Human Resource Management

Lesson 2 – Integrating Business & HR strategies and HRP

Chapter 3
BITS Pilani
Pilani Campus Dr. Annapoorna Gopal
Learning Objectives

1. Discussion on ways to integrate HR strategy with Business strategy

2. Understanding Human Resource Planning

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What is SHRM ?

Strategic human resource management (SHRM) refers to the process of developing practices,
programmes and policies that help achieve organisational objectives.

Specially, SHRM involves that:

– Human resource management is fully integrated with the strategy and the strategic needs of
the firm
– Human resource policies cohere both across policy areas and across hierarchies

– Human resource architecture of the firm results in its above-average financial performance. HR
architecture is composed of the systems, practices, competencies and employee performance
behaviours that reflect the development and management of the firm’s human resource
– Human resource practices are adjusted, accepted, and used by line managers and employees
as part of their daily work.

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Roles of HRM

Four roles of HR executives are relevant:

– HR should define an organisation’s architecture.
– HR needs to be accountable for conducting an
organisational audit.
– The role of HR as a strategic partner is to identify methods
for renovating the parts of the organisational architecture
that need it.
– HR must take stock of its own work and set clear priorities.

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Traditional and Strategic HRM

Traditional HRM Strategic HRM

Responsibility for HRM Staff specialists Line managers

Partnership with internal and

Focus Employee relations
external customers

Transactional, change follower and Transformational, change leader

Role of HR
respondent and initiator

Initiatives Slow, reactive, fragmented Fast, proactive, integrated

Time horizon Short term Short, medium, long

Bureaucratic roles, policies, Organic-flexible, whatever is

Control
procedures necessary to succeed

Tight division of labour, Broad, flexible, cross-training

Job design
independence, specialisation teams

Key investments Capital, products People, knowledge

Accountability Cost centre Investment centre

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SHRM Process

Phase 1
Scan the
Environment

Phase 5 Phase 2
Monitor Identify
and Sources of
Evaluate Competitive
HR Advantage
Strategies

Phase 4 Phase 3
Implement HR Identify HR
Strategies Strategies

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Benefits of SHRM

1. Being a strategic partner, HR manager plays key role in making a merger or an

acquisition a success

2. Being part of the strategic management process, HR professionals seek to answer

the fundamental question: How to create an organisation to accomplish business
objectives?

3. Organisations can be categorised into three depending on whether they are first
in the market (prospectors), defending the present market share (defenders), or
enter once it is created, with an improved product moving to become low cost
produce themselves (analysers)

4. The most significant benefit from SHRM relates to the creation of organisational
capability by ensuring that the firm has skilled, engaged, committed and
motivated employees who can render competitive advantage to it
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Barriers to SHRM

1. The inability of HR leaders to think strategically

2. Most senior managers lack appreciation for the value of HR and its ability
to contribute to the organisation from a strategic perspective
3. Human assets are not owned by organisations and, therefore, are
perceived as a higher risk investment than capital assets
4. Strategic HR may be resisted because of the insensitivity towards change
that might arise
5. Concern arising from non-availability of HR professionals to staff
themselves in HR departments, consequent to integration of HR function
with business strategy
6. Failure to understand the strategic needs of the business, inadequate
assessment of the environmental and cultural factors that affect the
contents of the strategies and the development of ill-conceived and
irrelevant initiatives

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Typical HR strategies

1. The Best Fit Approach

2. Best Practices Approach

3. Resource-Based View (RBV) of the Firm

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Selecting strategies to enhance performance - 1

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Selecting strategies to enhance performance - 2

Beyond HR Domain
– Encouragement of Pro-active Rather than Reactive Behaviour
– Explicit Communication of Goals
– Stimulation of Critical Thinking
– Productivity as an HR Based Strategy
– Quality and Service are HR-based Strategies

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Human Resource Planning

• HRP is a sub-system in the total organisational planning. Organisational

planning includes managerial activities that set the company’s objectives
for the future and determines the appropriate means for achieving those
objectives

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Factors affecting HRP - 1

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Factors affecting HRP - 2

Continual Strategic Choices in Human Resource Planning

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The planning process

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HR demand forecast

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Human resource information system

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Strategic HR initiatives

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HR plan implementation

• Recruitment, Selection and Placement

• Training and Development
• Retraining and Redeployment
• Retention Plan
– Compensation Plan
– Performance Appraisal
– Employees Leaving in Search of Green Pastures
– Employees Quitting because of Conflict
– The Induction Crisis
– Shortages
– Unstable Recruits

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Managerial succession planning

A typical succession planning involves the following activities:

– Analysis of the demand for managers and professionals by company level,
function, and skill
– Audit of existing executives and projection of likely future supply from
internal and external sources
– Planning of individual career paths based on objective estimates of future
needs, and drawing on reliable performance appraisals and assessments of
potential
– Career counselling undertaken in the context of a realistic understanding of
the future needs of the firm, as well as those of the individual
– Accelerated promotions, with development targeted against the future
needs of the business
– Performance-related training and development
– Planned strategic recruitment, not only to fill short-term needs but also to
provide people for development to meet future needs
– The actual activities by which openings are filled

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HRP and the Government

• Manpower planning has come to be recognised in India as one of

the adjuncts of socio-economic planning since the early years of the
planning era. Among the noteworthy steps taken by the
Government of India in this direction is the setting up of the
Institute of Applied Manpower Research (IAMR)
• The IAMR was set up in 1962, inter alia to conduct empirical
research in manpower, to provide advisory and consultancy services
to government departments and industry, and to impart training in
methods and techniques of manpower planning
• Training is now a major activity of the Institute

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Requisites for successful HRP

1. HRP must be recognised as an integral part of corporate planning

2. Backing of top management for HRP is absolutely essential
3. HRP responsibilities should be centralised in order to co-ordinate consultation between
different management levels
4. Personnel records must be complete, up-to-date and readily available
5. The time horizon of the plan must be long enough to permit any remedial action
6. The techniques of planning should be those best suited to the data available and the degree
of accuracy required
7. Plans should be prepared by skill levels rather than by aggregates
8. Data collection, analysis, techniques of planning and the plans themselves need to be
constantly revised and improved in the light of experience
9. The impact of external forces like technological changes, changes in labour market
compositions and the like needs to be considered while developing the human resource plan
10. HRIS should be used as decision support system and should alert managers to problems and
opportunities

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Barriers to HRP

1. People question the importance of making HR practices future oriented

and the role assigned to HR practitioners in formulation of organisational
strategies
2. HR practitioners are perceived as experts in handling personnel matters,
but are not experts in managing business
3. HR information often is incompatible with the information used in
strategy formulation
4. Conflicts may exist between short-term and long-term HR needs
5. There is conflict between quantitative and qualitative approaches to HRP
6. Non-involvement of operating managers renders HRP ineffective

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