Basis of Strategic HRM
As Baird and Meshoulam (1988) remarked: Business objectives are accomplished when human resource practices, procedures and systems are developed and implemented based on organizational needs, that is, when a strategic perspective to human resource management is adopted.’ This explains the strategic direction of the Human Resource Management. Strategic HRM takes its root from Strategic management where the focus is on formulation and implementation of strategies that aid in attainment of organizational goals.
Strategic management includes decisions and actions that results in the formulation and implementation of strategies designed to achieve the objectives of an organization. Whereas its purpose according to Kanter (1984) is to: elicit the present actions for the future’ and become an action vehicle integrating and institutionalizing mechanisms for change’
The Concept of Strategy
Strategy in simple terms is the approach or course organizations select to achieve their desired goals in the future. Strategy is Organizational determination and trust in a few ways/courses that they see would result in bringing prosperity and enhanced performance that is why the allocation of resources is directed by the strategy.
Fundamentals of Strategy
There are a few fundamental characteristics of strategy,
Forward Looking
We all would have heard about the term Strategic direction, for Businesses Direction is always forward, strategy is all about moving forward, it asking 2 key question
- Where the Organization wants to go?
- How would it get there?
This makes strategy a Declaration of intent (Armstrong, 2010) thus Strategies define long-term goals but they also cover how those goals will be attained. Strategy once formulated would offer direction for actions that help in attaining required results. Simply a Good Strategy is the one that give the organization what it has set out to achieve, ‘mastering the present and pre-empting the future’ Abell’s (1993). To make it easier to understand strategy is nothing but framework to meet the critical ends and identification of means to take the business to that ends.
Resource Capability of Business
Strategy as identified is about ends and means, Business cannot reach the ends unless it has the means to do so, Second characteristic of strategy deals with the means, its capacity to function effectively depends on its resource capability, the quality and quantity of its resources and their potential to deliver results. This is the resource-based view. Wernerfelt (1984) explained strategy in context of its dependence on resources, he remarked that ‘it is a balance between the exploitation of existing resources and the development of new ones’. Strategic Advantage for the Business stems from this view, where on business has hold of resources that the competitors are not able to imitate, and it gives the business liberty to innovate and take a market position that is difficult for others.
Striking the Strategic Fit
The third characteristic of strategy is strategic fit. It is about striking a match when developing the HR strategies with the external and internal environment. For instance Competitors are focused on gaining advantage through Quality products/services and HR cuts down on its focus on Training and Development, this is a serious mismatch in the direction of HR and external environment that would not yield good results. The focus is upon the organization and the world around it. To maximize competitive advantage a firm must match its capabilities and resources to the opportunities available in its environment. The concept of integration is also a major feature of strategic HRM.
References:
Abell, D F., (1993). Managing with Dual Strategies: Mastering the present, pre-empting the future. Free Press: New York.
Armstrong, M., (2009). Handbook of Human Resource Management. 11th Edition. Kogan Page: London.
Baird, L and Meshoulam, I., (1988). Managing two fi ts of strategic human resource management, Academy of Management Review, 13 (1), pp116-128
Kanter, R M., (1984). The Change Masters, Allen & Unwin, London
Wernerfelt, B., (1984). A resource-based view of the firm, Strategic Management Journal, 5 (2), pp 171-180.
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