Even similar organizations often pursue different goals; a thorough organizational analysis of the organization’s overall mission and goals is a second integral aspect of identifying human resource strategies. All organizations exist to accomplish something in their larger environments. The mission — the purpose of an organization’s existence — should guide its strategic thinking.
For example, two similar electronics manufacturers may have varying missions. One may want to “be a successful organization in the entertainment business,” while the other may define its mission as “occupying a technological leadership position in the industry.” The associated strategies are likely to show significant differences. Apart from manufacturing electronic goods used for home entertainment, the former firm may acquire video and film production firms and get into the music industry (e.g., producing music DVD’s); while the second firm may be more committed to innovative electronic products through research and development. The associated human resource strategies will also show variation. For example, excellence in customer service may be a guiding principle in the former firm’s employment strategies; hiring high-caliber technical personnel who can come out with innovative products may be a top priority of the second organization.
Organization and human resource strategies are intricately intertwined. Although many believe that HR strategy must be formulated on the basis of organizational strategy, more recently, many managers increasingly recognize that organizational strategy should take into account the firm’s HR strategy and constraints. Each organization has a unique set of skills and capabilities. Organizational core competencies are skills or capabilities in value—creating activities-such as manufacturing, marketing or research and development— that allow an organization to achieve superior quality, product innovation, low cost or better customer responsiveness, thus outperforming its competitors. Core competencies permit an organization to enter new market segments faster than its rivals through strategies that capitalize on those strengths. Gillette applied its marketing competence in selling razor blades to selling other products such as toiletries. HR strategies should recognize and respond to these core competencies. Any given organization tends to have a dominant HR strategy or HR system architecture; however, it is not uncommon to find the same organization adopting somewhat different employment practices for different employee groups or for different regions. In choosing its dominant HR strategy, an organization has four typical choices: commitment, paternalistic, compliance and collaborative. Every organization is unique. Similarities between two organizations can be found among their parts, but each has a unique character. Organization character is the product of all the organization’s features: employees, objectives, technology, size, age, unions, policies, successes, and failures and reflects its past and shapes the future. Some organizations have a very strong culture which acts as a driving force behind most of its actions. Human resource strategies should recognize these and, in the short run, work within the constraints imposed by them. In the longer term, organizational culture not consistent with organizational mission and strategy has to be changed. Even here, the human resource department has to take a lead position. Human resource strategies should be formed only after a careful look at the strengths, weaknesses, opportunities and threats (SWOT) of the organization concerned. Organizational goals that cannot be attained within the firm’s human resource capabilities should be avoided unless the organization has adequate resources to remove such deficiencies.
- COMMITMENT STRATEGY: A commitment strategy attempts to forge a commonality of interest between the organization (often symbolized by the management) and the employees. To develop that commonality of interest requires heavy emphasis on employee training and development, internal staffing and career development and compensation levels formulated on the basis of internal equity norms rather than market rates.
- COMPLIANCE: A compliance strategy focuses on achieving labor efficiencies through control over labor costs, use of temporary or contingent workforce and maximum control over processes as a key competitive weapon. Jobs are designed to be simple to ensure a constant and stable supply of employees and reduce training costs. To ensure uninterrupted production and eliminate all uncertainties, employees are expected to behave in a prescribed manner. Close monitoring of their work by supervisors is common. In many instances, the employer may also attempt to seek efficiencies by shifting production infrastructures to areas in which trade unions and government regulations pose fewer constraints on management.
- PATERNALISTIC: In a paternalistic human resource strategy, some minimal training and competency building through training, job rotation is done to achieve flexible staffing and task assignments and maintain workforce stability. Management typically provides some employment guarantees as well as a system of internal staffing, typically based on seniority. Adequate rewards are offered to maintain stability of workforce. The organization does achieve a limited degree of learning capability that is not available in a compliance strategy.
- COLLABORATIVE: An organization using a collaborative strategy relies on highly skilled contract labor to meet the specialized needs, hiring personnel on an “as-needed” basis or retaining them “on call” basis. These highly skilled and specialized “crafts” people are most often evaluated solely on the basis of their performance outcomes. “Because they are employed to provide certain outputs or “deliverables” but engage in processes that are often well beyond the ability of the employer to comprehend, contingent pay (rather than in-house socialization or employee development) is often used to align their interests with those of their employer and to ensure that organizational objectives are met.” Often, this is a strategy of choice by “virtual organizations.” No single organization may neatly or fully fall into any single category above; however, this schema has been found to be relatively stable across industries, types of organizations and geographic regions.
‘People are our greatest asset’ is a mantra that companies have been chanting for years. But only a few companies have started putting Human Resources Management (HRM) systems in place that support this philosophy. There are a number of challenges in the Indian industry which require the serious attention of HR managers to ‘find the right candidate’ and build a ‘conducive work environment’ which will be beneficial for the employees, as well as the organization. The Indian industries are already under stress on account of persistent problems such as attrition, confidentiality, and loyalty. Other problems are managing people, motivation to adopt new technology changes, recruitment and training, performance management, development, and compensation management. With these challenges, it is timely for organizations to rethink the ways they manage their people. Managing HR in the knowledge based industry is a significant challenge for HR managers as it involves a multi task responsibility. In the present scenario, HR managers perform a variety of responsibilities. Earlier their role was confined to administrative functions like managing manpower requirements and maintaining rolls for the organization. Now it is more strategic as per the demands of the industry.
In view of the industry dynamics, in the current times, there is a greater demand for knowledge workers. Resumes abound, yet companies still fervently search for the people who can make a difference to the business. Often talented professionals enjoy high bargaining power due to their knowledge and skills in hand. The attitude is different for those who are taking up responsibilities at a lesser age and experience. These factors have resulted in the clear shift in approach to individualized career management from organisation career commitment.