The literature on the development of traditional human resource management for the past thirty years and more has been on the emphasis for a complete shift from traditional human resource management to strategic human resource management. The Rationale of Strategic SHRM! The arguments fit into a widely accepted reason for accepting strategic human resource management as a way forward for corporate excellence. The main contributions come from debates developed during the molding of British and American models of human resource management. Also learned, How to Sharing HRM Functions? The Rationale of Strategic Human Resource Management (SHRM)!
Therefore, according to these debates, the rationale for SHRM is summarised as follows:
Business strategy is a plan that indicates the direction of the organization. It brings the organizational vision, mission, policies, goals, and objectives together. It can be at the level of the organization, department or business unit. It is developed based on the knowledge of the organizational environment including strengths, weaknesses, opportunities, and threats. Since the organization will have different strategies including, technological, capital, energy, marketing, finance etc, human resource strategy is one among many strategies but is more important than others because of its human nature.
Any business strategy will have human resource implications which include number, qualifications, working hours, training, pay, conditions of work etc. If, for example, one of the business strategies is to change the line of business after 5 years, then the necessary changes have to be planned as part of human resource strategies including training, layoffs in time, sub-contracting some jobs etc. as the need arises.
Securing the commitment of employees requires the building of trust on the part of the management. Employees have to be assured of their future in the organization through some kind of documentation. Human resource strategy is one such useful document; it gives a rough picture of how the management values employees and the reasons as to why employees should be committed to the future of the organization.
A competitive edge is generated from the quality and number of staff the organization has. Quality is measured in terms of the level of competence while the staff numbers depend on the required employee – job ratio and the number of working hours. Human resource strategy is a tool used for assisting the organisational process of gaining a competitive edge by recruiting the best people, using the best labour in the most effective way and putting the incentives in place that can retain the best people and develop them so that they, through their knowledge, stand at the forefront of management and labour utilisation.
Under SHRM, the director of human resources represents employees as a partner in the business. Employees are partners in business in the sense that they have a stake in the organization that requires the full cooperation of all parties so that, organizational objectives, team objectives as well as individual objectives are realized. An SHRM document is useful in identifying the role of each partner in strategic business performance. Millmore et al. (2007) have dealt in detail with the roles of human resource strategy and which are well summarised by Bhatia (2007).
These include shaping the mindset of the management and staff, facilitating the process of decision-making and action to be taken, working on human resource implications of specific strategic decisions and establishing strategies for cost reduction, defining opportunities for better capacity utilization, and creating future managers by nurturing talent.
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