Introduction to HRM, Strategy and SHRM

Objective
To understand the genesis of SHRM- Theory To understand the linkage between Business Strategy and HR Strategy through experiential exercise- Practice To understand the application of SHRM through the analysis of the HR practices at Infosys- Case analysis using The Harvard Model of Human Resource Management

Significance of Strategic Management of Human Resources

Ritz Carlton, a service company that has successfully leveraged the potential of its human resources to achieve excellence . Only hotel (as of 2007) to have won the Malcolm Baldridge National Quality Award twice Ritz-Carlton was ranked 1st in the Training top 125 Winners list in 2007 (Training Magazine)

Evolution of SHRM
The HR function has evolved over time A look beyond the industrial revolution The practice of dealing with Human Resources can be traced to different civilizations and their philosophies across the world

 Valmiki, in Ramayana , observed that people who carried out difficult and important tasks must be given due respect, and no compulsion was required for such people to perform well. It was implied that good performers were required to have freedom of action and recognition. Thiruvalluvar, a Tamil scholar who lived about 2000 years ago, emphasized the need for careful selection of employees. He authored one of the great classics in world literature - the Tirukkural in which he wrote: "All beings are equal in birth. But work decides their varied worth." "The greatness of an individual depends on his ability to perform rare deeds, not in their caste"

Ancient Indian Philosophy - High Performance focus

Work Specialization In the Vanashrams which existed in ancient India during the Vedic and Puranic periods, some sort of division of labour existed (Michael,1995). Kautilya had observed that there existed a sound base for systematic personnel management as early as the fourth century BC. He told about job-description, job-qualifications, selection procedure, executive development, incentive system (carrot and stick approach), performance evaluation and so on (Sharma,1977).

Ancient Arab Philosophy

Characteristics The policy is formulated in the light of the Quran and the Hadith. Every task is performed on the basis of being just and legal. It is never submissive to any undue influence, pressure and fear. Owner-labour are brothers and no-class discrimination exists. Labour exploitation is illegal. No worker can be employed in "sin" work. Labour is not considered an exchangeable product, but "the best creation"

Nature of work: No one should be charged beyond his capacity . Overtime work: If you assign on them the responsibility of doing more work, then help them by giving additional wages in that ratio. Pay contract: Do not employ a worker without determining his Wage. Payment of Pay: Pay the worker before his sweat dries up. Participative decision-making: Consult with others before Deciding.

Labour-management relations: Exhibit good behaviour with the Subordinates and do not give them any pain. Do you know that like you they have also a heart: they will be sorry if you give them pain and they will be happy if you give them pleasure? What happened to you that you do not show sincerity to them? Responsibility of labour: Allah likes that, the worker when he performs his duty, performs in a better way.

Contemporary HRM

The Concept of HRM

First emerged in mid-1980s HRM replaced the term personnel management

Contemporary Western Origin of HRM Concept

McGregor (1960)used the terms hard and soft to characterize forms of management control Theory X and Theory Y Full concept of HRM emerged in mid 1980s against background of popularist , schools of excellence writers on management who emphasized the need for strong cultures and commitments -Peters and Waterman (1982)

Development of the HRM Concept

(Founding fathers)
Boxall (1992) christened 2 initial concepts of HRM as: 1. The Matching Model of HRM Michigan School (Fombrun et al,1984) 2. The Harvard Framework Harvard School (Beer et al)

The Matching Model of HRM

One of the first explicit statement of the HRM concept was made by the Michigan School (Fombrum et al, 1984) They held that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name matching model).

The Human Resource Cycle

(Adapted From Fombrun Et Al, 1984)

The HR Cycle consists of four generic processes or functions that are performed by all organisations

The Harvard framework

The other founding fathers of HRM were the Harvard school of Beer et al (1984) who developed what Boxall (1992) calls the Harvard framework.

 Beer et al argue that when general managers determine the appropriate human resource policies and practices for their organizations, they require some method of assessing the appropriateness or effectiveness of those policies.
Beer et al devised the famous Harvard Map (sometimes referred to as the Harvard model) of HRM. This map is based on an analytical approach and provides a broad causal depiction of the 'determinants and consequences of HRM policies.' It shows human resource policies to be influenced by two significant considerations:

The Harvard Model of Human Resource Management

Competence

 Situational factors in the outside business environment or within the firm such as laws and societal values, labor market conditions, unions, work-force characteristics, business strategies, management philosophy, and task technology. According to Beer et al these factors may constrain the formation of HRM policies but (to varying degrees) they may also be influenced by human resource policies. Stakeholder interests, including those of shareholders, management employees, unions, community, and government. Beer et al argue that human resource policies SHOULD be influenced by ALL stakeholders. If not, 'the enterprise will fail to meet the needs of these stakeholders in the long run and it will fail as an institution.'

Differences between Personnel Management (PM) and Human Resources Management (HRM)

1. Personnel mean employed persons of an organization. Management of these people is personnel management (PM). Human resource management (HRM) is the management of employees knowledge, aptitudes, abilities, talents, creative abilities and skills/competencies.
2. PM is traditional, routine, maintenance-oriented, administrative function whereas HRM is continuous, on-going development function aimed at improving human processes. 3. PM is an independent function with independent subfunctions. HRM follows the systems thinking approach. It is not considered in isolation from the larger organization and must take into account the linkages and interfaces.

4. PM is treated like a less important auxiliary function whereas HRM is considered a strategic management function. 5. PM is reactive, responding to demands as and when they arise. HRM is proactive, anticipating, planning and advancing continuously. 6. PM is the exclusive responsibility of the personnel department. HRM is a concern for all managers in the organization and aims at developing the capabilities of all line managers to carry out the human resource related functions.

7. The scope of PM is relatively narrow with a focus on administering people. The scope of HRM views the organization as a whole and lays emphasis on building a dynamic culture.
8. PM is primarily concerned with recruitment, selection and administration of manpower. HRM takes efforts to satisfy the human needs of the people at work that helps to motivate people to make their best contribution. 9. Important motivators in PM are compensation, rewards, job simplification and so on. HRM considers work groups, challenges and creativity on the job as motivators. 10. In PM improved satisfaction is considered to be the cause for improved performance but in HRM it is the other way round (performance is the cause and satisfaction is the result). 11. In PM, employee is treated as an economic unit as his services are exchanged for wages/salary. Employee in HRM is treated not only as economic unit but also a social and psychological entity.

12. PM treats employee as a commodity or a tool or like equipment that can be bought and used. Employee is treated as a resource and as a human being. 13. In PM employees are considered as cost centers and therefore, management controls the cost of labor. HRM treats employees as profit centers and therefore, the management invests in this capital through their development and better future utility.

14. PMs angle is that employees should be used mostly for organizational benefits and profits. HRM angle emphasizes on the mutual benefits, both of employees and their families and also the company. 15. PM preserves information and maintains its secrecy. In HRM communication is one of its main tasks which take into account vertical, lateral and feedback type communication.

The Concept of SHRM

SHRM defined The pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals (Wright and McMahan, 1992) All those activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of the business (Schuler, 1992)

Origins of the concept

The concept was first formulated by Fombrun et al (1984). Stated that: A. Three elements necessary for effectiveness of firms 1. Mission and Strategy 2. Organization Structure 3. Human Resource Management B. HR Systems and Organizational Structures should be managed in a way that is congruent with organizational strategy

Aims of Strategic HRM

To generate strategic capability by ensuring that the organisation has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage Competitive advantage is the essence of competitive strategy