
environment and enjoy good health are
more likely to be productive.
The higher productivity, coupled with
lower long-term healthcare costs, benefits
the organization.
Interrelationships of HRM Functions
• All HRM functions are highly
interrelated and management
must recognize that decisions in
one area affect other areas.
• For instance, a firm that
emphasizes recruiting top-
quality candidates but neglects
to provide satisfactory
compensation is wasting time
and money.
• Each function affects the others
 Strategic And Operational
Role
Of HRM s
Strategic Role of HRM
◦ Human resource planning

◦ Tracking (following) evolving legal issues

◦ Assessing workforce trends and issues

◦ Engaging in community economic

development

◦ Assisting in organizational structuring and

downsizing

◦ Advising on mergers or acquisitions

◦ Managing compensation planning and

strategies 30 30
Strategic Operation …
AndOperational role al
of HRM

◦ Recruiting and selecting for current

vacancies

◦ Conducting employee orientation

◦ Reviewing safety and accident
reports
◦ Resolving employee complaints and
grievances
◦ Administering employee benefits
program
Environment of Human Resource Management
 The Environment of HRM

The External Environment

The external environment is composed of two
layers:
 The general environment and the task environment.
The General Environment
 The Economic Environment
 The Technological Environment
 The Socio-Cultural Environment
 The Political-Legal Environment
 The Physical Environment
 The Environment of HRM..

The Task Environment

– The Customers
– The Suppliers
– The Regulators
– The Owners
– The Competitors
– The Partners
Legal Considerations

• Federal, state, and local

legislation
• Court decisions
• The legal
considerations affect
virtually the entire
spectrum of human
resource policies.
 Labor Market
• Potential employees
located within certain
geographic area
• Always changing
– these shifts inevitably cause
changes in the workforce which
can affect the way management
must deal with the workforce.
 Society
Ethics: Deals with what is good and bad, or right
and wrong, and with moral duty and obligation
Corporate social responsibility: Implied,
enforced, or felt obligation of managers to serve
or protect interests of groups other than
themselves
Unions
• Group of employees who have
joined together to collectively
bargain with their employer
• Become a third party when
dealing with the company
• A union acts as a third party to
negotiate work agreements
with management.
 Shareholders
• Owners of corporation
• Have invested money in firm
• May challenge programs considered by
management to be beneficial to organization
 Competition
• Firms may face intense competition in both their
product or service and labor markets.

• To compete effectively, a firm must also compete for

and retain competent employees.

• Bidding war often results

 Customers
• People who actually use firm’s goods and services.
• Employment practices should not antagonize
members of the market the firm serves.
• Workforce should be capable of providing top-quality
goods and services.
• This capacity is directly related to the skills,
qualifications, and motivation of the organization’s
employees.
 Technology
• Technology makes the job more intellectual or
upgraded.
• It renders workers dislocated if they do not
equip themselves to the job.
• Job becomes challenging for the employees
who cope with the requirements of technology
• Technology reduces human interaction at the
work place.
• Finally job-holders become highly
professionalized and knowledgeable in the job
they perform.
 Economy
• When economy is booming, it is often more
difficult to recruit qualified workers.
• In economic downturn, more applicants are
typically available.
• One segment of the country may be
experiencing a downturn and another a boom
• This variation in supply and demand is also true
for obtaining qualified workers in different
industry and professional areas.
Unanticipated Events
• Unanticipated events are
occurrences in the external
environment that cannot be
foreseen.
• These events (eg., natural or man-
made disasters) cause major
modifications in the performance of
many human resource functions in
the affected firms.
• Require a tremendous amount of
adjustment with regard to HRM
 The Environment of HRM…
The Internal Environment
– Mission
– Policy
– Organizational Culture
• Other factors include:
– The organization's management
– The organization's employees
– The organization's structure
– The organization's rules and procedures etc.
 Trends Enhancing The
Importance
of Of HRM
1.The increase in globalization 2.Technological changes
 Products and services can
the economy be
 International delivered more effectively
employment
 World wide labor through an optimal
market combination
 Greater
3.The need tocompetition
be flexible in of people, software and
 Global companies equipment.
response 4. Increasing in litigation related
to changing business to
environment HRM
 Outsourcing  related
Proliferation
to of decisio
 Downsizing regulations
personnel n
 Temporary employees
 Independent contractors
5.Changing
Reengineering
characteristics of the work force
 Ethnically diverse
 More educated
 More diverse
 Becoming less prepared to handle the toda
challenges of work y
 HR and Competitive Advantage

Competitive advantage
• Any factors that allow an organization to
differentiate its product or service from
those of its competitors to increase
market share.
• Superior human resources are an
important source of competitive
advantage
Strategic Human Resource Management

• Linking of HRM with strategic goals

and objectives in order to improve
business performance and develop
organizational cultures that foster
innovation and flexibility.
• Formulating and executing HR systems—HR
policies and activities—that produce the
employee competencies and behaviors the
company needs to achieve its strategic aims.
 Linking HR with corporate strategy
Company external environment
Opportunity & Threat

Company Strategic Plan

Company Strategic Situation Eg. – Should we expand
- Diversify
- Cut Cost

Company Internal Strength &

Weakness

Company HR & other function

Strategy
What are basic course of action HR
Organizational Performance will purse to ensure the achievement
of corporate strategies ?
 End of 1
st

Chapter
Thank You
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