What is the relationship between strategic management and human resource planning?

Introduction

The strategic dimension of human resource management started to receive specific attention from researchers at the end of the 1970s with the influence of two basic changes in the literature: first, the shift from the old personnel administration approach to the more modern concept of human resources and second, the reorientation of generic strategic models to internal aspects of the organization. HRM can contribute to the strategies and strategic planning process of the organization in different ways. HRM functions like performance evaluation, human resource planning, employee selection, training and wage management should be designed according to the strategic plans of the organization. Most of the organizations prefer to integrate their HRM systems with their strategy implementation process. Human resource planners have started to learn the techniques of strategic planning and have assumed a more proactive role in promoting strategic thinking in the human resources area and have extended the personnel function beyond the limits of its traditional activities Nowadays, it is a common belief in both the business and the academic world that the human resources of an organization can be a source of competitive advantage, provided that the policies for managing people are integrated with strategic business planning.

A typical way to approach strategic HRM is to define it as “bridging” the concept of business strategy and HRM. Strategic HRM focuses on the point that there should be a link between a firm’s strategy and the utilization of its human resources. According to this perspective, people management can be a key source of sustained competitive advantage. The main rationale for strategic HRM thinking is that by integrating HRM with the business strategy, rather than human resources strategies being a separate set of priorities, employees will be managed more effectively, organizational performance will improve and therefore business success will follow. Strategic HRM has a clear focus on implementing strategic change and growing the skill base of the organization to ensure that the organization can compete effectively in the future. Strategic human resources departments are future oriented and operate in a manner consistent with the overall business plan in the organization. In order to have a strategic role and get effective results in the organization, HRM departments should design their practices and functions consistent with the strategies and goals of the organization.

Strategic Human Resource Management

Typically, strategic HRM bridges business strategy and HRM and HRM focuses on the integration of HR with the business and its environment. Strategic HRM has a clear focus on implementing strategic change and growing the skill base of the organization to ensure that the organization can compete effectively in the future. Organizations develop their HR strategy as an integral part of formulating the high-level corporate strategy rather than developing it in parallel with or after the corporate strategy. In this sense strategic HRM bridges corporate level strategy and HRM tightly integrating HR with the business. Strategic HRM is crucial in today’s business world. The main reason is that, with the shift from a manufacturing to knowledge based economy; many organizations’ competitive advantages now stem more from their human assets. When implemented successfully, strategic HRM translates human assets into shareholder value. Another reason that strategic HRM is important has to do with the benefits it generates for both a company’s workforce and its HR team. When people understand what their company is trying to do and how their work contributes to those efforts, their focus and job satisfaction increase. Effective HRM acquires quality employees, motivates them to maximize.

Performance and helps meet their psychological and social needs. This leads to long term relationships with skilled and happy employees. HRM focuses on people in organizations. People are a major component of any organizations so organizations with more productive employees tend to be more successful. Employee productivity increases when organizations hire and motivate employees effectively. In addition, good human resource practice creates more satisfied employees. From this point, it is possible to say that good HRM practice can improve work and efficiency in organizations by motivating employees.

It is also important to highlight the point that HRM is not the property of particular specialists. HRM should be seen as an aspect of all management levels. HRM is concerned with both the structure of work in a company and with all the related employment practices that are needed to carry out the work. HRM is not simply about HR or people practices; it is about the management of work and people in the company. HRM is concerned with managing people both individually and collectively. In today’s competitive business world both HR managers and line managers have become responsible for all HRM processes and practices.

Role of HRM through innovation

Although HR executives’ involvement in strategic management was not always associated with firm performance, their involvement had a substantial effect when the firms pursued an innovation strategy for which skilled employees were a critical source of core competence. To manage innovative workforce effectively, traditional HRM practices, such as work systems, HR flows, rewards and employee influence, have to be renewed to be in line with the innovative strategy of the organisation. “HRM innovation” seeks a model that pays attention to the dynamic character of various types of innovations – not just cost reduction or quality – in organizations, that is in line with an innovation oriented organizational strategy supported by deliberately chosen (HRM) policies and practices at all relevant levels.

Strategic Aspect of Implementing HRM Functions

HRM functions and practices are the infrastructure elements of strategic HRM process. Organizations should strategically utilize these infrastructure requirements to gain competitive advantage, particularly through their human resources and human resource management practices. Infrastructure requirements consist of those functions and activities are necessary for effective management of an organization’s human resources. The major purposes of these activities traditionally have been to attract, retain, and motivate employees. They are referred as HRM practices and the key HRM practices include; human resource planning, staffing including recruitment, selection and socialization, appraising, compensation, training and development. The result of effectively managing human resources is an enhanced ability to attract and retain qualified employees who are motivated to perform, and the results of having the right employees motivated to perform are numerous. They include greater profitability, low employee turnover, high product quality, lower production costs, and more rapid acceptance and implementation of corporate strategy.

To sum up HR executives need to know how all the HR subsystems interact so they can create and maintain alignment, rebalancing the organization as the market shifts particularly driven by the innovative competitors

Conclusion

Human resources are the valuable and unique assets of organizations for gaining competitive advantage in today’s challenging environments. The organizations which can select and retain qualified employees with the needed skills can be successful today. HRM practices are important for selecting and retaining these qualified employees. Designing these HRM functions and practices in a strategic way and according to the needs of employees can help organizations to attract and retain these workforces. Strategic HRM practices also have important role in supporting innovation in organizations. Strategic HRM practices such as training and development activities, participation to decision making process and empowerment can support employees’ innovative ideas and encourage them to be active in innovation process. Taking into account that, the relationship between strategic HRM practices and innovation is investigated in this study. As a result, a positive and strong relationship has been found between innovation and HRM practices such as training-development, participation to decision making, job analysis, job identification, performance evaluation and career management. Also it is seen that organizations that participated to the research have been using these strategic HRM practices in a medium level.

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Courtesy:

Dr. Mukesh Kumar Mahawar

Associate Professor and Head- Department of Commerce

Faculty of Commerce and Management

Madhav University

What is the relationship between human resource planning and strategic management?

What is the relationship between human resource planning and strategic human resource management quizlet?

What is the relationship between strategic management and strategic planning?

What is the relationship between human resource management and human resource planning?