Strategic Human Resource Management

Assignment

Submitted To:
Mr V. P. Kakkar

Submitted By:
Varun Gupta SEC D A1802010055

Question No.1: Why is a competitive advantage based on heavy investment in Human Resources more sustainable than investment in other type of assets?

Answer: In todays fast-paced economy competition is an issue of services and products. Much attention has been directed to a better service and the best product and how this can be achieved through utilizing the human resources. Human resource management (HRM) refers to the policies, practices, and systems that influence employees behavior, attitudes, and performance. Many companies refer to HRM as involving people practices. When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors, then we can say the firm has a Competitive advantage. And when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy, then we can say the firm has a sustained competitive advantage. Traditional sources of competitive advantage, such as production capacities, research laboratories, access to financial resources, distribution channels or economies of scale, are necessary but not sufficient for success in today's business world. It is commonly acknowledged "people are the key assets in the new world market and that all other assets are nothing more than commodities that can be purchased at market prices, because only the human asset has potential to learn, grow, and contribute". As "we do live in a world in which knowledge, rather than physical capital, is increasingly important, we need smart people who can do great things--increase productivity, build new products and services--and do so even more quickly". Researchers emphasizes the role of employees for achieving enterprise goals, employees are the most important enterprise asset and human capital represents the only sustainable source of competitive advantage. In other words, "the biggest, most valuable asset any company has is its people, because all management plans for success enhancement are carried out, or fail to be carried out, by people". Consequently, human resource management (HRM) deals with recruiting, developing, and keeping the best people. It now has the opportunity to move out of the background and into the mainstream organizational strategy and management. In a world where "all work is knowledge work and intellectual capital is crucial for economic success, it is logical that the ability to attract, retain, and use the talents of people provides a competitive edge". So, a company should invest more towards Human Resource Management to increase their productivity.

So, in this way competitive advantage based on heavy investment in Human Resources more sustainable than investment in other type of assets.

Question 2: Do pressure of cost containment work against effective management of people?

Answer: Many companies are feeling the pinch of competition. Rather than the cost cutting, cost containment is the norm. To remain competitive it is not feasible to raise prices, so they are looking to their employees to produce more. W.R. Grace has 3400 employees nationwide and has been using productivity initiatives to help them stay ahead of inflation. One successful change was the Rapid Close Project which took the reconciliation process in the firm's 50 person accounting department from eight days each month to three days. They saved a total of 3500 people days. Another initiative, called the Invoice Accuracy Project, reduced the error rate in invoices by analyzing time and money spent correcting errors. Regardless of the technique, corporations are boosting productivity by expecting their workers to do more. It seems to be working - productivity among American workers is growing at a pace not seen since the Korean War era. However, the push for productivity is backfiring in some instances. Sears, Roebuck and Co. sought to boost the number of visits by repair workers each morning. The result was that employees were asked to start their day from home via a hand held computer. Rather than loading the parts from a company loading dock, Sears sent the parts to the home of the employee and required them to load the trucks on their own time. A class-action suit was filed in 2001 seeking unpaid overtime to the retailer's repair-product employees. The suit alleges that Sear's benefited from the productivity gains by asking workers to perform duties off the clock. Small businesses have more success pushing workers to work more hours during lean times than large companies, but only for a short time. Otherwise employees will experience burnout. Other companies have had similar successes using different productivity methods. Those who shared the wealth of their corporate successes, and listened and implemented employees' suggestions for productive change, are reaping the results. Along with better productivity numbers they have employees who feel appreciated and motivated.

Pushing employees during hard times may be a method of survival. The message is to treat employees with respect, acknowledge their sacrifice and to reward them.

Question 3: Discuss strategic role of HRM in today's competitive environment?

Answer: Having a well-defined corporate culture is important as globalization transforms the way business is conducted. A well-defined corporate culture can create an atmosphere for success. Today's Human Resource departments have taken on a strategic role as a change agent and a business partner in the company. Human Resource strategies can be powerful tools for signaling cultural change and reinforcing those changes once they are made. Strategic Human Resource Management helps the organization see promising and positive results by operating on a global level. One of the hottest buzzwords coming into the millennium has been "globalization." Today, globalization is transforming the way business is conducted by dictating that operating within a personal vacuum will no longer be possible. Thus, the corporate world has found itself catapulted into the global arena due to the emergence of the Internet and other forms of communication, and an increase in the numbers of international mergers and acquisitions. Any business that wants to succeed in this rapidly changing, highly competitive environment must be able to adapt, evolve, and operate on a global scale. Success on a global level now goes beyond dollars and cents. With competition so fierce, the race is now on to place human capital at the very center of a sustainable competitive advantage. In addition to looking toward its people, companies should examine their unique characteristics-anything to separate them from the competition. Looking to organizational culture as a competitive advantage is not a new idea. It is now more important than ever because of the narrow margin between companies globally. Human Resource Management is the process of acquiring, training, appraising, and compensating employees and attending to their labor relations, health and safety, and fairness concerns. Strategic human resource management is linking HRM with strategic goals and objectives to improve business performance and develop organizational cultures fostering innovation and flexibility. Ideally HR & top management work together to formulate the company's overall business strategy; that strategy then provides the framework within which HR activities such as recruiting & appraising must be crafted. If it is done successfully, it should result out in the employee competencies & behavior that in turn should help the business implement its strategies & realize its goals. According to an expert "the human resources management system must be tailored to the demands of business strategy".

In order to be successful the employees should be developed in such a manner that they can be the competitive advantage, & for this the human resource management must be an equal partner in both the formulation & the implementation of the corporate & competitive strategies.