Excel Books1– 1
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Chapter1The Strategic Role of
Human Resource Management
Excel Books1– 2
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
“Hire the best. Pay them fairly. Communicate freely.
Provide challenges and rewards. Get out of their way. They’ll knock your
socks off.”
- Mary Ann Allison
Excel Books1– 3
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Nature of HRM
It is the art of procuring, developing and maintaining competent workforce to
achieve the goals of an organisation in an effective and efficient manner.
Excel Books1– 4
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
HRM Features Pervasive force
Action oriented
Individually oriented
People oriented
Future oriented
Development oriented
Integrating mechanism
Comprehensive function
Auxiliary service
Interdisciplinary function
Continuous function
Excel Books1– 5
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Scope of HRM
Personnel aspect
Welfare aspect
Industrial relations aspect
Excel Books1– 6
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Objectives of HRM
1. To help the organisation reach its goals
2. To employ the skills and abilities of the workforce efficiently
3. To provide the organisation with well-trained and well-motivated
employees
4. To increase to the fullest the employee’s job satisfaction and self-
actualization
5. To develop and maintain a quality of work life
6. To communicate HR policies to all employees.
7. To be ethically and socially responsive to the needs of society
Excel Books1– 7
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Importance of HRM
1. At the enterprise level
2. At the individual level
3. At the society level
4. At the national level
Excel Books1– 8
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Competitive Advantage
1. Superiority
2. Inimitability
3. Durability
4. Non-substitutability
5. Appropriability
Excel Books1– 9
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Strategic Human Resources Management (SHRM)
SHRM is built around three important propositions: (M. Armstrong 34-45)
The human resources of a firm are a major source of competitive
advantage; in a way, people can make or break an organisation.
Successful organisational performance depends on a close fit between
business and human resource strategy (vertical fit).
Individual HR strategy should cohere by being linked to each other to
offer mutual support (horizontal fit).
Cont….
Excel Books1– 10
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
External Environment
• Competition• Government Policy• Technology• Market Trends• Economic Factors
Business Strategy
Internal Environment
CultureStructurePoliciesSkillsPast Strategy
Laws Regulating
Employment
HR Strategy
•HR Planning•Design of jobs and work systems•What workers do•What workers need•How jobs interface with others
HR InformationSystems
HR InformationSystems
–Procurement
–Development
–Performance Management
–Compensation
–Labour relations
–Procurement
–Development
–Performance Management
–Compensation
–Labour relations
Outcomes
• Increased Performance
• Customer Satisfaction
• Employee Satisfaction
• Enhanced Shareholder Value
Outcomes
• Increased Performance
• Customer Satisfaction
• Employee Satisfaction
• Enhanced Shareholder Value
CorporateStrategyCorporateStrategy
A Model of Strategic Human Resources Management
Cont….
Excel Books1– 11
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Point of Distinction Traditional HR Strategic HR
Traditional HR versus Strategic HR
Focus Employee Relations Partnerships with internal and
external customers
Role of HR Transactional change follower and respondent
Transformational change leader and initiator
Initiatives Slow, reactive, fragmented Fast, proactive and integrated
Time horizon Short-term Short, medium and long (as required)
Control Bureaucratic-roles, policies,
procedures
Organic-flexible, whatever is
necessary to succeed
Job design Tight division of labour; independence, specialization
Broad, flexible, cross-training teams
Key investments Capital, products People, knowledge
Accountability Cost centre Investment centre
Responsibility for HR Staff specialists Line managers
Excel Books1– 12
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
History of Personnel/Human Resource Management
(P/HRM)
1. The industrial revolution
2. Scientific management
3. Trade unionism
4. Human relations movement
5. Human resources approach
Excel Books1– 13
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Concept What is it all about?
The Commodity concept Labour was regarded as a commodity to be bought and sold. Wages were based on demand and supply. Government did very little to protect workers.
The Factor of Production concept Labour is like any other factor of production, viz, money, materials, land, etc.Workers are like machine tools.
The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room will have a positive impact on workers’ productivity.
The Paternalistic concept/ Paternalism Management must assume a fatherly and protective attitude towards employees.Paternalism does not mean merely providing benefits but it means satisfying various needs of the employees as parents meet the requirements of the children.
The Humanitarian concept To improve productivity, physical, social and psychological needs of workers mustbe met. As Mayo and others stated, money is less a factor in determining output, than group standards, group incentives and security. The organisation is a social system that has both economic and social dimensions.
The Human Resource concept Employees are the most valuable assets of an organisation. There should be a conscious effort to realise organisational goals by satisfying needs and aspirations of employees.
The Emerging concept Employees should be accepted as partners in the progress of a company. They should have a feeling that the organisation is their own. To this end, managersmust offer better quality of working life and offer opportunities to people to exploit their potential fully. The focus should be on Human Resource Development.
Evolution of the Personnel Function
Excel Books1– 14
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
Traditional HR practice Emerging HR practice
Administrative role
Reactive
Separate, isolated from company
mission
Production focus
Functional organisation
Individuals encouraged, singled
out for praise, rewards
People as expenses
Strategic role
Proactive
Key part of organisational mission
Service focus
Process-based organisation
Cross-functional teams, teamwork
most important
People as key investments/assets
Shifts in HR Management in India
Excel Books1– 15
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
“Case Study”“Case Study”
Excel Books1– 16
Copyright © 2010, VSP Rao
CH-1 The Strategic Role of Human Resource Management
Human resource Management (3rd Edition) V S P Rao
“Southwest Airlines:
Wall Street’s Cinderella Story”
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