Heathfield (2007) defines Human Resource Management (HRM) as an organizational function; focusing on recruitment, management, and directing the people who work in the organization. HRM can hence be viewed as an organizational function that deals with the human resource “people who start and operate an organization, (Ramlall, 2003).
Owing to the continuous political, economic, social and psychological changes within our societies, there is an increasing need for organizations to constantly evaluate their internal and external environment in response to the challenges and opportunities in the society; so as to remain competitive and to sustain organizational growth. This article examines the strategic role of Human Resource (HR) and its main practices, describes the outcomes of the respective category of (HR) practices and explains the critical reasons for measuring HR’s efforts.
The fundamental role of the HR to an organization is to “create value” (Ramlall, 2003) to the organization. It can hence be inferred that the critical HR’s role is to maximize profitability. Every organization, in pursuit of its strategic goals, must determine how particular HR practices correlate with improved business results and be more accountable for each major HR activity. This entails determination of the value of each HR activity in creating a competitive advantage for the organization. Without this, achievement of the organization’s goals and corporate missions may remain a dream that is never attained.
There are many factors influencing change in organizational structure today. These factors include technological advancement, globalization, changes in workforce demographics, the elimination of bureaucracies in organizational structures, and the need to strike a balance between work and family issues. Understanding the potential of an organization’s resources and optimizing the output of such resources, given the changes, provides an impetus for HR to become the key source of creating the competitive advantage for the organization.
It is the role of the HR to build a competitive organization though strategic management of human resources, management of firm infrastructure, management of employee contributions and management of transformation and change. This can be summarized as “defining the deliverables of work” (Ulrich, 1997). This entails going beyond the strategic business partner role to becoming a player in the business. Ulrich, (1997) identifies six roles of a player in an organization. The player coach, designs, construct, creates followers, plays the rules and changes the organization.
This ensures that the functioning of the organization is directed towards its goals. An effective HR personnel acts as a “facilitator and a collaborator” (Brewster, 2000). As a facilitator, the HR will function as an agent of change- providing rationale, support, and readiness for planned changes designed to support the business strategies. As a collaborator, the HR provides a link between the senior leaders and all employees to implement business strategies forming the strategic link throughout the organization. This is essential to the organization as it helps to maximize its profits.
A research by Brewster, (2000) postulates that less than 10 percent of the 968 firms that participated in the study had a formal estimation procedure to measure HRM. This implies that most companies have little or no assessment of their HR department’s efforts and therefore they cannot give any quantitative measures of HR’s value to the organization. Hailey, (1999) stated that the best way for HR to gain credibility in order to make meaningful changes is for practitioners to measure the cost and effectiveness of what they do. As such, the HR should be credible enough to lead the rest of the workers towards giving value to the organization.
To achieve a competitive advantage, it is necessary to identify the skills that need to be developed internally for current employees and the fundamental areas of effectively managing an organization. The HR function has the most experience and knowledge in addressing these critical issues. It is therefore necessary for an organization to have an effective human resource that can efficiently achieve these vital objectives. The integration of human resources into the organizational strategy provides the basis for enabling the HR function to support and implement the strategic plan to achieve a competitive advantage, (Wofford, 2002).
This strategy provides for the maximization of human capital, reduction of wasted and inefficient labor, and other financial investment, eventually to maximize profitability. An efficient HR increases the likelihood of more efficiently achieving the business outcomes and avoiding chaos, massive layoffs, crises resulting from not having skilled employees to carry out particular tasks and not having the right fit among employees, corporate strategies, and business environments, (Hailey, 1999).
HR function plays a pivotal role in determining the business strategy through the assessment of the organization’s capabilities to compete successfully through a particular strategy, determining the appropriate rewards system, determining appropriate organizational structures, and developing strategies to increase employee performance. All these work in achieving firm’s objectives and assessing the effectiveness of its strategic plan.
Given the definition of strategic planning as how an organization will compete, the question arises as to how an organization would be able to assess the effectiveness of its strategic plan. Indicators of a successfully crafted strategic plan include creating advantages that are sustainable over a long period, (Ramlall, 2003). These include attainment of the organization’s goals and objectives, the financial profitability of the organization, organizational positioning to create advantages for the short-term and long-term, and creation of a stronger sense of social responsibility.
In essence, this process determines the decisions and actions an organization will undertake to create and sustain competitive advantage. It is evident that any organization that endevours to achieve a competitive advantage over its rivals and move towards its strategic goals is left with no choice but to have an effective human resource.
The constant evaluation of the effectiveness of the organization results in the need for the HR professional to frequently champion change. Both knowledge about and the ability to execute successful change strategies make the HR professional exceptionally valued. Knowing how to link change to the strategic needs of the organization will minimize employee dissatisfaction and resistance to change. Only an effective HR can champion these important changes.