Critically discuss the importance of HR Management to transform from being primarily administrative and operational to becoming a more strategic contributor. In addition, examine the current role of HR function. Due date- 24th April 2010 Name- Suntharamurthy Vishakan Student ID- SUVID91 3115 Table of contents 1. Introduction3 2. Discussion4 2. 1 Personnel management4 2. 1. 1 Functions of Personal management4 2. 2 Transform of personnel management to Human resource Management6 2. 2. 1 Change in competitive environment7 2. 2. Cultural differences7 2. 2. 3 Embracing new technology8 2. 2. 4 Flexibility and Diversity8 2. 2. 5 Controlling costs 9 2. 2. 6 Global economy9 2. 2. 7 The strategic significance10 3. 3 Current Role of HRM11 2. 3. 1Functions of SHRM12 3. 4 HR as strategic partner13 2. 4. 1 Strategic Business Plan13 2. 4. 2 Strategy Development and Implementation14 2. 4. 3 What are required of HR as Strategic Partner? 14 2. 4. 4 Continuous Improvement15 2. 4. 5 SHRM and Competitive advantage15 2. 4. 6 Some Real world examples of Successful firms using SHRM 16 2 Conclusion17 References18 1. Introduction Purpose of this report is to critically discuss the importance of HR Management to transform from personnel management to becoming more strategic contributor and examine the current role HR function. Personnel management is Personnel Management is the phase of management, which deals with the effective control, and use of manpower as distinguished from other sources of power. HRM is a strategically-driven process of acquiring, training, appraising and compensating employees, and maintaining good labor relations, health and safety.
HRM directly addresses the business related issues or functions. Strategy is normally a long term plan that shows the path to achieve the stated goals and objectives. HRM is the key to ensure the existence of the organization in this challenging business world. HRM is a separate department which manages the entire work force of an organization. This report has completed based on the SHRM practices and factors influenced personnel management to transform towards a Strategic partner.
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Real world examples are been used to illustrate the importance of SHRM as a strategic partner. Maximum information is used to complete these tasks. Internet, HRM reports, journals, Books, and newspapers are the sources of information used in the project. 2. Discussion 2. 1 Personnel management The word Personnel Management is popular with different names such as Labor management, Staff management, and Industrial management and in modern times as Human Resources Management Personnel management was focused on employment contracts, disciplinary issues and compensation.
Personnel management can include administrative tasks that are both traditional and routine. It can be described as reactive, providing a response to demands and concerns as they are presented. Personnel management is often considered an independent function of an organization. (Page West & Bernhadrdt, 2009) * The welfare aspect – This is concerned with the working conditions and basic enmities such as housing, schooling, hospitality, sanitary, canteen, creches, handling personnel problems and the recreational facilities. The labor or personnel aspect – This is concerned with recruitment, placement of employees, remuneration, training and development, promotions, incentives, measuring productivity and individual performance. * The industrial relation aspect – This is concerned with trade union, negotiations settlement of industrial disputes, joint consultation and collective bargaining Personnel management can include administrative tasks that are both traditional and routine. 2. 1. 1 Functions of Personal management Personnel management is different from HRM.
Personnel means persons employed. Hence, personnel Management views the man as economic man who works for money or salary. Human resources management treats the people as human beings having economic, social and psychological needs. Thus HRM is broader in scope compared to personnel management. 2. 2 Transform of personnel management to Human resource Management Human resource management has changed in name various times throughout history. The name change was mainly due to the change in social and economic activities throughout history.
The beginning of Personnel management can be traced to the distress about utilization of people functioning in factories and was set up through law of the land in most of the countries to deal with issues pertaining to grievances and welfare of the workmen. As the dynamics in relationships linking trade unions and management distorted the personnel management tasks grew away from welfare to other areas such as guaranteeing harmonious industrial relations and valuable personnel administration. During this period the prominence was on planning and observing conformance to rules and procedures. Page West & Bernhadrdt, 2009) Social, economic, and technological events also strongly influence HRM practices. These events include: An expanding cultural diversity at the work-place, The emergence of work and family issues, The growing use of part-time and temporary employees, An increased emphasis on quality and team-work, The occurrence of mergers and takeovers, The occurrence of downsizing and layoffs, The rapid advancement of technology, An emphasis on continuous quality improvement and A high rate of workforce illiteracy.
These events influence HRM practices in numerous ways. For example: * Some firms are attempting to accommodate the needs of families by offering benefit options like maternity leave, child care, flextime, and job sharing. * Some firms are attempting to accommodate the needs of older workers through skill upgrading and training designed to facilitate the acceptance of new techniques. * Some firms are educating their employees in basic reading, writing, and mathematical skills so that they can keep up with rapidly advancing technologies. 2. 2. 1 Change in competitive environment
The last three decades saw, the changes in the competitive environment brought concerning by rising competition, which resulted in accessibility of wide option for clients and that in turn, gave a new aspect to marketplace, customers’ preference, which in result forces companies to constantly innovate and provide the kind of value to customer that competition cannot match. 2. 2. 2 Cultural differences The global business environment today is a multi-cultural one. While general business considerations are essentially the same the world over, business styles differ greatly from country to country.
The global style of business is mixed with the multi cultural people. Organizations employees, executives, salespeople, technicians to negotiate or make contracts with little or no understanding of the cultural differences in the ways people communicate and do business with each other. Due to this HRM has to be more dynamic in terms of recruiting, training and developing the employees to assure that they can function effectively anywhere around the world. (Millmore, M, & M, 2009) (2003 Southwestern College Publishing. ) 2. 2. 3 Embracing new technology Technology is forcing firms to become more competitive.
At every instance there are innovation taking place. The rate of change is rapid. Organizations have come a long way from applications of Lasers to optic fibers. Some systems where IT helps HRM are: * Systems for e-recruitment; * On-line short-listing of applicants; * Developing training strategies on-line; * Psychometric training; * Payroll systems; * Employment data; * Recruitment administration; * References; * Pre-employment checks. This has forced personnel management to be more strategic where to include IT in their Strategic planning of the Company and the HRM. 2. 2. 4 Flexibility and Diversity
Before two or three decades a major trend emerged where employers were seeking increasing flexible arrangements in the hours worked by employees due to an increase in number of part-time and temporary contracts and the invention of distance working. The workforce and patterns of work are becoming diverse in which traditional recruitment practices are useless. In recent years, growth in the use of internet meant a move to a 24/7 society. This created new jobs in e-commerce while jobs were lost in traditional areas like shops. This meant an increased potential for employees to work from home.
Organizations need to think strategically about the issues these developments raise. HRM’s role will change as changes occur. (Millmore, M, & M, 2009) 2. 2. 5 Controlling costs Investment in a new technology, intellectual capital and efforts for globalization has increased pressures on companies to lower cost as well as improve productivity. Among the above investments, labor cost is the largest expenditure of any organization, especially in service and knowledge intensive companies. So organizations have started using approaches such as down-sizing, outsourcing and employee leasing and productivity enhancement.
All these have direct impact on Policies and practices change in labor management. 2. 2. 6 Global economy Today’s global economy also influences some aspects of HRM. Many firms realize that they must enter foreign markets in order to compete as part of a globally interconnected set of business markets. From an HRM perspective, such organizations must foster the development of more globally-oriented managers: individuals who understand foreign languages and cultures, as well as the dynamics of foreign market places. These firms also must deal with issues related to expatriation, such as relocation costs, selection, compensation, and training.
With this shift in business dynamics, the awareness sunup on companies that people and their knowledge is the only source of sustainable competitive advantage, as other resources related to materials, equipment, technology, finances etc. have proved short lived in the absence of human capital capable of deploying these resources effectively and efficiently. Companies now bank on people’s domain knowledge combined with their awareness of markets for developing innovative new products & services and thus creating enhanced value proposition for customers.
This marked change in attitude of managements saw the emergence of concept of Human Resource Management which characterizes implementation of personnel policies to maximize objectives of organizational integrity, employee commitment, flexibility and quality. Personnel management traditionally is aimed largely at non-managers, where as HRM treats management development as an equally important issue. Traditionally personnel management viewed organizational culture and leadership as issues concerned with organizational development, where as HRM highlights responsibility for managing organization culture and leadership issues.
HRM concerns with setting consistent HR policies which reflect and communicate “core values” of the company. It is through building culture and sharing common values among people that companies are trying to ensure that their acts and decision are based on best interest of the company rather than stressing on conventional rules and procedures, thus achieving the element of speed. (Baron & Armstrong, 2007) 2. 2. 7 The strategic significance However more and more companies have begun to view the issues such as organization development, employee development, direct employee communication and involvement, performance management etc. s deliverables of well conceived HR strategy. In the industries where there is a strong correlation of intellectual capital and success at marketplace, the companies took HRM altogether to a different plane of strategic importance where the role of HR is clear in achieving overall strategic goals of the company. There are yet some other industries where companies think that industrial relations are still the major concern in people area, traces of traditional personnel management functioning can be seen in practice.
However, in general across the industries, there has been a shift in attitudes of personnel / HR professionals and the aspect is gaining importance at strategic level. (Boxall & Purcell, 2008) 2. 3 Current Role of HRM Strategic human resource management is designed to help companies best meet the needs of their employees while promoting company goals. Human resource management deals with any aspects of a business that affects employees, such as hiring and firing, pay, benefits, training, and administration. Human resources may also provide work incentives, safety procedure information, and sick or vacation days.
Strategic human resource management is essential in both large and small companies. In small companies, this may be as simple as the owner or manager taking a little time every day to observe, assist, and assess employees, and provide regular reviews. Larger companies may have a whole department in charge of human resources and development. By meeting the needs of the employees in a way that also benefits the company, it is possible to improve the quality of staff members. Taking the effort to provide employees with the tools they need to thrive is worth the investment.
ORGANIZATIONAL PERFORMANCE MANAGERIAL COMPETENCIES * HR Professional Competence * Business -related Competence Technical Human Resource Practices ices Theoretical Framework for Strategic Human Resource Management Strategic Human Resource Practices ORGANIZATIONAL CONTEXT VARIABLES * Firm size * Level of Technology * Union Coverage 2. 3. 1 Functions of HRM Strategic Role: * develops and promotes policies, standards and good practices in the management of civil servants; and * implements these policies through discussions, explanations, guidelines, regulations and circulars. Central roles: determines and communicates overall Human Resource Management policy and standards of best practice * advises departments on the implementation of policies and the development of their Human Resource Management plans * formulates pay and conditions of service, fringe benefits and allowances and also deals with proposals for changes to structures of grades/ranks and for creation of directorate posts in the light of advice from independent standing bodies * Deals with appointment, promotion and discipline relating to senior positions, taking into account the advice from the Public Service Commission.
It also processes cases relating to staff complaints, early retirement, legal assistance for civil servants, and benefits for retired civil servants * ensures service-wide comparability between grades and ranks with similar responsibilities * manages the Administrative and General Grades * consults with major staff associations(Boxall & Purcell, 2008) To play all these roles HR has several functions as follows: * HR plan * Recruitment * Selection * Induction * Motivation * Performance appraisal * Training and development Compensation management * Industrial relations * Health and safety(Relly) 2. 4 HR as a strategic partner 2. 4. 1 Strategic Business Plan To some organizations, strategic planning is a way of life. To others, it’s an exercise. To almost all, it’s a requirement. Strategic planning allows agencies to map out where they are, where they want to go, and how they plan to get there. The strategic planning process varies from agency to agency. * Develop Human Resource plans and strategies aligned to the organization’s strategic direction and business strategy. Provide tools and tactics to enhance execution of these strategies * Integrate human resource management with current and pending legislation and socio-political changes. * Integrate human resource management with general organizational management. * Manage the interface between human resource management processes and systems. * Formulate and communicate human resource management policies. * Act as the conscience of employer with respect to public issues. * Scan the environment and identify emerging trends that ill affect the organization and the management of people therein. * Assess the long-term impact of short-term decisions on people. * Express the philosophy and values regarding people management in the organization. 2. 4. 2 Strategy Development and Implementation Full participation of HR people in strategy development and implementation promotes HR as strategic partner. Ensure that HR Manager and HR professionals: * contribute to business decisions * develop business acumen to understand how a profitable business is run * are customer-oriented learn how to link HR practices to your organizational business strategy Strategic planning allows agencies to put down on paper where they are, where they want to go, and how they plan to get there. But the best planning in the world does nothing for an agency if it does not act on those plans. Strategic implementation of human resources management means performing activities that support agency mission accomplishment and measuring how well those activities contribute to achieving agency strategic goals. (Boxall & Purcell, 2008) 2. 4. 3 What are required of HR as Strategic Partner? These are among the important ones Recruiting the right employees. Align corporate values to the recruitment strategy. * Well-developed competencies of the workforce, and their relevance to organizational core business. * Participative culture where HR initiatives fully support the overall strategic plan. * Effective use of information technology. * Effective leadership through appointment of the right HR Head. Identification of human resource practices that make HR as strategic partner, namely, serving the business needs of the organization. Discard ineffective HR practices that do not contribute to the success of the organization. (Office of State Personnel, California, 2008) ] 2. 4. 4 Continuous Improvement HR management requires continuous improvement to ensure it retains its relevance as strategic partner. Capable and committed people are needed at every level in order for this to happen. Senior management support is crucial to ensure that human resource becomes the organization’s strategic partner. It is said that nothing changes except change itself. Change is inevitable for the continued success of your organization. Manage them well to avoid or minimize disruption in your organization’s activities. 2. 4. SHRM and Competitive advantage Baron & Armstrong, (2007) define sustainable competitive advantage (SCA) as “long-term advantage over the organization’s competitors which is achieved by offering unique value”. Therefore, competitive advantage can reasonably be defined as per above, but not necessarily long-term/sustainable. Universal (best practice) Organizations create competitive advantages by integrating a suitable ‘HRM bundle’ of best practices into the firm’s overall structure. The ‘HRM bundle’ typically includes ‘high ground’ elements of HRM, some of which may include: * A goal of employee commitment; A goal of organic structure and functional flexibility; * A goal of quality; and * A goal of integrating corporate objectives and HR objectives. In theory, successful integration of the above practices into a firm will ultimately result in an environment in which HRM actually helps to determine strategy (rather than just implement it). The validity of this framework is commonly substantiated by drawing causal relationships between, for example, motivation and customer satisfaction, or other relevant factor Contingent (best fit)
As per the “best practice” framework, except that in this instance best practice is contingent on the firm’s situational environment. The competitive environment, industry and workforce structure interact to create a specific context in which HRM adds competitive advantages Organization-specific (unique) Baron & Armstrong uses the resource-based theory of sustainable competitive advantage to posit that intellectual and human resources are sets of attributes (i. e. he knowledge, training and experience of a firms employees), and that they can provide the firm with sustainable competitive advantages. The firm must control the resources. (Baron & Armstrong, 2007) 2. 4. 6 Some Real world examples of Successful firms using SHRM SAP (Australia) * Annual employee conference where everyone participates in developing the Company’s vision and strategy; * Staff and managers jointly compile business plans; * Staff and management jointly manage performance evaluations; and * Bonuses linked to ‘rated’ customer satisfaction system; Pepsi-Cola International Adopts a common values approach to HRM, to enhance competitiveness; * Has a multinational vocabulary that unites staff from different cultures and countries; and * Has identified 11 success factors for performance measurement and management. Apple Computer (USA, Europe, Pacific) * Adopted a growth/prospector/high-tech strategy for HRM; * Facilitated rapid HR growth by “fattening” corporate structure to create opportunities while simultaneously maintaining innovative spirit; and * Removed original founders in the best interest of the Co. nd its strategies. 3. Conclusion Once a HR professional said that “The most powerful of the strategic configurations of power remains people… you must work on developing an organizational spirit de corp. that aligns the hearts and minds of your staff with the aims of the business” The report has shown that the people are the asset for a company and to improve that asset the HR have transformed as a strategic contributor from personnel management. The report also has showed the other factors which influenced this transform.
In today’s organizations, to guarantee their viability and ability to contribute, HR managers need to think of themselves as strategic partners. The project also illustrates the importance of HR as a strategic partner through some real world examples, trend of SHRM and by explaining how the SHRM provides a competitive advantage to the companies. The project also analyzed the current role of HR functions in a critical way by providing an understanding of contemporary HR theory and issues, by showing awareness of political, social and ethical issues. . References Books Baron, A. and Armstrong, M. (2007) Human capital management. London: Kogan Page. Boxall, P. and Purcell, J. (2008) Strategy and human resource management (2nd edition). Basingstoke: Palgrave Macmillan. Millmore, M. , Lewis, P. and Saunders, M. (2007) Strategic human resource management: contemporary issues. Harlow: Financial Times/Prentice Hall. Page West, J. N. , & Bernhadrdt. (2009). An ascendant view of human resource management as a critical content dimension in new venture strategy. Bingley: Emerald group of publishing.
Journal articles Reilly, P. (2008) Strategic HR? Ask yourself the questions. HR Director . No 44, February. pp12-14, 16-17 Richards, J. (2007) Aligning HR with the business: two steps forward, one step back. IRS Employment Review. No 866, 2 March. pp6-12. Online document HR as a Strategic Partner for Organizations of the Future (n. d). Retrieved April 22, 2010, from http://www. hewittassociates. com/Intl/AP/en-IN/KnowledgeCenter/ArticlesReports/hr_strategic_partner. aspx Office of State Personnel, California. (2008,