STRATEGIC HRM

STRATEGIC HRM

Strategic Management is defined as ‘ the set of managerial decisions and actions that determine the long-term performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control. The study of strategic management, therefore, emphasizes monitoring and evaluating environmental opportunities and threats in the light of a corporation’s strengths and weaknesses.’

The strategic management process involves the following four processes:

The advent of HRM has brought the linkage between employer-employee relationship and strategic management to sharp focus.

Since Environmental Scanning helps identify threats and opportunities prevailing in the external and internal environment, HRM is of great help in locating opportunities and threats.

HRM is in a unique position to supply competitive intelligence that may be useful in Strategy Formulation. Details regarding advanced incentive plans being used by competitors, opinion-survey data from employees that elicit information about customer complaints and information about pending legislation like labour laws or mandatory health insurance are some examples. The strengths and weaknesses of a company’s human resources can have a determining effect on the viability of a company’s strategic options. Unique HR capabilities serve as a driving force in strategy formulation. A company may build its new strategy around a competitive, advantage stemming from it’s human resource. The well known accounting and consultancy firm, Arthur Anderson, developed unique HR capabilities in training, which provides the firm with a competitive advantage enabling it to provide fast and uniform in-house training.

HRM supplies a company with a competent and willing workforce which is responsible for executing strategies i.e Strategy Implementation. For example Maruti Udyog and Hindustan Motors are manufacturing cars, essentially using identical technology. The secret behind the meteoric rise of Maruti is its workforce.

HRM supports strategy implementation in other ways too. For example human resource today is heavily involved in the execution of a company’s restructuring and downsizing strategies, through outplacing employees, instituting performance linked pay plans, reducing health care costs and retraining employees. And in an increasingly competitive global market place, instituting HR practices that build employee commitment can help improve an organization’s responsiveness.

Lastly Human Resource Management must be continuously evaluated to make strategic management highly effective by supplying human resources who are competent and committed. Thus Strategic Human resource Management today is given due importance and offers several financial and non-financial benefits to a company.