THE STRATEGIC NATURE OF HRM

Meaning of Strategy:

Strategy is a course of action or a long term plan. Organizational Strategy means organization’s long term plan about how it will deploy its resources and how it will outperform competitors by serving customer better than the competitors.

Strategy Levels:

Scholarly literature on Strategic management identifies three main levels of strategies.

Corporate level strategy sets the direction for whole organization

Business Unit or Divisional level strategy is about planning at specific division or strategic business unit level

Functional Strategy is about the planning of specific functions such as HRM, Marketing, Finance and Research and Development.

Corporate level strategy guides the divisional level strategy and the divisional level strategy guides each functional level strategy however in some cases it become reverse means functional strategies are set first and then they guide divisional strategies and corporate strategy.

                                                   Source: Strategy Levels by Tahir 2012

  Strategic HRM Process:

The process of Strategic HRM begins with the strategy formulation for the whole organization. Once strategy is being formulated it guides HRM practices and policies. Strategic Human Resource Management means designing such HR practices and policies which result in specific behavior and skills. Such behavior and skills are important for organization to achieve its strategic objectives.  In simple words Strategic HRM means achieving competitive advantage through your people. For example if organization is competing on Cost basis then HR practices should be designed in such a way that it result in a more cost conscious employees. Similarly if Organization is competing on Differentiation then HR practices should aim to increase employee’s creativity, innovation and risk taking.  

 Source: Strategic HRM Process by Tahir 2012

 

Some Strategic HRM model suggest that HR Practices should be matched with organization’s or Industry’s life cycle. Summing up the debate it simply means that HR Practices and policies are guided by the overall strategy and are aimed to achieve required competencies and behavior and once these competencies and behavior are achieved, they become source of competitive advantage because it is difficult for competitor to copy.

HR Manager’s Strategic Role:

If organization want to achieve its strategic objectives, it is important that HR manager should be involved in strategy formulation process. Many organizations fail to achieve their strategic objectives because of the low involvement of HR managers in strategy formulation process. The failure mainly occurs because employees are not ready to implement strategic changes or there is mismatch between their competencies and organization’s strategy. This gap can only be filled by involving HR Manager in Strategy formulation process. The strategic role of HRM requires HR Managers to play an active role in strategy formulation, continuous lobbying, designing HR practices which support business strategies and being proactive to any changes  in the environment internally as well as externally.