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The Evolution of Resources, Case Study Example

Pages: 8

Words: 2103

Case Study

The present paper is dedicated to HR management and its major aspects including functions, objectives, tools, challenges, etc. The main aim was to provide an in-depth understanding of the origins and development of HR management as an extremely essential aspect of organizational management. The results demonstrate that HR management has undergone the long-term evolution from an administrative to a strategic function. According to the main findings, a strategic aspect of HR management helps today’s organizations to achieve goals through the essential strategies that help employees’ capabilities fit an overall strategic plan. However, although the strategic aspect of workforce’s management potentially increases any organization’s performance, and ensures its long-term success, certain challenges prevent today’s organizations from taking advantage of strategic HR management fully. Overall, the paper implies that the significance of strategic HR management cannot be underestimated for the current business environment.

Today’s organizational management is the result of a long-term evolution. The origins of one of its essential aspects, human resource (HR) management, date back to the beginning of the 20th century. The present paper is dedicated to the general evolution of HR management within organizations. Several points related to the topic will be covered: the evolution of HR management from an administrative to strategic function, societal and workplace trends, organization’s creation of a competitive advantage with the help of its HR department, objectives of HR planning, key tools of HR managers used for improvement of organizational performance, and challenges related to a strategic HR function. Overall, the discussion of the mentioned points associated with HR management will demonstrate the major areas of workforce’s development within an organization. Besides, the present paper will suggest that the strategic value of HR for organization’s success cannot be underestimated.

Before the practitioners of HR management (management of people) recognized that employees are the crucial assets of an organization, this aspect of organization’s management had undergone the evolution from a purely administrative function to a strategic one (Vani, 2011). In the first half of the 20th century, HR (also can be called as human relations or personnel) referred to a strictly administrative function responsible for staff’s hiring and firing, payroll, benefits, compensation, and tactical human transactions. At that time, organizations usually viewed HR as a low-return, low-risk function the performance of which can be measured in employee turnover, their attitudes, total compensation, etc. (Groysberg, McLean, & Reavis, 2006). However, in the middle of the 20th century, the strategic aspect could be traced in HR, since the labor-management role of organizations gradually grew.

In this context, the General Electric (GE) Company, an American multinational corporation, serves the best example of the earliest companies where the strategic aspect of HR was officially recognized. In the mid-1950s, development of leaders became a top priority for this company with the meritocratic culture; hence, the company believed that HR, its systems, and processes are strategically essential for its leadership on the market (Groysberg et al., 2006). This way, GE was ahead of time because it had a clear strategic focus on the human capital. In the 1980s, the first wave of strategic HR management was noted, since all companies started paying special attention to such intangible assets as innovation, knowledge, and human capital, and their role in the organizational success (Groysberg et al., 2006).

Since the end of the 20th century, organizations have been recognizing the strategic value of HR management. When this value was recognized, HR practitioners focused on finding “right” people, retaining and developing talented employees, and striving for diversity (Groysberg et al., 2006, p. 2). Besides, since that time, workplace learning has been viewed as a necessary task for organizations interested in good performance, competitive advantage, and sustainable future.  HR management practitioners recognized that “company success is realized with an optimal combination of structure, system and value, and all of them are created and maintained by employees and their creative and innovative ability” (Ðurović, 2012, p. 83). In other words, HR management has become an integral part of organization’s strategic management because companies have treated human capital as a key to their business success. In its turn, strategic HR management can be defined as the “productive use of people in achieving organization’s strategic business objectives, and fulfillment of individual employee needs” (Sahoo, Das, & Sundaray, 2011, p. 18). Overall, in the 21st century, HR management does not perform a support function anymore; instead, it is believed to be a highly vital strategic aspect of any organization interested in the achievement of its goals and high performance, in particular (Kumar, 2012).

Today’s HR management is affected by some significant societal and workplace trends that should be taken into account. The current societal trend is associated with the fact that more and more job seekers are interested in a modern, experienced, and popular organization functioning in the high-demand areas (IT, in particular) with favourable working conditions as their potential employer (Groysberg et al., 2006). The workplace trends are mostly presented by the growing role of leveraging technology (for example, an online HR dashboard is considered a golden standard) and outsourcing (mainly, transfer of the employees to an outsourcing business partner) in strategic HR management processes (Groysberg et al., 2006). The mentioned trends influence today’s HR management to a certain extent making some employers less desirable than others, and allowing organizations to develop at the expense of new technology and employees. Correspondingly, strategic plans of modern organizations are supposed to meet these trends, or at least to respond to them appropriately.

Building competitive advantage at the expense of hiring and developing the best people has become a widespread practice within organizations interested in their long-term success. Organizations may create their competitive advantage by positioning their strategic HR department as a representative of the executive leadership team. For example, according to the case of Royal Bank of Scotland, an organization can enroll its HR staff (in particular, line managers of the HR department) in a special leadership program or improve its leadership qualities through extensive master class training sessions and development initiatives (Groysberg et al., 2006). As a result of this program, training, or initiatives, an organization’s strategic HR department becomes a member of the executive leadership team that contributes to the organization’s competitive advantage.

Naturally, strategic goals of any organization can be achieved if its needs are met. For this reason, HR planning is considered an essential process in strategic HR management. Strategic HR planning can be defined as the process identifying current and future HR needs for an organization to reach its goals (Kumar, 2012). Overall, it is the response to challenges of the present global, complex, and changing business environment full of workplace crisis and stress. Kumar (2012) reflected upon the role of HR planning in a corresponding way,

This is possible if HR is able to participate in company’s business strategy and is looked upon as valuable contributor to the organization. Hence, the HR team should understand business environment very well and make tactical and strategic planning for survival of an organization in the competitive market (p. 54).

One may admit that strategic HR planning has become a vital instrument of organizational management focused on the preservation of a competitive advantage and long-term success. Strategic HR planning is believed to serve as a link between HR management and the overall organization’s strategic plan. The main objectives include the estimation of the demand for labor, evaluation of the size, sources, and nature required to meet the demand. To achieve these two major goals, strategic HR management practitioners create an employer brand, and apply recruitment, selection, retention, flexibility, talent management and other essential strategies (Groysberg et al., 2006). Naturally, all mentioned objectives are critical for an organization’s success because all selected, retained, talented, and employed people are supposed to fit an organization’s strategic objectives that can be achieved with the help of their tangible (for example, the written data related to projects, innovation, etc.) and intangible (competency, skills, experience, etc.) assets (Kumar, 2012).

The control over employees’ performance is an undoubtedly essential task of HR managers because organization’s success usually depends on staff’s high performance. Hence, HR managers have to utilize corresponding assessment tools that help them to evaluate employees’ performance; correspondingly, this assessment helps to identify the most fragile areas that need to be improved for the sake of organization’s success. According to Groysberg et al. (2006), “HR measures drive a company’s performance” (p. 9). Hence, it is not surprising that different measurement systems have become essential assessment tools used by HR managers. The new HR vision that emerged at the beginning of the 21st century, required a measurement system that demonstrated the connection between investments in HR and shareholder value in terms that managers understood, and that focused on  strategically relevant questions – such as which people make a difference, how, and why, – and less on nonstrategic measures like cost per hire and benefits as a percent of revenue (Groysberg et al., 2006, p. 9).

This way, special measurement systems focused on strategically relevant HR measures have been introduced into organizations. For example, employees can be measured according to two metrics: actual human-capital return (“the actual value contributed by the employee, a function of the value created by projects he or she worked on”) and expected human-capital return (“the break-even point of investment in an employee”) (Groysberg et al., 2006, p. 9). Although these metrics can rarely be used as employees’ performance measures, they can serve as guidelines for HR managers to find the best fit between project needs and employees’ real-life capabilities.

Another example of a measurement system is presented by the set of employees’ behaviors supposed to help the company achieve its performance goals, for example, displaying leadership qualities, remaining flexible, taking initiative, resolving issues objectively, etc. (Groysberg et al., 2006). Correspondingly, if employees have all mentioned behaviors, their performance can be measured as high. In addition, different performance monitoring measures can be taken. For example, the case of Baker Telecomm demonstrated that employees can be assessed with the help of a balanced scorecard that includes special quantifiable metrics (Groysberg et al., 2006). In other words, “implementing clear quantifiable measures, identifying milestones in the achievement of specific organizational goals and using Balance Scorecards will articulate results of HR Strategic plan in measurable terms” (Kumar, 2012, p. 58). Overall, the regular assessment of employee performance through the implementation of various measurement systems is an inevitable necessity of today’s organizations focused on the ongoing improvement of performance.

Although the necessity of a strategic HR function within the organizations has been recognized, they have faced certain challenges related to the creation of the ongoing support of this function (Ðurović, 2012). The first challenge is related to the real-life implementation of this function by line HR managers. As Groysberg et al. (2006) noted, “firms were holding HR accountable for the quality of the workforce and the attainment of business goals, but few HR managers were yet capable of translating company strategy and operational goals into actionable and measurable HR goals” (p. 13). Hence, in real-life organizational settings, a strategic HR function can be fully realized only in the case if a leader of an organization’s HR department possesses deep knowledge of HR practices. Another challenge is related to a doubtful “balance between paying a strategic role and overseeing and executing the tactics necessary for short-term results” (Groysberg et al., 2006, p. 13). Hence, the strategic HR role may challenge the chief executive on pay and other issues. Hence, a strategic aspect of HR management has a challenging nature within today’s organizations.

The information presented in the paper allows concluding that the replacement of an administrative and support function of HR management by the strategic one can be considered as the greatest moment in the evolution of organization’s management of workforce. The strategic aspect of HR management makes organizations not only fit employees’ capabilities into their strategic plans, but also respond to certain trends, and create a competitive advantage on the market. Fulfillment of HR planning objectives and assessment (and improvement) of staff’s performance help to ensure the long-term organizational success. At the same time, the challenging nature of a strategic function slows down the development of strategic HR management in today’s organizations.

References

Ðurović, M. (2012). Human resources management – strategic aspect. Management, (62), 83-88.

Groysberg, B., McLean, A.N., & Reavis, C.  (2006). Delivering strategic human resource management.  Harvard Business Review, 30.

Kumar, K. A. (2012). Strategic human resource management for high performance organizations. International Journal of Research in Commerce and Management, 3(6), 54-59.

Sahoo, C. K., Das, S., & Sundaray, B. K. (2011). Strategic human resource management: exploring the key drivers. Employment Relations Record, 11(2), 18-32.

Vani, G. (2011). Evolution of human resource management. Review of Management, 1(2), 127-133.

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