Introduction
There is a rising competition for companies which are rushing world over for superiority, influence and comparative advantage amongst themselves and this is because of the strains of economic trends in the global market that is always demanding proficiency and profitability for businesses to remain afloat in the market.
One of the greatest ways that many companies are opting to address this area of their organizational organization is to improve on the way they handle their employees. There is evidential proof in support of the surmise that this management of employees and their welfare when well strategized and executed can be a source of competitive advantage for corporations and companies (Perry and Mesch 1997).
Therefore, the main aim of this study is to identify and explain different models of the Human Resource function, the forces shaping them and evaluate the role of line managers in delivering HR review and assess the importance of ethical considerations and issues of effective governance in HR decision making.
As it were the HR has had to continually evolve and change its priorities and its activities in response to market and global imperatives on a planned and structured basis. This trend continues today and a number of models of the HR function have been proposed to meet changing demands.
Methodology
This research will take a conceptual approach in identifying the basic frameworks of HR strategy, how it is formulated and implemented, and differentiate between horizontal and vertical integration.
It is common ground that a key feature of contemporary HR is its role in and contribution to strategy formulation and implementation this paper will therefore interrogate the various human resource strategies in the light and face of market practices horizontally in their quest to ensure that they are consistent and compatible with each other.
The integration of HR strategy vertically with business strategy aims at creating a synergy between them. Best practice, best fit and resource-based views of the firm have been proposed.
Findings
Forces shaping the HR agenda within the organization
Business aims, goals, objectives, strategy
The extent of an organizations’ performance of its mission and accomplishment of its goals in as far as program service delivery is concerned is of paramount concern (Nunnally 1978).
Improving administrative capacity and as well as specific interests in aspects dealing with human resource presents a great challenge in the race towards improving organizational effectiveness. Strategy in Human Resource Management enhances the levels of productivity among employees and improves the ability of an organization to achieve its mission (Perry and Mesch 1997).
Vertical and horizontal integration
The situation as it is in the organization business and market environment is that the principles governing integration are comprehensively clear but the implementation of the practice is difficult. In fact some organizations reach a point of disappointment and even consider it impossible (Schuler and Jackson 1999).
Over time organizations have invested in research initiatives that aim to establish an appropriate strategy that incorporates the principles of integration in all levels (Schuler 1992). The history of this research initiative is long and insightful and cannot be summarized in a single essay (Singh 2004).
However horizontal integration concerns the efficiency of the human resource strategy. It allows the organization to adjust its human resources strategy and function to operate harmoniously.
It entails adjusting by increasing and decreasing the levels of reliance vested in systems and tools in the company’s strategy (Som 2008). How effective an organization is in performing its objectives and goals depends heavily on the degree of vertical integration of its human resource function (Milkovich and Boudreau1998).
HR’s role in business planning
Business planning as a strategy for management requires deliberate strategies that are directed towards ensuring that there is fostering of the objectives and aims that the business set out to attain in the first place.
Practical contributions which HR makes include evaluating future skills that would be needed, creating appraisals and trainings that bring motivation and equipping personnel for their work, preparing for succession planning and benchmarking among others (Pfeiffer 1994).
HR initiatives may be skewed towards realizing these objectives through employing such tools as appraisals which are sessions where personnel’s performance is reviewed in line with determining whether they have met their objectives or not (McCourt and Wong 2003).
For the sake of future endeavours, HR can also assess the skills that may be anticipated to be required and this may be in the case where expansion for an organization is anticipated (Katou and Budhwar 2007).
Organizational financial situation, structure, culture
Structure is a generalization of the working relationships that operate within the organization. Structures are mean to serve as virtual components of the organization with a two way organizational role (Teo 2002). The structure separately distinguishes the set aside tasks that are found in the organization.
This in effect refers to the specific duties that every individual should do (Budhwar and Khatri 2001). The structure avails a means of integrating all these tasks into a single whole. Structure entails among others specialization which is the matching of the various activities with individuals who are best able to successfully execute them this applies across all levels within an organization.
It also involves Standardization which involves practices, procedures as well as guidelines that form the basis for consistency in performance. Structure also entails Centralization which is the delegation of organizational authority across the organizations ranks.
The financial situation of the organization also plays an important role in the influence of the organizations strategy and implementation of the human resource function.
An organization with a lesser financial muscle will invest lesser in the human resource function and therefore the level of expertise is much lesser than that of a firm with more financial resource. On the other hand the organizations culture also influence the position held by the human resource function in as far as the distribution of authority as well as procedure (Budhwar 2000).
HR’s roles and functions in management structures
Management of corporations in recent times has been greatly been skewed towards human resources and therefore Human Resource Management and strategies have become among the most important and relevant strategies that are being keenly followed and implemented.
This is basically because assets and resources have slightly been shifted to the rear of corporate management since personnel performance precedes them as quite correctly said by Budhwar and Khatri (2001) when they surmise that personnel that are not well trained to deliver, not even assets and resources can realize company profitability (Budhwar and Khatri 2001).
This means that HR has critical roles and functions in management structures of corporations. On the top of the list of these functions is personnel performance (Budhwar and Khatri 2001).
HR strategies being at the center of managing workers and their responsibilities, the other core function that they play is ensuring that the welfare of these workers is properly taken care of. This is important since it is clear that as humans, when one is not appreciated chances that their delivery be impaired by lack of motivation and appreciation is very high.
Employer/employee brand
The modern day effectiveness of the employers’ brand is an important aspect in the quest for a competitive advantage. It is an important basis for the modern human resource manager to attract and retain talent that is necessary for growth.
This aspect has been utilized by multinational companies across the world especially financial institutions across the banking sector which (these companies) have used it as a mechanism for the establishment of a connection with the market. This approach explains the fundamental role of the employers brand in the sustenance of the organizations quality workforce.
Employee engagement
The most basic fundamental assumption of human resource planning and management that cuts across all organizational concepts is the treatment of employees as the most important asset in an organization (Budhwar and Boyne 2004). The objective here is to ensure that the manager facilitates and maintains greater employee influence as well as participation.
This is an important and fundamental requirement for a successful organizational human resource practice (Doyle 1997). An interrogation of the effects relevance and need for this aspect has revealed that employee participation has a positively skewed relationship to performance, satisfaction, as well employee productivity (Dimba and K’bonyo 2009).
Resources Available
Resources that are available in an organization may find a lot of utilization depending on the needs and objectives of such an organization. However regardless of all these factors, a basic human resource function has a variety of technological human and capital menu from which the manager is supposed to choose from (Bowen and Ostroff 2004).
The success of an organization’s human resource system therefore relies on how well the manager utilizes these resources to ensure that the organization is well equipped to deliver its goals, objectives and purpose (Gray and Shasky 2007).
Flexibility / Change Management
The flexibility of an organization regardless of the market conditions as well as the economic environment has a bearing on the organizations ability to attract investment. This has been the case especially with the onset of the young generation dubbed “Generation X and Y”.
Investigation into the relevance effect and importance of this human resource aspect has disclosed that the increased demand for a balance between work and life in the context of a demographic and social trend has had a great impression on the strategies adopted at the workplace (Black and Boal 1994). Many organizations have adjusted their policies to suit the common market competitive drift towards flexibility (Green et al. 2006).
Review of the role of HR in strategy formulation and implementation
Strategy formulation and implementation is an area that takes most of the resources and time of an organization since it is from this that planning that ushers in results and improvements is nurtured and realized. Gray and Shasky (2007) observe that strategy formulation is the breeding ground of ideas and initiatives that when implemented realize corporate profitability and development (Gray and Shasky 2007).
Being an approach that watches over all the personnel performance and operation in an organization, HR can therefore in all respects be considered the operational engine that oversees the formulation of strategies and a propeller of the implementation of the same.
This is partly because HR teaches proper communication and sharing of information and largely directs how such information can be shared with satisfaction both for the corporation and the employees who when they are satisfied, such satisfaction becomes even better impetus for them to perform even better (Gray and Shasky 2007).
External factors
External integration goes to the maintenance of Sustainability and Resilience of the human resources function (Hall and Torrington 1998). Objectively the role of the human resource function is to contribute to resilience and sustainability of the organization as a whole. Post modern organizations especially in western societies and economies are depending on the sole objectivity of the people and their knowledge.
This is based on the analogy that organizations do not learn; it is human beings who do (Bana 2006). The organization has an obligation to facilitate this process and to ensure that the workforce learns to become as flexible as their most talented people can be. The onset of business ethics is not any different form other management disciplines (Bana and McCourt 2007).
Corporate Social Responsibility
This is the organization’s responsibility to respond and act upon factors other than those influencing its general functional activities and it is an attempt at ensuring that it maintains good social relations with the community around it (Katou and Budhwar 2007). It assures that the organization has enabling environment as well as an opportunity to grow on a sustainable basis (Barak et al. 1999).
The extent of the company’s corporate responsibility activities varies depending on the available capital. The range in these activities may either be small donations as well as bigger acts of charity such as projects for social welfare (Jules and Holzer 2001).
Corporate Governance
Every successful organization has a minimum regulatory framework that represents the standard policy framework that should basically be followed by all the members of an organization. Corporate governance principles ensure that the organization principles are representative of the required regulatory framework (Khatri 1999).
The compliance of an organization to these principles therefore is a fundamental influential factor in a human resources function and therefore affects the strategy formulated by the organization (Terpstra and Rozell 1993).
The techniques and tools used to analyze organizational and business environment
There are different techniques and tools that are used in the analysis of different aspects of business and organizational environment. These tools are important since they give a fuller perception of the different elements of a business that need consideration and monitoring so as to ensure that profitability and meeting of objectives is realized (Barak et al. 1999).
Some of these tools include SWOT analysis, STEEPLE analysis, environmental scanning and PESTEL analysis among others. SWOT analysis is the tool that is important in the auditing of the position of the business in relating its environment. It involves evaluating the strengths, weaknesses, Opportunities, and threats that concern the business.
Usually, the strengths and weaknesses in a SWOT analysis refer to the internal factors affecting operation of an organization whereas the opportunities and threats refers to external factors that have to be considered to have a clear understanding of the business environment (Buyens and De Vos 1999).
STEEPLE analysis as tool for analyzing business and organizational environment considers factors that are considered to be bordering on a given industry’s performance and business challenges (Hall and Torrington 1998). It consists of seven factors that during analysis are considered to be among the most importance in determining the effect and impact that they have on a given business venture.
These factors are mainly political (especially as regards regulation of businesses), social (as well as demographic), economic, legal, environmental, technological and ethical factors that affect and shape the industry where a given business thrives (Hall and Torrington 1998).
Another tool that is closely related to STEEPLE is the PEST analysis which analyzes the macro-environmental factors that affect business operations. This analysis is usually expressed by analyzing the following factors: Political factors, Economic factors, Social factors and Technological factors (Barak et al. 1999).
In other instances, PEST analysis is usually extended to become PESTEL analysis with the inclusion of Ethical and Legal factors in its previous analysis. The following illustration shows how PEST analysis fits in the environmental scan process.
Fig 1. Diagram showing how PEST analysis fits in the environmental Scan Process
Environmental scanning encompasses the measures undertaken by a company to keep track of the emerging issues and current trends in the global markets. It also includes the fundamental requirements in the international markets in terms of the knowledge, skills and competence of the human resource personnel employed by the company (Katou and Budhwar 2007).
This kind of scanning when done properly with appropriate planning and formulation of set strategies towards the market, play a vital role in ensuring the successful outcome after venturing into unfamiliar markets.
After thorough analysis of the internal skills and knowledge of the company’s personnel through appropriate HR strategies, it then follows that a company should engage into a comprehensive evaluation of the potential market (Barak et al. 1999). Market research can be done in various ways and several methods can be incorporated including the use of surveys or testing using samples.
Potential customers should be interviewed or given questionnaires to fill in concerning their views on the current market conditions and whether they would embrace products from the new company in their market. All these feedback will then be analyzed and used to arrive at whether the new market is viable for investment or might lead to losses (Bana and McCourt 2007).
Assessment of how the organization measures the effectiveness: Key performance indicators
Key performance indicators act as a link between the old or previous regime and the new in performance management. Organizations can be said to be in themselves echo-systems in their own right. Strategies that have been agreed can be implemented via a number of ways some of which include Organizational development, and change management models like McKinsey’s 7 S’s Model. Given the importance that implementation of strategies is accorded in corporate world, it is imperative that the approaches and models that are used are ones that are proven and appropriate since without implementation, there is no amount of strategies that can realize development and profitability of a corporation (Cheddie 2001). One such model is the above named McKinsey’s 7 S’s Model which has been defined by (Katou and Budhwar, 2007) as a Value Based Management (VBM) model which is lauded for its capacity to holistically and effectively analyze and organize company operations and they give details of how a company operates and runs its daily operations to realize profitability and attain its goals (Bana and McCourt 2007). This 7-S framework comprises of:
- Share Value – this is the central concept of the model which seeks to outline the values of an organization that are shared; these are the central belief of the company.
- Strategy – this plans on how to allocate a company’s limited resources so as to realized set out goals.
- Structure – this is an indication of how the different units and departments of an organization are linked to each other so as to have all its functional units operational at all times.
- System – this element comprises of all the processes that characterize the importance of how tasks are to be performed. This may include hiring personnel, promotional activities, financial systems and performance appraisals for the company.
- Staff – this lists the entire workforce of the organization complete with the different roles that are to be done by each type of personnel.
- Skill – in the model, this refers to the specific capacities, capabilities that are required for the organization to run well. These elements are usually presented as illustrated in the figure below:
Fig 2: Diagrammatic Illustration of McKinsey’s 7 S’s Model
Assessing environmental planning and the sources of business data for planning purposes
Strategic environmental planning is central to any business operation as it clearly defines the objectives and assesses with great detail both the internal and the external situations of a company which is important for the company’s formulation of the strategy, implementation of the strategy as well as evaluation of the progress and adjustments made where necessary (Bana and McCourt 2007).
The exact process of this kind of planning includes explanation and re-assessing the missions and objectives of the company, strategy formulation, Environmental scanning, evaluation, strategy implementation, and control which are among the key tools and sources of getting data for the planning process (Katou and Budhwar 2007). These are those HR elements that are key for human capital development and management in an organization.
Conclusion and Recommendation
In conclusion the successful management of the organizations strategy depends heavily on the organizations ability to use the available human resource strategies. The organizational environment has formulates three major conventional strategy approaches. The best fit practice attempts to create a correlation between the company’s strategy and the overall corporate strategy.
The close cooperation strategy on the other hand links the human resource the top management and the overall corporate strategy. The continual monitoring approach provided feedback from surveys and research analysis (Butler et al. 1991).
The adoption of a human resource strategy does not necessarily guarantee the organization a smooth sail. In fact due to the cost implications as well as other implications that limit the firms ability to adopt such a strategy. The human resource department plays an important role in the influence of the general company’s policy and therefore requires a great amount of attention as well as investment.
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