Nowadays modern business management is more strategic which is more proactive in planning in setting the direction, approaches, policies, and procedures to achieve organization objectives. Strategic Human Resource Management (SHRM) is one part of business management that value individuals not merely one factor of goods and services production but as Human Resource, the most valuable resource of the organization. Strategic Human Resource Management (SHRM) is developed from Personnel Management which is more administrative work, not be concerned by company or value aspect, not flexible in working because need to work by order, simple system in collecting and manage data and consider human resource as a cost of companies or organizations.
While SHRM’s concept is Human Resource is the most valuable resource of the organization. SHRM is about creating strategies align with organization’s goals to attract qualified people who fit with tasks, to build suitable working environment for employees, to develop employees skills and knowledge, and to retain employees so SHRM is reconciliation between company and personal expectation.
Strategic role of Human Resource Management consist of 3 elements; First, all managements must take responsibility as Human Resource Executive and do not let only the Human Manager take this duties. Every management needs to value Human Resource especially in development and management. Moreover, they have to know the human resource management tools include survey, career planning, performance appraisal, compensation, and etc. very well to encourage employees to work hard for organization.
Second, value employees as organization or company asset because labor is not similar to other production factors (building, land, or machine), they do not easy to imitated. In addition labors or employees are the factors which bring competitive advantage to the organization so the effective Human Resource Management will support organization to achieve the organizational objectives. Finally, Strategic Human Resource Management (SHRM) is matching process mean SHRM is integration strategic plan and organizational objectives with Human Resource Management processes.
Strategic planning can be divided to 3 levels. First, Organizational level or Company level, in this level we will look the organization in big picture. We
will define scope, direction, and progress of our organization in the business or industry. Second, Business level, strategy from this level is the approaches to achieve the direction of organization which is defined in organization level. For example, the organization may present itself with the unique characteristic of organization such as leader in Corporate Social Responsibility or leader in Technology of production.
Third, Operation level, this level is about identify strategy in each department of organization such as strategy of Human Resource Management, strategy of Marketing, strategy of production, etc. Therefore Strategic Human Resource Management (SHRM) is one of strategy in operation level of the organization which is approaches to support and encourage the organization to have comparative advantage and to achieve the goal or mission of the organization.
The effective Human Resource Management strategic plan should including 4 factors as following;
1. Align with Organization’s strategic plan.
Creating Human Resources Management strategies need to focus on relationship between HRM strategies and organization’s objectives or vision and mission of organization. The suitable HRM Strategies need to encourage and support the success in organization’s goals with human resource process such as Organization structuring, Job designing, Reward designing, Performance management, and Training and Development programs.
2. Suitable with Organization environment
Before we determine HRM strategy, we have to analyze environment of organization or organizational climate. Due to organization climate has strong correlation with performance of employees. Organization environment can impact employee desire to work more effectively or less. The environment analysis will provide the information like strength, weakness, opportunities, threats, and working styles that we can bring this information to determine suitable HRM strategy for organization.
3. Suitable with Organization culture
In general, there is different culture or characteristic for each organization. For example, some organizations focus on marketing while others focus on cost of production or some organizati on focus on transparency in organization. Therefore this is one factor that we need to focus on when we identify HRM strategies for the organization.
4. Suitable with Organization’s capability
Organization’s capability is including knowledge, skills, capacities of executives and employees of the organization, competitive advantages of organization, ability of organization to making profit, and etc. the HRM strategies need to concern that the strategies are achievable by organization.
Furthermore, I learn the procedure of creating Human Resource Management strategic plan that the procedure is like the cycle that we need to follow as following;
First of all, we need to analyze the Human resource Management environment of the organization that can be divided to 3 aspects.
We have to analyze strategies of organization at each level that how those strategies related to Human Resource Management. Then using information from analysis to determine organizational needs about Human Resource Management strategies which will facilitate the organization to succeed in doing business.
We have to analyze capability of Human Resource Management Department to assure that HRM department has enough ability to set HRM strategies and manage HRM strategies effectively and productively.
We have to analyze strength and weakness of Organization in allocation Human Resource of Organization or in the other word the strength and weakness of Human Resource Management of the organization.
Human Resource Management analysis is internal analysis which has objective to analyze the strength and weakness of Human Resource Management to compare with competitors. There are some techniques to use as approach for analysis HRM processes that are;
Analyze the quality of knowledge, skills, and experience o f total employees.
Analyze the desire, inspiration, and encouragement of employees in working.
Analyze the efficiency of employees in working.
Analyze communication system of the organization to find the gap of communication between employees themselves an d/or between employees and executives and to show the mobility of organization’s communication system.
Analyze decision-making process of executives and employees of the organization that is effective or not. In addition, analyze it to see whether employees can make decision fast and suitable with situations.
Analyze Training and Development programs or processes for employees.
Analyze creativity or innovative thinking of employees.
Analyze efficiency of Human Resource Management activities such as manpower, recruitment, compensation, employee relation, and etc. Second, we will bring the information from Human Resource Management analysis above to determine vision of Human Resource Management of organization. The vision is specification of approaches and dir ection of Organizational Human Resource Management in Long term. For instance, my company set the vision for its Human Resource Management that is Be Professional.
The organization expect employees can work more professional which mean behave company’s regulations, working with higher accuracy, making higher productivity in performance, and keep learning and developing themselves. Therefore the vision determination is supposed to present the approaches which solve and improve organizational weakness while encourage and support organizational strength.
Third, we need to have specific procedure to specify strategies for organization. We should concern about organization capability and focus on vision, mission, and objectives of organization. Moreover we still keep the information from Environment of Human Resource Management analysis including strengths and weaknesses of the organization as factors to create HRM strategies. The procedure of determine HRM strategies are 3 main steps.
Firstly, we should specify our strategic alternatives or choices which are selected from possible alternatives of strategies that will support organization in achieve its vision and mission. Next, we will evaluate each strategy about suitability and possibility to specify the most suitable and effective strategy for the organization. Then, we will make a decision about the most suitable strategies which concern with strength and weakness of Human Resource Management and align with organization cultures and organization values. After we got strategies, we will
transform the strategies to working plan in operation level to set allocation of resource of organization for instance budget, Human Resource, Machine, and etc. Working plan should have clearly objective for each activity and mis sion to complete the strategies of the organization.
The effective objective or SMART Objectives need to be specific which is clear and easy to understand, be measurable which mean we know how to measure that we achieve the goals, be challenging and achievable, Be relevant and align with organization objective and have specific deadline or have time-bounded to get people interaction.
The last procedure of strategies specification for the organization is monitoring and assessment. After we bring the work plans and strategies to operation, we need to have methods to assess the efficacy of those plans and strategies and give clear and accurate feedback to executive in order to adjust and improve the plan up to how the plan impact to organization and the effic acy of the strategy to respond to current situation at that time. This process is created to make sure that the selected plan can truly support organization goals.
First part above is about the definition and important of strategic Human Resource Management however to get more details and ideas about what Strategic Human Resource Management impact to the organization I would like to go deep in to detail of Human Resource processes that are the important factors to encourage, support, and apply Human Resource Management Strategic plan to the working plan in operation level.
I would like to start with 2 main factors which are strongly effect on efficacy of Human Resource Management Strategies that are Organizational Climate and Leadership style. Organizational Climate or Organization environment can be categorized to 2 aspects. One is external environment and another is internal environment. External environment such as new competitors, customers, entrepreneurs, suppliers and labors can effect on organization or company directly. For example, the major product of my company is the cut size paper from farmed tree which present the green concept that we don’t destroy environment . When the competitors launch new product in the same category and do marketing that their product it help the world to reduce affect to climate change of the world. So the new product with same concept of competitors can attract some of our
customers to buy their products with marketing approaches. This example can show the impact from competitors as one of external environment. By the way, I am currently working as international recruitment for Fast moving consumer goods (FMCG) company. Due to I responsible for recruit candidates from far away countries and I don’t have any opportun ity to visit those countries to look for qualified candidates. Therefore I generally use recruitment agencies to feed me resumes. In my case, recruitment agencies act as my suppliers.
My performance strongly correlated with the number of qualified resumes that recruitment agencies can feed me. So I am supposed to face the high level of impact if recruitment agencies cannot provide me the candidates. Both 2 examples show how the external environment important to the organization especially external environment is the factor that we cannot control. However we can learn from our experiences and estimate the possibility from information we have to make a plan to response the problems that may occur from this factor.
To understand more about external environment that have direct impact to the organization, I would like to give the definition of each by each. Competitor is people or organization which is an opponent against another. In business, competitor is referred to an organization or a company in the same industry or a similar industry which offers a similar good or service. The competitors will attempt to gain market share by using marketing approaches for instance reducing the price of goods and services. So the competition will force a company or an organization to become more efficient in order to decrease costs and take advantage from lower cost. The example of competitor in business are Coca-Cola and Pepsi, Apple and Samsung, True-move H and DTAC, and etc.
Customer is individuals or organizations that receive, purchase, and consume products (goods or services) produced by a business. Since customer is the one who willing to pay for supply and create demand and has the ability to choose between different products and suppliers, business or company compete each other to attract customer by using sale promotion or advertisement. Customer is also known as buyer, client, or purchaser.
Entrepreneur is someone who organizes, manages, and assumes the risks of a business, enterprise. Entrepreneur is also referred to someone who pays a definite price for a product to resell it at an uncertain price, thus entrepreneur has to make decisions about obtaining and using the resources Supplier is an organization or a company that supplies parts, goods or services to another company. Supplier is also called as vendor.
Labors are individuals who are ready for working and look for the job. However there are some regulations for individual to count as labor force such as age limitation that is up to labor law of each country. Labor is the one of the major production factor which has direct impact to company success. Thus the organization needs to create methods to attract talents to work for it. The methods may include recruitment, selecting, training, and development. Another type of external environment is the External Environment which has indirect impact to the organization such as new regulation of the company or new law or government regulation.
For example, government regulation required the organization to provide basic facilities for disabilities such as toilet for disabilities and ramp for disabilities inside the building. I also have experience in impact of government regulation at my company. In general, our company does not have policy to allow employees work over time. Even some employees have to work over time, the company will not pay the special wages for that however the company offer their employees that employees who work over time can ask for the holiday instead.
The problem occur when the government officer visit the company and inform the company that the company must pay the wage for working over time because it is one of labor law. If the company don’t change this policy, they will be fine from government. So this factor is important as well however we can avoid the problems which can occur from this factor by monitor the new regulation. Not only the laws and government regulations but culture, social, political situation, economic situation, technology, and globalization are also the external environments that have indirect impact to the organization.
The other aspect is internal environment including working system, stake holders, organizational facilities, and organization culture. Working-system is process of working or working procedure of each department of organization for example, Human Resource Management system, Production system, and Marketing system.
Stakeholder is including individuals in the organization who gain the benefit from the organization and related to organization directly such as owner, stakeholder, executive director, and employees.
Organizational facilities mean equipment, tools, stationary, and office building. The management is responsible for provide all necessary facilities to employees in order to support their employees. With the suitable organization facilitates, employee can do their task comfortably and safe.
Organization culture is invisible environment however employees of the organization can perceive via organizational communication and organizational working system. The organization culture has same characteristic with social cultures or norms that it takes time to create and it is identity (different for each organization)