Shahzad Ahmed

ID: 9395

Contents
Contents..................................................................................................................... 1 Introduction:...........................................................................................................................................4 1. Importance of strategic human resource management:-.......................................................................4 2. Evaluation and implementation of human resource model on Air National Airlines:..........................6 2.1 Fombrun, Tichy & Devanna Model:..................................................................................................6 2.1.1 The reward system:........................................................................................................................8 2.1.2 Training & development:...............................................................................................................8 2.1.3 Selection:......................................................................................................................................8 2.1.4 Appraisal:......................................................................................................................................8 2.1.5 Performance:..................................................................................................................................8 2.2 Harvard Model:.................................................................................................................................9 2.2.1 Stakeholder Interest:......................................................................................................................9 2.2.2 Situational factors:.........................................................................................................................9 2.2.3 Human Resource Management Policy Choice:..............................................................................9 2.2.4 Human Resource Outcomes:........................................................................................................10 2.2.5 Long-term Consequences:...........................................................................................................10 3. Factors influencing AN airline:.........................................................................................................12 3.1 Internal factors:................................................................................................................................12 3.1.1 AN objective:...............................................................................................................................12 Strategic Human Resource Management 1

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3.1.2 Financial Position:.......................................................................................................................12 3.1.3 Reward system:............................................................................................................................13 3.2 External Factors:..............................................................................................................................13 3.2.1 Political:.......................................................................................................................................13 3.2.2 Economical:.................................................................................................................................14 3.2.3 Technological:.............................................................................................................................14 4. Development of Human Resource Plan to achieve its HR Objective.................................................15 4.1.1 Design The Management System:...............................................................................................15 4.1.2 Environmental Scanning:.............................................................................................................16 4.1.3 Demand forecasting:....................................................................................................................16 4.1.4 Analyzing Supply:.......................................................................................................................17 4.1.5 Reconciliation and Planning:.......................................................................................................17 5. ANs HR strategy and Recommendation:..........................................................................................18 5.1 Hard strategy:..................................................................................................................................18 5.1.1 Organizational design and Structure:...........................................................................................18 5.1.2 Organizational development:.......................................................................................................18 5.1.3 Resource planning:......................................................................................................................18 5.2 Soft Strategy:...................................................................................................................................19 5.2.1 Rewards and recognitions:...........................................................................................................19 5.2.2 Employee relations:.....................................................................................................................19 Strategic Human Resource Management 2

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5.2.3 Employee training and development:...........................................................................................19 Recommendation:..................................................................................................................................20 References:............................................................................................................................................21 Bibliography:.........................................................................................................................................22 Grafton, L. (1999). Strategic human resource management: corporate rhetoric and human reality. New York: Oxford University Press...................................................22

Strategic Human Resource Management

Shahzad Ahmed

ID: 9395

To: From: Subject: Date:

The Human Resource Director The Human Resource Manager Strategic Human Resource Management 11th April 2011

Introduction:
This report covers the following issues for strategic human resource management. a. Importance of strategic human resource management. b. Evaluation and application of human resource models in Air National (AN) airlines. c. Factors influencing Air National (AN) airlines.
d. Development of human resource plan for Air National airlines to achieve its HR objectives.

e. Review of Air National airlines strategy and recommendation.

1.

Importance of strategic human resource management:Before discussing the importance of SHRM lets just talk about the concept of human

resource management and strategic human resource management. The human resource management is concerned with the dimension of the employees in the organization. HRM is a function that helps managers to recruit, select, train and develop employees in the organization (Armstrong, 2006). Human resource deals with the issues that are related with the employees of the organization like compensation, personal management, organizational development, employee benefits and motivation and etc. The first and the most important goal of HR is to get the maximum use of the
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ability of employees of the organization that lead achievement of the main goal of the organization. It also make sure that the every employees is satisfied with the working environment, compensation and the benefits provided by the organization that he or she is getting. Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that promote innovation, flexibility and competitive advantage. In an organization SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding and personnel (Fombrun, Tichy, and Devanna, 1984). Strategic human resource management is very important for AN and its performance here the word strategic related with the long term objectives of the AN. It focuses on programs of the human resource management which are long term objectives. Rather than focusing on the internal issues of human resource the focus should be on finding and solving the problems that can affect employee management related programs in long. So the main goal and objective of strategic human resource management is to increase employees productivity by focusing on business problems that take place outside that take place outside of human resource. AN is providing training and development of its employees which helps employees to perform better and become competitive. So after getting training the performance of employees is increased and the productivity of work as well. The HR department of AN should find the what kind of problems employees are facing in the working environment and solve those problems quickly and provide a competitive environment to its employees. Strategic human resource management helps to improve the performance of AN and provide an environment for employees to be innovative and flexible. The main action of strategic human resource management is to identify the main HR areas where the strategies can be executed for the long term to improve overall motivation of employee and productivity as well. Strategic human resource management helps to find out the weaknesses and strengths of the AN. It develops and maintains the competition between employees of AN. It also helps to keep a check
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on the expectations of employees that either they are addresses properly or not. In above two paragraphs the comprehensive detail of importance of strategic human resource management was discussed. The employees of AN airlines are getting paid by profit-related pay system which increases the motivation of employees and helps AN to improve the employee motivation and their performance for long term.

2.

Evaluation and implementation of human resource model on Air National Airlines:

There are number of models can be use to explain the concept of the human resource

management and we can apply those models on the organizations. Following are the list of some models: a. Fombrun, Tichy & Devanna model. b. The Harvard model.
c. The Guest model.

d. The Warwick model.

e. The Storey model.

But here we will use only two of them for our discussion in which we will explain and evaluate and then apply those two models on Air National airlines.

2.1 Fombrun, Tichy & Devanna Model:

This is one of the earliest models in human resource management. According to Fombrun et al (1984) this model emphasizes on the interrelatedness and consistency of HRM activities. This models tell is that how can we get maximum performance from employees to achieve the main objective and goal of organization.

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Human Resource Management

Selection

Appraisal

Performance
Rewards

Figure 1: Fombrun Tichy and Devanna model (Fombrun et al, 1984)

Basically it focuses on four main key activities which are selection, appraisal and rewards. These four key activities use to increase the overall performance of the organization. These four activities directly related with the employees of the organization so it means that this model only focuses on the employees of the organization the weakness of this model is that it ignores the expectation of some stakeholders the factors according to situations and the idea of strategic choice. But the main strength of this model is that it states the logic and importance and practice of internal HR policies and external business strategies. We can say that this model helps us to improve the performance of the employees of the organization and their productivity as well by giving them proper training and development and by giving them rewards after their performance appraisal. If the employees who works hard and giving better performance should get good reward because it will motivate them and they will perform more better but if not the performance can be less by and the main objective and goals of the organization can effect so you have to make sure that everything is going according to plan. If we apply this model on Air National Airlines then we can define following points:
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2.1.1

The reward system: From the case study of Air National Airlines we can see that AN introduced the profit

related salary system to its employees with the full help and support of unions. 2.1.2 Training & development: The ANs senior management held different off job trainings to train its employees by leading business academies to make more skilled employees and to motivate them and assure them about their job security. 2.1.3 Selection: Even if they didnt hire any more employees because at that time their objective was cost reduction so they started downsizing in AN they fired 37% of employees. AN took right decision at that time that who should leave and who should stay in organization in order to improve the present position. 2.1.4 Appraisal: Because at that time they were doing a lot of activities in the organization so there was no proper appraisal system to keep a check on employees that either they are performing well or not. 2.1.5 Performance: After introducing reward system and training program and good selection of employees the performance of employees was improving the organization started improving the profit percentage of ANs started increasing in first quarter of 1997. Then ANs aircraft were flying to 164 places in 75 countries from 16 airports of United Kingdom and it became largest international air traveler in the world

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2.2 Harvard Model:

2.2.1

Stakeholder Interest: Include shareholders, management, employee group, government, community.

2.2.2

Situational factors: Include characteristics of workforce condition of business and strategies, philosophy of

management, labor market, unions, task technology, and laws and social values. 2.2.3 Human Resource Management Policy Choice: Influence of employees, law for human resource, inflow of HR, reward system and work system.
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2.2.4

Human Resource Outcomes: Commitment, competence, congruence, cost-effectiveness

2.2.5

Long-term Consequences: Individual well-being, organizational effectiveness and societal well-being.

If we talk about management in stakeholders interest then we can say that for example the mangers want high incentives and authority and the HR department have to make some policies regarding reward system then the outcomes of HR policies will be positive and the level of commitment of the mangers with the organization will be high and the satisfaction level as well which will effect overall organizational effectiveness and the performance of the overall organization will increase and the effectiveness of the organization as well. In situational factors we can talk about the Unions they can ask for the better reward system for all employees to deal with this situation the HR department have to make some policies regarding attractive reward system for all employees which will give positive human resource outcome because competency between employees will increases so the performance of employees will automatically improve and in long term the organizational effectives will automatically high.

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The management of AN airline was totally reorganized at the corporate level to focus on the operational issues at corporate level. The new brand names and uniforms were introduced by the management. The new business and HRM strategies were introduced. They introduced training and development programs and seminars with the help of unions AN train its employees in the best business school academies on the importance of motivation, trust and visionary leadership. A profit-related pay system was introduced in AN for employees with the support of union. AN downsize its employees and give training to its employees for multitasking and all the conflicts were resolved very quickly. Which increase overall performance of employees and the profit was increased in first quarter of 1997 the companys aircraft were flying to 164 destinations in 75 countries from 16 UK airports. AN became the largest international air passenger carrier in the world. In the end of day overall effectiveness and performance of AN was increased. If we summaries this in one or two lines then we can say the most suitable model for the company AN airlines is Harvard model because it is covering all aspects and situations of AN airlines.

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3.

Factors influencing AN airline:

Their number of internal and external factors can affect AN objective and its HR

planning. 3.1 Internal factors: Following are the issues that can affect inside AN:
a. AN objective. b. Financial position.

c. Reward system. 3.1.1 AN objective: As every organization ANs main objective can be the profit making it can only happens if the employees like pilots, crew members, engineers, technicians and etc. are highly skilled and highly experienced and if AN recruit more employees then the selected employees should have enough knowledge and AN should give them training to make them highly skilled and increase their performance. When the employee will get proper training will perform better then overall performance of the AN will increase and they can make maximum profit for the organization. That will lead them towards the objective that AN already have decided.

3.1.2

Financial Position: This is another of the important factor that can affect AN internally. Like AN should have

sufficient fund to recruit new people. AN must need finance for research and development and buying new technology. But if AN dont have sufficient fund for all these then AN cannot recruit and invest in new technology and research and development. In result of insufficient fund AN will not be able to achieve its overall objective and the growth level of AN will automatically decrease.
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3.1.3

Reward system: AN should introduce proper reward system in term of promotion and increment in salary

and give those employees extra bonus who work overtime, and other benefits. All these activities will motivate the employees of AN and the positive competition will occur between employees and all the employees will highly motivate which will increase the overall performance of AN. It will take AN to its overall objectives accomplished and help to grow more fast.

3.2

External Factors: There are number of external factors can directly or indirectly affect ANs objective and

its HR plans. Following are the list of external factors effecting ANs objective: a. Political b. Economical c. Social d. Technological e. Legal f. Environmental But in this report we will discuss only three of them 3.2.1 Political: For every company this is one of the most important factors that can affect whole company, its profit and its employees as well. In 1986 AN was privatized by Britain conservative government. Due to this political influence a lot of big changes were done like restructuring and downsizing of employees and the assets. AN needed to make new business strategy and HRM strategies.

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3.2.2

Economical: Economical factors are related with employment and unemployment, inflation deflation,

interest rates. In 1990 the whole airline industry suffered from world economic recession. As we know that United Kingdom is in big recession nowadays more then 2.5 millions people dont are unemployed and they are willing to work on minimum wages. So in future if AN need to recruit more employees then they can hire skilled employees on the minimum wages rate. 3.2.3 Technological: Nowadays technology is growing very fast and rapidly changing. So company like AN air line this is very important factor. Like nowadays people can book their tickets on internet so An dont need to hire more people in ticketing department they can enable this option for customers to but tickets for them on internet.

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4.

Development of Human Resource Plan to achieve its HR Objective.

In this report we will develop a HR plan which will identify Air Nationals Human

Resource objectives and the strategies to achieve its strategic HR objectives. Basically HR is use to make sure that the enough number of employees are recruited having right skills regarding their jobs to meet the present and the future actions or activities of Human Resource. So it is stated that all the planning regarding HR is concerned with following activities: 1. Identify and attain that number of employees of the organization who have enough knowledge and highly skilled in their jobs. 2. Motivate all the staff to get or achieve high performance. 3. Keep all HR activities up to date to achieve the overall business objectives like good performance, maximum profit, and outstanding customer services.

4.1

Steps of HR planning process:

(Mathis & Jackson, 2008) defines the steps in HR plan which are following:
1. Design The Management System.

2. Environmental Scanning.
3. Forecast Human Resource Demand. 4. Analyzing Supply.

5. Reconciliation and Planning. Now we will discuss all of these five steps briefly

4.1.1 Design The Management System:

The main concern of HR planning in AN should be to ensure that a suitable method or system is used to handle all process. The main objective for AN is that they have to manage all employees or human resource is aligned according to ANs main objective. The method or system is responsible for all HR plans, policies and procedures and their best practice. But if the
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system doesnt work properly then AN can face difficulties regarding Human Resource like dissatisfaction, employee turnover, poor performance and etc.

4.1.2 Environmental Scanning:

This is the first step of HR plan is to understand the effect of internal and external issues on HR objectives of AN. In this step of Hr plan is to make an evaluation of the environmental factors which can impact on requirement of employees of AN in future. We can evaluate by using PESTLE factors and how they effect on ANs employees behavior. Here we will discuss one factor that is political factor. 4.1.2.1 Political factor: In political factor we can say that it can directly affect AN because of government instability and the taxes and interests imposed by the government will change with the change in government so if the taxes and interest will be high then HR department of AN have to do downsizing in AN to reduce the cost and expenses which can cause the less growth of AN. But if the taxes and interest then AN can spend that money on the training and development of employees to increase the performance of employees which can help to grow more faster.

4.1.3 Demand forecasting:

Forecast the demand to decide the number and the type of employees needed in future. In forecasting demand we should consider the past and the present requirements and the future objectives and directions of the AN. If AN forecast demand considering past and present requirements and the ANs objectives then they can forecast that what is the exact number of employees with required skills they can hire in the future.

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4.1.4 Analyzing Supply:

AN can recruit employees from internal and external sources by using skill inventory methods. Basically skill inventory is manual and computerized system in which AN can keep all the data of employees regarding their skills, knowledge, experience and their education in related fields. Forecasting supply of employees is expected to join AN from the external sources.

4.1.5 Reconciliation and Planning:

This is the final step of HR plan for AN and to develop the plan based on the collected data, its analysis and other alternatives. The main issue is that the HR plan of AN should be acceptable for all level of management. AN should give priority to the HR plan and all the difficulties in success should be identified. Some of the HR plans for AN can be maximum utilization of employees, appraisal system and training and development of employees.

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5.

ANs HR strategy and Recommendation:

(Wilson, 1999) define Hard and Soft strategies areas which that are related with Human

Resource structure and methods are known as Hard human Resource and the areas which are concerned with employees are known soft Human Resource. There are some Hard strategies and Soft strategies.

5.1 Hard strategy:

Hard strategies include following: 5.1.1 Organizational design and Structure: (Senior & Fleming. 2002) define organizational structure as it is established pattern of relationships between the component parts or an organization. Outline communication and control. 5.1.2 Organizational development: Organizational Development is a set of concepts and techniques overall organizational and employee effectiveness. 5.1.3 Resource planning: Basically it is a process in which organization to make sure that it has right number and right skills of people at the right place at the right place, capable of effectively and efficiency completing those tasks that can help the organization to achieve its overall objectives. (Andrew. 1988) If we take an example of AN in Hard strategies then we can say that CEO Clive Warren restructure AN. The corporate level were divided into groups on five major markets group one was responsible for North America, group 2 was responsible for Pacific, group 3 was responsible for India, group 4 was responsible for Europe and group 5 was responsible for Domestic.

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They make groups and teams of employees to work and to complete their tasks. AN reduced its employees up to 35000 to save the labor cost and employees were trained to do multi tasking.

5.2 Soft Strategy:

Soft Strategies Include following: 5.2.1 Rewards and recognitions: Rewards can be defined as all the tangible and intangible benefits given to employees are known as rewards. Like increment in salary, bonuses, and etc. 5.2.2 Employee relations: Employee Relations involves the body of work concerned with maintaining employeremployee relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, Employee Relations is concerned with preventing and resolving problems involving individuals who arise out of or affect work situations. (Heery & Noon, 2001) 5.2.3 Employee training and development: It is very important for employee and for organization as well because training and development increase employees communication and increase the performance of employees which directly related with overall organizations performance.

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Recommendation:
We can say that AN did a lot for its employees. All the conflicts were resolved quickly and AN give employee job security, and all the employees were getting good salaries and bonuses. AN introduced profit-related salary system with full support of unions. The senior management of AN introduced major training programs designed ad delivered by leading business school academies. (Colling. 1995). Now AN is on the stage of growing they are near to expending their business and we see that UK is nowadays in big recession more than 2.5 million people are unemployed so AN should make future HR plan according to the situation they can hire high skilled and educated people for AN on the minimum wage rate it will reduce their cost. AN should give training to its employees with time by time to learn new technologies and methods which will increase their motivational level and will improve their performance. At present technology is getting advance very fast so AN should invest its money on research and development to upgrade its technology like online ticketing. AN should upgrade its aircrafts with latest upgraded technology to attract more customers. In the end it will increase its profit and give AN a competitive edge in the aircraft industry. AN should create an environment for employees where they can get a lot of opportunities to perform better means a learning organization. AN should increase the number of destinations in different countries that will help them in ANs growth. The structure of AN should be more decentralized. AN should involve its employees in decision making be getting their views and opinions regarding decisions. AN should introduce some promotional packages to its regular customers time by time and they should get feedback from the customers to know their satisfaction level. One important thing that AN should adopt is that AN must do performance appraisal system periodically.

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References:
Andrew, Y (1988). The Personnel Function. Pretoria: Kegiso Tertiary Armstrong, M (2006). A Handbook of Human Resource Management Practice (10th Ed). London: Kogan Page. Boxall, P (1992). Strategic Human Resource Management: Beginnings of a New Theoretical Sophistication? Human Resource Management Journal, Vol.2 No.3 Spring. Colling, T (1995). Experiencing turbulence: Competition Strategic Choice and the Management of human Resource in Brithish Air Ways. Human Resource Management Fombrun, C.J., Tichy, N, M, and Devanna, M.A (1984). Strategic Human Resource Management. New York: Wiley. Heery, E. & Noon, M. (2001). A dictionary of human relations. Oxford: Oxford University Press J. Broten & J. Gold (1999). Human Resource management: Theory and Practice (2nd Ed). New Jersey: Lawrence Erlbaum Associates Inc. Mathis, L. R, & Jackson, H. J. (2008). Human Resouce Management. USA: Library of Congress. Porter, M.E (2004). Competitive advantage: Creating and sustaining superior performance. USA: Free press Senior, J. & Fleming. (2002). Organizational Change (3rd Ed). Harlow: Pearson Education Ltd Willson, J (1999). Human Resource Development: Learning and Training for Individual & organization (2nd edition). London: Kogan Page Limited

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Bibliography: Bandt, A., & Haines, S. (2004). Successful Strategic Human Resource Planning. Australia: Systems Thinking Press Burnes, B. (2002). Managing Change: A Strategic Approach to Organizational Dynamics. london: Prentise Hall . Claydon, T., & Breadwell, J. (2007). Human Resource Management: Contemporary Approach 5th Ed. Harlow: FT prentice Hall Grafton, L. (1999). Strategic human resource management: corporate rhetoric and human reality. New York: Oxford University Press Kandula, S.R (2004). Human Resource Management in Practice: With 300 Models, Techniques and Tools. New Delhi: Prentice-Hall of India Kitamura, R (1996). Demand Forecasting. Kyoto University: Japan Richard, L. D., & jonathen, M. (2007). Organizational Theory and Design. Hampshire: British Library. Scholes, G. J. (2002). Exploring corporate Strategy. harlow: Pearson Education Limited. Snell, S., & Bohlander, G. (2009). Managing Human Resource. USA: Cengage Learning http://adg.stanford.edu/aa241/intro/airlineindustry.html

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