Human resource management (HRM) is that part of management process which makes, enhances, manages and develops the human element of the enterprise measuring their resourcefulness in terms of talents, abilities, total skills, creative, knowledge, and potentialities for effectively contributing to the organizational objectives. Human resources are precious and a source of competitive advantage. Human resources may be tapped most effective by mutually standard policies which promote promise and foster an inclination in employees to act flexibly in the interests of the adaptive organization’s pursuit of excellence.
Human resource policies can be joined with planned business and used to reinforce appropriate culture. Human resources play a critical role in enabling the organization to effectively deal with the external environment challenges. The human resource management has been accepted as a strategic partner in the formulation of organization’s strategies and in the implementation of such strategies through human resource planning, employment, training, appraisal and rewarding the personnel.
Strategic Human Resources Management (SHRM) facilitates creation of competitive advantage for the organization over its rival by building unique human resource based competence. An organization’s recruitment, selection, training, performance management process and compensation practices can have a strong influence on employee competence. The workforce will be more capable if a firm can successfully identify, attract, and select the most competent applicants. Performance appraisal takes in account the past performance of the employees and focuses on their improvement for the future performance of the employees through counseling, coaching or training.
The human resource strategy of a business should reflect and support the corporate strategy. An effective human resource strategy includes the way in which the organization pans to develop its employees and provide them with suitable opportunities and better working conditions so that their optional contribution is ensured. This implies selecting the best available personnel, ensuring a ‘fit’ between the employee and the job and retaining, empowering and motivating employees to perform well in the direction of corporate objectives.
Strategic Human Resource Management Planning
Strategic human resource management is the process by which managers design the mechanisms of an HRM system to be reliable with each other, with the organization’s plans and goals and with other essentials of organizational architecture. The main role of strategic HRM is the improvement of an HRM system that increases an organization’s awareness, worth, invention, and productivity to customers. Strategic Human Resource Planning (SHRP) involves four distinct stages:
- Situational analysis/environmental scanning.
- Estimating demand for human resources.
- Analyzing the supply of human resources.
- Developing action plans to close any gap between human resource demand and supply.
The first stage of Strategic Human Resource Planning is the point at which strategic planning and HRM interact. HR planners anticipate sources of threats and identify and should drive the organization’s strategic planning and opportunities with the help of Environmental scanning. The strategic ideas or plan implement to environmental circumstances, and HR planning is the mechanisms that an organization can use to accomplish this adaptation process.
The second stage of Strategic Human Resource Planning, forecasting demand, requires estimating not only how many but also what kinds of employees will be needed by the organization. The demand for employees should be closely tied to the strategic direction of the organization. Forecasting yields advance estimates of the organization’s staffing requirements. This is a difficult task, especially for organizations in rapidly changing environments. Four forecasting techniques include expert estimates, trend projections, statistical modeling, and unit-demand forecasting. Estimate by no of expert, a group of experienced or expert provides the organization with demand estimates based on subjective assessments of available economic, intuition, prior experience, and labor force indicators. Trend projection involves forecasting which is based on a previous relationship between the employment and a factor related to employment (e.g. sales levels). Statistical modeling techniques (e.g. regression analysis or Markov analysis) are more quantitative forecasting and sophisticated techniques. Unit-demand forecasting requires the unit managers (e.g. department head, project team leader) to analyze the present and future job-by-job, people-by-people needs.
The third phase of Strategic Human Resource Planning involves studying the number and types of current employees in terms of the training and skills necessary for the future and also the supply of capable workers in the outside labor market. The skills inventory is a major tool used to assess the internal supply of employees. A skills inventory is a list of names, skills and characteristics of the people currently working for the organization. The list of skills coded into the skills inventory should be tailored to the needs for the organization, but might include such factors as level and field of education, knowledge of a foreign language, professional qualification or certification, or licenses held. The organized inventory provides a way to acquire these data and makes them available as needed in an efficient manner. Also important is the need to maintain the inventory so that information is kept current. With regard to the external labor market, the entire country (or world) may be the relevant labor market for highly skilled jobs. For unskilled jobs the relevant labor market is usually the local community.
After the HR planning system has analyzed both the supply of and the demand for future workers, the two forecasts are compared to determine what, if any, actions are necessary. If a discrepancy exists between the two estimates, the organization needs to choose an appropriate course of action designed to eliminate the gap. The organization has a number of options available when the demand for workers is greater than the supply of workers. The organization might elect to use overtime work with current employees, increase training and promotions of current employees, or recruit new employees. In tight labor markets, the availability of labor is limited (i.e. demand exceeds supply), driving up the price of those employees who are hired, and limiting the extent to which the organization can be selective in its hiring procedures. In a loose labor market, qualified employees are abundant. When the supply of workers exceeds demand, alternative solutions include attrition, early retirements, demotions, layoffs, and terminations.