Different people, at different times, have different perceptions of what human resource is about. However, HR is now increasingly being viewed as an important strategy needed to fulfil final corporate goals. As defined by Keenoy in 1990, HRM is a method of maximizing economic return from labour resource by integrating HRM into Business Strategy. And as defined by Storey in 1995, HRM is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic development of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques.
These definitions definitely reveal the importance of HR strategy in achieving corporate goals. As shown in illustration 1. 1, corporate goals to be achieved, when associated with HR, should go through the process of HR management, which includes recruitment, selection and performance management. Illustration 1. 1 Interactive Framework between HRM and Business Strategy The purpose of recruitment and selection is to attract sufficient proper candidates and then to select qualified and most suitable persons from candidates to match people to specific works.
It is not possible to optimise the effectiveness of human resources, by whatever method, if there is a less than adequate match. Performance management is then designed to motivate the selected people for better performance. Therefore, recruitment, selection and performance management are integrated together to form a driving force by which the organisation comes to the realisation of corporate goals. A poor HR management might lead to a destructive result. This is, however, easier said than done. The importance of HR strategy will be discussed further.
And the difficulties of achieving corporate goals the firms counter during the HR management will be analysed thereby for consideration. 2. Fit between HR strategy and business strategy HRM shall be viewed as part of the strategic managerial function in the development of business policy, in which it plays both a determining and a contributory role. HRM, with its strategic importance, needs to be considered by top management in the formulation of the corporate plan. HR managers are no longer viewed primarily as being in charge of simply performing a service function such as recruiting and selecting personnel.
Today, they are expected to assume an active role in the strategic planning and decision making at the upper echelons of their organisations. There has been a growing need for HR managers to assume a broader role in overall organisational strategy. In short, “the HR function should be planned, organized, and evaluated on the basis of its contribution to the business. ” Actually, the overall aim of HRM should be to make an effective contributing to the achievement of corporate goals.
As shown in a survey, seven in 10 HR departments operate with a documented HR strategy, of which almost all are explicitly linked to the organisation’s business strategy. Almost all the organisations in the sample employ HR staff at managerial level. The survey shows that a number of companies are making efforts to transform HR from traditional administrative cost centre to dynamic strategic function. HR’s strategic role as corporate architect, as defined by Ulrich, surely indicates that the function needs to become more tightly integrated into the main body of the organisation, rather than less.
Some companies have taken this to its logical conclusion by merging their strategic HR function with other key departments. Microsoft’s former finance director in the UK, for example, has now become director of people, profits and strategy. HR planning must be coordinated closely with the organisation’s strategic and related planning functions. As a result, efforts in HRM are being directed toward providing more support for the achievement of organisation’s operating goals. HRM directs employee efforts to meaningful activities contributing to achieve the corporate goals.
That’s why many of the most forward-looking CEOs are seeking top HR managers who can report directly to them and help them address key issues. HR strategies shall be more closely integrated with business strategies, especially at the time to choose proper methods of recruitment and selection, and to determine if people are available, internally or externally, to implement the business strategic plan. However, the survey also suggests that HR departments do not have much time to devote to strategic activities. Overall, almost three-quarters allocate 20% or less of their time to strategic activities and just 8% allocate more than 40%.
Administrative work still takes up the majority of the HR department’s time. It seems that people, although come to emphasis the strategic importance of HR, on the other hand have to deal with lot of administrative trivia which greatly distracts HR department’s focus from strategic activities. Moreover, from the fact that just 18 members of the FTSE 100 have a HR director on the board and that people are the only major asset that listed companies can legitimately ignore in annual reports, HR is still being underestimated in the formulation of business strategies and the process of decision-making.
People are a strategic asset rather than a cost to business. Human resources are viewed as the key source of sustained competitive advantage. Miller defined strategic HRM as: “those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage” (Miller, 1987:352). “Competitiveness doesn’t come out strategy alone,” comments Ulrich. “That’s only half of the game. Competitiveness also depends on whether you have the organisation you need to execute the strategy.
” HR has always been critical to the success of any organisation. How effectively the organisation will achieve the strategic goals depends in large part upon how effective the HRM is in the organisation. People are the final chain of the organisation to execute the strategy. Efficient HRM shall lead to an efficient organisational structure which then will facilitate the implementation of strategy plan to achieve corporate goals. HR strategy shall be thus at centre of the organisation, defining its future direction and shaping the means of obtaining its goals.