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Block 1 Human Resource Planning

Unit 2 Human Resource Management

1) What is strategic HRM?

Strategic Human Resource Management (SHRM) is a modern approach to human resources that views HR as a central component in helping an organisation achieve its strategic objectives. It moves beyond the traditional personnel department functions of hiring, training, and providing pay and benefits. SHRM focuses on how organisations can improve their competitive performance by more effectively utilising their human resources. It involves developing new structural and cultural patterns to meet the competitive demands of a dynamic and international marketplace. SHRM is proactive and considers various time frames in a flexible way.

2) Discuss the universalistic approach.

The universalistic approach to SHRM posits that there are a set of HR practices that will always contribute to a firm’s success, regardless of the business environment or the company’s strategy. It suggests that all organisations should incorporate these universally effective HR practices into their firms. These practices may include extensive employee training, practices that reduce status distinctions among employees, and a high level of information sharing.

3) Define strategic fit and explain its role.

Strategic fit is the idea that a firm's performance will be enhanced only when the firm adopts HR practices that complement and support other HR policies, practices and the other elements of the organisation’s strategic plan. It is a perspective of SHRM that focuses on the consistency of HR practices with each other and with the overall business strategy. There are three types of strategic fit:

• Horizontal fit refers to the consistency among various HR practices within the firm. For example, if a company wants to hire innovative, risk-taking employees, its performance appraisal and reward systems should also assess and reward innovation and risk-taking.
• Vertical fit is the degree to which HR practices are consistent with the firm’s overall business strategy. For instance, if a firm aims to be highly "customer-focused," its training programs should develop better customer relations skills, aligning with the overall business strategy.
• External fit is about how well HR practices align with the specific aspects of the external environment. For example, if there are demographic changes, HR systems should adapt to enhance the competitive value of employees.

4) What do you understand by the term internal service provider in HR context?

An internal service provider approach to SHRM views HR professionals as service providers to the firm’s individual business units. In this model, HR professionals are focused on improving the quality and cost-effectiveness of HR services to increase the satisfaction of management "customers" within various business units. These 'customers' are the business unit managers who use HR services to help solve their people-related business problems. For example, HR professionals might intervene to solve conflicts or plan training programs.

5) Discuss the configurational approach.

The configurational approach to SHRM suggests that SHRM involves putting together configurations of HR practices that are logically consistent with and appropriate for a particular business environment. It focuses on creating a set of HR practices that fit together and support the organisation's goals and context.

6) Describe the Resource based model.

The resource-based model of SHRM, proposed by Jay Barney, suggests that organisations gain a competitive advantage when they possess resources that are valuable, rare, difficult for competitors to imitate, and organised to maximise their value. It focuses on creating unique capabilities that other firms cannot easily replicate, thus providing a competitive edge.

7) What are the theoretical perspectives of SHRM? Discuss the contributions of the different perspectives of Strategic Human Resource Management.

The theoretical perspectives of SHRM include:

• The universalistic approach: This perspective suggests that there is a universal set of HR practices that will always contribute to a firm’s success.
• The strategic-fit perspective: This perspective argues that a firm's performance will be enhanced only when the firm adopts human resource management practices that complement and support both; other HR policies and practices and the other elements of the organisation’s strategic plan.
• Internal Service Provider: This approach focuses on improving the quality and cost-effectiveness of HR services to increase satisfaction of management in various business units within the firm.
• Resource-based model: This model suggests that organizations gain competitive advantage when they possess resources that are valuable, rare, difficult to imitate and organized in such a way to maximize their value.

The contributions of these perspectives vary. The universalistic approach offers a simplified view that may not account for the complexities of different business environments. The strategic-fit perspective highlights the importance of aligning HR practices with both internal and external factors. The internal service provider view emphasizes customer satisfaction within the organization. The resource-based model underscores the importance of unique, valuable resources in gaining a competitive edge.

8) What are mission goals and value statements?

Mission, goals, and value statements are crucial elements in strategic planning:

• Mission statements define why the company exists, its unique contributions, and what business it should be in. They outline the organisation's purpose and reason for being.
• Goals are a source of motivation, describing the purpose of the organisation to all involved. They provide a basis for decisions and performance measurement.
• Value statements articulate the principles and standards that guide the organisation's actions and behaviours.

9) Discuss the integral steps in strategic planning.

The integral steps in strategic planning include:

• Defining the company philosophy: This includes understanding why the company exists, its unique contributions and what business it should be in.
• SWOT analysis: Analysing the organisation's current state, including its strengths, weaknesses, opportunities, and threats.
• Environmental scanning: Analysing the external factors that influence organizational objectives, including technology, economic factors, legal/political environment, international markets, labor supply, and customers.
• Establishing goals and objectives: Setting clear, measurable targets that the organisation aims to achieve.
• Formulation of strategies: Selecting the most effective course of action to achieve the organization’s goals and objectives.

10) How do we overcome environmental threats in strategic planning?

Environmental threats in strategic planning are aspects of the surroundings that may prevent the organisation from achieving its strategic goals. To overcome these threats, a firm needs to conduct an environmental scan to analyse various factors such as technology, economic conditions, legal and political environment, international competition, labor supply and customer needs. By anticipating these threats and understanding how they can impact the organisation, strategies can be developed to mitigate their effects.

11) Discuss the organisational strengths and weaknesses from strategic planning approach.

Organisational strengths and weaknesses are assessed as part of the SWOT analysis during strategic planning.

• Strengths are the internal capabilities that enable the organisation to achieve its objectives.
• Weaknesses are internal limitations that may hinder the organisation's performance. HR management can also illuminate a company’s internal strengths and weaknesses and some firms even develop their strategies based on their own HR-based competitive advantage. HR should gather and present information relevant to overall business strategy, reviewing the key talents, benefit structure, and culture of the firm.

12) Describe the goals and objective for strategic planning.

Goals and objectives for strategic planning include:

• Defining the purpose of the organisation to all involved.
• Providing a basis for decisions, guiding managers and employees in their daily activities.
• Serving as a basis for performance measurement.

13) How do we integrate strategic planning with HRM?

To integrate strategic planning with HRM, it is not enough for HR managers to simply provide HR-related information. Instead, they should actively participate in the strategic decision-making process. This integration can be achieved by:

• Changing the hierarchical position of the senior HR manager to make them a member of the senior executive committee.
• Ensuring that the HR representative has the power and influence to ensure that HR strategies are voiced and implemented.
• Gathering and presenting information that is relevant to the making of overall business strategy, including reviewing key talents, benefit structures, and culture.

14) How do you fit HR practices to Business strategy?

Fitting HR practices to business strategy means ensuring that HR activities make sense and help the organisation achieve its goals and objectives. It involves aligning HR practices with the overall business strategy through the use of:

• Vertical fit: Aligning HR practices with the firm’s overall business strategy.
• Horizontal fit: Ensuring consistency among the various HR practices within the firm.
• External fit: Aligning HR practices with the specific aspects of the external environment. The HR staff members, working closely with line managers, must make correct choices about the nature and specific type of HR programs used.

15) What are the six categories of HR practice choices?

The six categories of HR practice choices are:

• Staffing: Deciding whether to hire from external sources or promote from within.
• Appraising: Designing performance appraisals that align with strategic goals.
• Compensation: Determining the reward systems to align with the organization’s philosophy.
• Training and Development: Implementing training that supports strategic goals.

• Employee relations: Deciding on the type of relationships between management and employees.
• Benefits: Determining the type and level of benefits provided to employees.

16) Define staffing, compensation.

Staffing is the process of deciding how to fill job vacancies, whether from external sources or internal promotions, and impacts opportunities for current employees, as well as rewards, training, development and employment commitment. Compensation is an area of HRM that communicates the overall philosophy and strategy of the organisation through choices of rewards.

17) Describe training and development.

Training and development are ways that organisations develop employee skills and knowledge so that the firm can compete on quality. This can include extensive employee training which also contributes to the strategic implementation; creates a capacity for change and instils strategic unity.

18) How do empowered employees strengthen organisations?

Empowered employees strengthen organisations by:

• Enabling them to adapt, learn, and act quickly.
• Ensuring that change initiatives focused on high-performance teams, reduced innovation cycle times, or new technology implementation are defined, developed, and delivered promptly.

19) What is the HR practices strategic fit steps?

The HR practices strategic fit steps involve a step by step analysis of the mission, goals and objectives of the organization and includes:

• Developing an internal mission statement that identifies key focus areas for HR activities.
• Focusing on cultural changes, such as globalisation, rewards and recognition and ownership among employees.
• Developing special programs, in partnership with management and employees, to adapt to a new external environment and contribute to strategic success.

20) Discuss strategic fit versus strategic flexibility.

Strategic fit is highly desirable for HR managers to achieve, but if HR systems become too well-fitted to a particular business environment and strategy, it can become difficult to adapt to changing circumstances. Therefore, strategic flexibility is also important. The environment in which organisations function is dynamic and changes directly impact the organisation.

21) How do we measure HRM? 

Measuring HRM involves assessing the effectiveness of HR practices and their impact on the organisation. This can be done by identifying those who have a stake in HR activities (like managers, unions, customers, employees, suppliers, and shareholders) and surveying their perceptions of HR. It is also important to assess whether HR activities have a measurable impact and what the cost benefit to the organisation is.

22) Explain how we can measure the effectiveness of HRM? What are the ways to understand the effectiveness of HR?

Measuring the effectiveness of HRM can be done through:

• Assessing customer reactions to HR practices.
• Evaluating the impact of HR activities on the organisation.
• Determining the bottom-line cost-benefit of HR activities. HR units must develop a strategic framework for assessing the effectiveness of their services. They should identify the strategic objectives of the organisation and the HR activities needed to accomplish those objectives.

23) Discuss the measures to be taken to benchmark HR practices

To benchmark HR practices, an organisation should:

• Assess its HR practices against both internal standards and the HR practices of key competitors and firms that exemplify excellence.
• Identify and prioritize measures that are obtainable in comparison firms, relative to their strategic importance.

• Develop an overall plan for the benchmarking program, allocating resources and establishing a project calendar.
• Identify firms for the study, persuade them to participate, and collect data.
• Analyze the data to identify gaps between the firm and the target firm.
• Make recommendations on how to close these gaps and implement them.

24) Explain what is SWOT analysis of an organisation?

A SWOT analysis of an organisation involves assessing its:

• Strengths: Internal factors that enable the organisation to achieve its objectives.
• Weaknesses: Internal limitations that may hinder the organisation's performance.

• Opportunities: External factors that can help the organisation to achieve its goals.
• Threats: External factors that can prevent the organisation from achieving its goals.