Strategic Human Resources Management: a New concept and New tools

STRATEGIC HR PLANNING – Human Resource Management

Strategic Human Resources Management: a New concept and New tools

Strategic HR management is defined as:

Integrating human resource management strategies and systems to achieve the overall mission, strategies, and success of the firm while meeting the needs of employees and other stakeholders.

Strategic HR planning is an important component of strategic HR management. It links HR management directly to the strategic plan of your organization.

Most mid- to large sized organizations have a strategic plan that guides the organization in successfully meeting its mission.

Organizations routinely complete financial plans to ensure they achieve organizational goals and while workforce plans are not as common, they are just as important.

Even a small organization with as few as 10 staff can develop a strategic plan to guide decisions about the future.

the strategic plan, an organization can develop a strategic HR plan that will allow to make HR management decisions to support the future direction of the organization.

Strategic HR planning is also important from a budgetary point of view so that you can factor the costs of recruitment, training, etc. into your organizational budget.

The strategic HR planning process:

The strategic HR planning process has four steps:

  1. Assessing the current HR capacity
  2. Forecasting HR requirements
  3. Gap analysis
  4. Developing HR strategies to support organizational strategies

Assessing current HR capacity:

the organization's strategic plan, the first step in the strategic HR planning process is to assess the current HR capacity of the organization. The knowledge, skills and abilities of your current staff need to be identified. This can be done by developing a skills inventory for each employee.

The skills inventory should go beyond the skills needed for the particular position. List all skills each employee has demonstrated. For example, recreational or volunteer activities may involve special skills that could be relevant to the organization. Education levels and certificates or additional training should also be included.

An employee's performance assessment form can be reviewed to determine if the person is ready and willing to take on more responsibility and to look at the employee's current development plans.

Forecasting HR requirements

The next step is to forecast HR needs for the future the strategic goals of the organization. Realistic forecasting of human resources involves estimating both demand and supply. Questions to be answered include:

  • How many staff will be required to achieve the strategic goals of the organization?
  • What jobs will need to be filled?
  • What skill sets will people need?

When forecasting demands for HR, we must also assess the challenges that you will have in meeting your staffing need the external environment.

  • How will the external environment impact on our HR needs?

Gap analysis

The next step is to determine the gap between where your organization wants to be in the future and where you are now.

The gap analysis includes identifying the number of staff and the skills and abilities required in the future in comparison to the current situation.

One should also look at all your organization's HR management practices to identify practices that could be improved or new practices needed to support the organization's capacity to move forward. Questions to be answered include:

  • What new jobs will we need?
  • What new skills will be required?
  • Do our present employees have the required skills?
  • Are employees currently in positions that use their strengths?
  • Do we have enough managers/supervisors?
  • Are current HR management practices adequate for future needs?

Developing HR strategies to support organizational strategies

There are five HR strategies for meeting your organization's needs in the future:

  1. Restructuring strategies
  2. Training and development strategies
  3. Recruitment strategies
  4. Outsourcing strategies
  5. Collaboration strategies

1. Restructuring strategies

This strategy includes:

  • Reducing staff either by termination or attrition
  • Regrouping tasks to create well designed jobs
  • Reorganizing work units to be more efficient

Attrition – Not replacing employees when they leave – is another way to reduce staff. The viability of this option depends on how urgently you need to reduce staff.

It will mean that jobs performed in the organization will have to be reorganized so that essential work of the departing employee is covered.

Careful assessment of the reorganized workloads of remaining employees should include an analysis of whether or not their new workloads will result in improved outcomes.

It is important to consider current labour market trends (e.g., the looming skills shortage as baby boomers begin to retire) because there may be longer-term consequences if you let staff go.

Sometimes existing workers may be willing to voluntarily reduce their hours, especially if the situation is temporary. Job sharing may be another option.

The key to success is to ensure that employees are satisfied with the arrangement, that they confirm agreement to the new arrangement in writing, and that it meets the needs of the employer.

Excellent communication is a prerequisite for success.

2. Training and development strategies

This strategy includes:

  • Providing staff with training to take on new roles
  • Providing current staff with development opportunities to prepare them for future jobs in your organization

3. Recruitment strategies

This strategy includes:

  • Recruiting new staff with the skill and abilities that your organization will need in the future
  • Considering all the available options for strategically promoting job openings and encouraging suitable candidates to apply

For strategic HR planning, each time you recruit you should be looking at the requirements from a strategic perspective.

Perhaps your organization has a need for a new fundraiser right now to plan special events as part of your fund raising plan.

However, if your organization is considering moving from fund raising through special events to planned giving, your recruitment strategy should be to find someone who can do both to align with the change that you plan for the future.

4. Outsourcing strategies

This strategy includes:

  • Using external individuals or organizations to do some tasks

Many organizations look outside their own staff pool and contract for certain skills. This is particularly helpful for accomplishing specific, specialized tasks that don't require ongoing full-time work.

Some organizations outsource HR activities, project work or bookkeeping. For example, payroll may be done by an external organization rather than a staff person, a short term project may be done using a consultant, or specific expertise such as legal advice may be purchase from an outside source.

Each outsourcing decision has implications for meeting the organization's goals and should therefore be carefully assessed.

5. Collaboration strategies

Finally, the strategic HR planning process may lead to indirect strategies that go beyond your organization. By collaborating with other organizations you may have better success at dealing with a shortage of certain skills.

Types of collaboration could include:

  • Working together to influence the types of courses offered by educational institutions
  • Working with other organizations to prepare future leaders by sharing in the development of promising individuals
  • Sharing the costs of training for groups of employees
  • Allowing employees to visit other organizations to gain skills and insight.

Documenting the strategic HR plan

Once the strategies for HR in your organization have been developed they should be documented in an HR plan. This is a brief document that states the key assumptions and the resulting strategies along with who has responsibility for the strategies and the timelines for implementation.

Once the HR strategic plan is complete the next step is to implement it:

Agreement with the plan

Ensure that the board chair, CEO and senior managers agree with the strategic HR plan. It may seem redundant step if everyone has been involved all the way along but it's always good to get final confirmation.


The strategic HR plan needs to be communicated throughout the organization. Your communication should include:

  • How the plan ties to the organization's overall strategic plan
  • What changes in HR management policies, practices, and activities will be made to support the strategic plan
  • How any changes in HR management will impact on staff including a timeframe if appropriate
  • How each individual member of staff can contribute to the plan
  • How staff will be supported through any changes
  • How the organization will be different in the future

It is impossible to communicate too much (but all too easy to communicate too little), especially when changes involve people. However, the amount of detail should vary depending upon the audience.

Legislation and mandate

Ensure that the actions you are considering are compliant with existing laws, regulations and the constitution and bylaws of your organization.

Organizational needs

Whether you are increasing or reducing the number of employees, there are implications for space and equipment, and on existing resources such as payroll and benefit plans.


HR plans need to be updated on a regular basis. You will need to establish the information necessary to evaluate the success of the new plan. Benchmarks need to be selected and measured over time to determine if the plan is successful in achieving the desired objectives.


7 Key Steps: Strategic Human Resource Management

Strategic Human Resources Management: a New concept and New tools

Table of Contents

Bonus content included throughout this post:

What is strategic human resource management?

Strategic human resource management is the connection between a company’s human resources and its strategies, objectives, and goals. The aim of strategic human resource management is to:

  • Advance flexibility, innovation, and competitive advantage.
  • Develop a fit for purpose organizational culture.
  • Improve business performance.

In order for strategic human resource management to be effective, human resources (HR) must play a vital role as a strategic partner when company policies are created and implemented. Strategic HR can be demonstrated throughout different activities, such as hiring, training, and rewarding employees.

Strategic HR involves looking at ways that human resources can make a direct impact on a company’s growth. HR personnel need to adopt a strategic approach to developing and retaining employees to meet the needs of the company’s long-term plans.

HR issues can be a difficult hurdle to cross for many companies, there are all kinds of different components that can confuse business owners and cause them to make ineffective decisions that slow down the operations for their employees as well as their business.

To ensure that you never have to worry about being lost on HR related issues again, click the download button below for your  one-page document of the 7 steps to strategic human resource management.

Why is strategic human resource management important?

Companies are more ly to be successful when all teams are working towards the same objectives. Strategic HR carries out analysis of employees and determines the actions required to increase their value to the company. Strategic human resource management also uses the results of this analysis to develop HR techniques to address employee weaknesses.

The following are benefits of strategic human resource management:

  • Increased job satisfaction.
  • Better work culture.
  • Improved rates of customer satisfaction.
  • Efficient resource management.
  • A proactive approach to managing employees.
  • Boost productivity.

Seven steps to strategic human resource management

Strategic human resource management is key for the retention and development of quality staff. It’s ly that employees will feel valued and want to stay with a company that places a premium on employee retention and engagement. Before you implement strategic human resource management, you will need to create a strategic HR planning process using the steps below:

1. Develop a thorough understanding of your company’s objectives

Since the success of strategic HR is dependent on how well it links to your company’s goals, you need to have a thorough understanding of your aims, objectives, and mission.

You’ll need to be able to articulate both your short and long-term plans for growth to the relevant HR personnel.

Ensuring clear communication of your company’s goals will make it easier for HR personnel to formulate an effective resource management strategy.

2. Evaluate your HR capability

Evaluating your current HR capabilities will enable you to understand the employees you have and how they contribute to fulfilling your goals and objectives. Additionally, you should also undertake a skills inventory for every employee. Skills inventories help you to discover which employees are experts in particular areas.

It also helps you to identify the employees who have an interest in being trained in a particular aspect of your company. A great time to asses skills is during a performance review. However, the traditional performance review is dying. Check out our guide on how to conduct an efficient and results driven performance review while obtaining the skills inventory you need from your employees!

[Download] 9 Best Practices to Master the New Performance Review

3. Analyze your current HR capacity in light of your goals

An assessment of your HR capacity will help you to recognize barriers and implement a plan of action to capitalize on opportunities and effectively deal with threats. Strategic HR personnel will analyze the number of employees as well as their skills and will work with senior leadership to identify ways to better equip employees to serve the needs of your company.

4. Estimate your company’s future HR requirements

After an analysis of your company’s employees and skills has been done in relation to your objectives, it’s time to forecast your HR needs. The forecast should be done in relation to:

  • Demand – A prediction needs to be made in relation to the number of employees with the associated skills that will be required in order for your company’s future needs to be met.
  • Supply – Looks at the employees and skills that are currently available to help your company achieve its strategic goals.

Forecasting your company’s future HR requirements also determines the following:

  • New jobs and roles required to secure the future of the company.
  • Skills required by current employees to undertake the responsibilities of new jobs and roles.
  • Whether your employees’ expertise are being sufficiently utilized.
  • Whether current HR personnel and practices can accommodate the company’s growth.

HR personnel need to liaise with the appropriate departments to find out how the tools used by employees impact on their ability to perform their roles. For example, an audit of hardware and software can be undertaken jointly with the I.T department to identify gaps in tools that will facilitate a more organized workforce.

For example, where a company employs hourly staff, it’s crucial to utilize workforce management software. This software manages important HR functions such as scheduling, holiday entitlement, and sick leave management.

Deputy provides the functionality to effortlessly manage your employees’ hours and time. This enables your employees to focus on the tasks identified in the strategic HR plan that have a direct impact on growing your company. Sign up for a free trial and see how Deputy can support your strategic human resources management.

6. Implement the human resource management strategy

After the analysis and forecast of your company’s HR requirements have been completed, it’s time to start the process of expanding your workforce and developing current workers to equip your company for future growth. You can achieve the implementation of your human resource management strategy by doing the following:

  • Start with the recruitment stage – At this point, HR professionals begin searching for candidates who possess skills that have been identified during the HR strategic planning process.
  • Organize a selection process – Interviews and other selection criteria take place at this time. Interview questions such as “what are your salary requirements?” and relevant tests will be used to assess whether the candidate is suitable to carry out the role.
  • Begin hiring applicants – Your company will make the candidate a job offer after all appropriate checks have been carried out.
  • Design onboarding and training – Employee Onboarding is a key determining factor as to whether an employee remains with a company. A comprehensive onboarding and training package must be put in place to increase employee retention. Once you have onboard your employees well, another important step to retaining them is to keep them engaged! Easier said than done, but our guide on employee engagement will help! You can download it by clicking the button below:
[Download] The Employee Engagement eGuide

7. Evaluation and corrective action

HR personnel should decide on a timeline to carry out a strategic HR management review. This review will track the progress made and also identify areas for improvement. The review should be measured against whether changes are helping your company to achieve their goals. Corrective action must be taken if strategic human resource management is failing to meet its objectives.

Strategic human resource management articles

Several articles have been written about strategic human resource management to help companies to implement this process. Check out two of our favourites below:

  • Emerald Insight published an article about whether strategic human resource management practices have an effect on performance. The paper is research, which found that training, development, and pay are the strategic human resource management practices that had the greatest impact on employee performance.
  • Another strategic human resource management article, published by Sage Journals, looks at whether there’s a relationship between strategic human resource management and organizational commitment.

Human resource strategies examples

With more than two million employees, Walmart is the world’s largest employer. This retail giant places a premium on the role of HR to drive and grow its business. The emphasis on the value of employees has been evident from the start when Walmart’s founder, Sam Walton, named the HR department the ‘people division.’

HR Magazine uses Walmart as an example of how strategic human resource management can be used to establish a profitable company. The article provides details about how Walmart aligns its seven overriding strategies (price, operations, culture, key item/products, expenses, talent, and service) with human resource strategic management, for example:

  • Operational success is achieved because Walmart invests in continuous training and learning for its employees. Walmart also seeks to empower its employees to take ownership of their work for more successful teamwork.
  • Company culture is emphasized because Walmart managers attend cultural training at the Walton Institute. The Walmart culture is defined by managers having an entrepreneurial mindset that encourages a problem-solving approach. For tips on creating an amazing culture, download our guide on creating a healthy multi-gen workforce below:
[Download] 10 Tips for Creating a Healthy Culture for a Multi-Gen Workforce
  • Connecting people to products is where everyone at Walmart, irrespective of their position, has to focus on how to provide a better customer experience. Part of Walmart’s HR strategy is to train managers to make decisions in relation to customers in their store as quickly as possible.

In addition to Walmart, Human Resources MBA compiled a list of 30 of the world’s most innovative HR departments. This list contains examples of companies that use human resources strategically to grow and strengthen their market position. These companies include:

  • FedEx has a ‘People-Service-Profit’ philosophy that demonstrates its belief that. if employees are taken care of, they’ll take care of customers in return. As part of fulfilling this slogan, FedEx undertakes a yearly survey and feedback program where employees provide their opinions on different aspects of the organization. The results are analyzed and, where possible, action is taken to improve employee conditions.
  • Nissan uses a philosophy called kaizen to help its employees to always keep striving to make improvements to how they work. This approach starts during the recruitment stage and new hires are encouraged to keep improving so that they can stand out. Other strategic human resource management practices at Nissan include leaders being given the independence to hire and build their team.
  • Alliance Boots GmbH is founded on the philosophy that Boots employees are part of a family. Boots encourages a stress-free work environment and assists managers in being supportive of their teams. Boots values vocational education and was one of the first companies to provide formal accreditation for its employees.

Strategic HR services

Strategic human resource management is important for every company. Your company doesn’t need to employ a specific number of employees before you start to consider implementing strategic human resource management principles. In fact, if you have a plan to grow your business, you should be thinking about linking this growth to strategic human resource management.

Some companies outsource this part of their business because they don’t have an in-house HR function. Strategic human resource services provide full-service HR functions including developing a human resource management strategy. Strategic HR services help to take away the burden of both operational and strategic management to facilitate the growth of your business.

To facilitate your company’s future growth, you should use tools and software that free up your time. Sign up for a free trial of Deputy below to see how we can help you with the time-consuming aspect of employee scheduling, so you have more time to work on the strategic aspect of your business.


What is Strategic Management?

Strategic Human Resources Management: a New concept and New tools

Every business strategize. It is an essential management process to strategize and prepare for different odds. Strategy in the simple sense of the word is a plan designed to achieve an objective and planning as we all know is the primary function of management that lays down the base for the entire business.

“Strategic management in essence is a fancy name given to the planning process in action. It involves the creation and execution of the major goals agreed upon by the top-level management of a business”.

Wikipedia defines Strategic management as,

“Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, consideration of resources and an assessment of the internal and external environments in which the organization competes.”

Why Strategic Management Is Important?

It is the sum total of all the clever decisions taking by the managers across the organization at different points of time for the benefit and success of the business. It is done primarily on the basis of the SWOT analysis.

SWOT is an acronym formed four aspects of a business that has to be analyzed Strength, Weakness, Opportunity, and Threat. The manager has to understand where the business excels (strength), where it struggles (weaknesses), where it can succeed (opportunity) and how it could fail (threats).

Doing this analysis a clear picture of what the business will face and will have to do will be formed and it is on the basis of this picture that the process continues.

How Often Should Strategic Management Activities Be Performed?

Strategic Management is the identification and illustration of the strategies that management implements in order to attain superior financial results for their organization, especially, in comparison to the competitors in the same industry.

Strategic management can also be observed as the set of decisions undertaken by a manager impacting the results of the organization’s competitive performance. Detailed analysis of the available information and creative utilization of resources (may not be unique) is necessary for making important strategic decisions.

While making strategic decisions, significant planning is required for both predictable scenarios as well as unpredictable situations.

Strategic Management for Organizations

It can be beneficial for any organization, irrespective of their sizes since there is always room for improvement, and each organization possesses some unique strengths and opportunities which can be capitalized upon.

It ideally should be a continuous process and not a one-time evaluation or brainstorming exercise. It involves thoroughly studying competitors, understanding their approach, and unique selling points that have helped them achieve their places.

READ  Types of Organizational Structures

Also, rechecking their own organization’s strategies regularly determining their applicability and potential success/ threats in present market conditions.

Bigger strategic decisions provide overall future direction to the organization and should be thorough analysis. Continuous monitoring is further required that the organization is moving in the right direction and if any further steps are needed for more effective implementation.

Strategic Management for Employees

Strategic Management should aim at providing a strong perspective on the employees about their organization so that can better judge their fitment and map their long-term objectives to the organization’s overall direction.

Strategic management can be used to manage employees so as to maximize the ability to achieve business objectives.

Empowering the employees so that they can correlate well to organizational tasks and objectives, is a smart strategic move.

Further, strategic management makes employees capable of understanding the market reactions to the organization’s product and taking corrective measures for the organization. Employees can also gauge the effect of the factors which can influence their jobs or roles and can take necessary corrective steps.

There are several tools and concepts which are generally used for the analysis of softer aspects of the organization aiding to the derivation of impactful decisions.

1. SWOT Analysis

SWOT framework was initially used by Harvard and later popularized by Kenneth R. Andrews and it still remains a commonly practiced analysis tool.

SWOT Analysis should be conducted, i.e., identify Strengths, Weaknesses, Opportunities, and Threats for your organization and accordingly utilize strengths in the best manner, work over the organizational weaknesses, grab the upcoming opportunities and make a backup plan for identified threats.

2. Experience Curve

Coined by the Boston Consulting Group, the experience curve is a hypothesis that per unit product costs decrease gradually in the range of 15 to 25 percent whenever the cumulative production doubles in quantity.

It has been confirmed by renowned organizations at different points of time. The decline in the costs can be attributed to numerous factors, including the learning curve, automation in the processes, and economies of scale.

Author Walter Kiechel identified several insights, such as a cost structure can always be improvised, varying costs structure in the same industry is a result of varying experiences of organizations, higher market share helps in cutting costs, etc.

He wrote in 2010: “The experience curve was, simply, the most important concept in launching the strategy revolution…with the experience curve, the strategy revolution began to insinuate an acute awareness of competition into the corporate consciousness.”

Following are the other important concepts of Strategic Management:

1. Conscious Process

Strategies are a product of the developed conscience and intellect that we humans proudly possess and employ. Strategic management implies the usage of the brain and the heart and is not a routine ever-continuing process. It requires great skill and experience to be carried out effectively and requires a full application of one’s conscience.

READ  SWOT Analysis of Starbucks

The future is uncertain. We cannot predict what will happen. However, on the basis of the information that is available to us, we will be able to presume certain things about the future.

For instance, a discovery that the item XYZ causes cancer can allow us to make a very reasonable presumption that the item XYZ will be banned in the near future. This presumption thus allows us to not make any investment in anything directly related to XYZ.

This is a very obvious presumption but most presumptions aren’t and the information so available also doesn’t in the face of it be necessarily valuable. This is where strategic management as a process requires foresight. The manager has to be able to foresee what would happen from the limited and often ambiguous signs he procures from the world.

3. Dependent on Personal Qualities

The above two considerations make it amply clear that Strategic Management is heavily dependent on the personal qualities of the managers occupying the top-level positions.

These personal qualities including skills and experience obtained over years of employment and observation cannot be imparted by training or coaching classes and require practical exposure for extended periods of time unless the person is born with the talent of strategizing (which is rare).

4. Goal-Oriented Process

The process of Strategic Management is a goal-oriented process. The process is done with the intention and goal of analyzing the various elements through SWOT analysis and other tools and to develop a plan or strategy that effectively allows the business to maneuver itself around every hurdle and make use of its strength.

This process also plays the role of making all other functions of the business goal-oriented as well.

5. Facilitates decision making

Strategic Management plays an integral role in making important decisions. Whenever a manager has to make a decision he has to think about the bearing of such a decision on the overall strategy and the business’ trajectory.

Thus the strategies developed to act as a guide to making efficient and accurate decisions.

6. Primary Process

Strategic Management is the primary process in any business. The strategies that the business has to apply in its activities is developed at the initial stage itself and only after the creation of the strategy that other processes commence by making the strategy as its basis.

7. Pervasive Process

Strategic Management is a pervasive process seen in all levels of the business.

The core strategies are formulated for the entire business by the top-level management and strategies to efficiently achieve the overall goal so laid down by the top-level management is developed through the various lower business units.

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8. Allows for Risk Management

Risk management can be considered as a subset or a specific form of strategic management. Risk is the probability of a future loss and risk management involves formulating various strategies to combat the risks making risk management a form or variety of strategic management.

Strategic management in this form allows for identifying and eliminating the risks posed by various hazards to the business.

9. Drives Innovation

The development of strategy is not a simple process and requires making the best often very restrictive situations. This drives innovations and allows managers to approach problems from different angles and solve problems more efficiently. After all, necessity is the mother of all inventions.

Strategic Management as a process is quite complicated and requires years of experience and inherent skills to be carried out efficiently. The process is pervasive and is central to any business. It is a discipline in itself and requires more study for enthusiasts wanting to pursue management.

Limitations of Strategic Management

A contrary view on strategic management is that it significantly limits the manager’s discretion in a dynamic market landscape.

Strategies are developed to provide direction to the organization, and guidance on how to respond to adverse or favorable situations, however, there are certain elements that are completely left out from the consideration.

According to Mintzberg “Strategy is a categorizing scheme by which incoming stimuli can be ordered and dispatched.” Since a strategy drives the organization in a particular direction, the approach may not be any more valid due to changes in circumstances. Mintzberg further said, “Strategy once established is a force that resists change, not encourages it.”

Some experts, in turn, promote an iterative approach, which is a repetitive learning cycle [rather than] a linear progression towards a clearly defined final destination.

Woodhouse and Collingridge suggested that true strategy should ideally follow the “intelligent trial-and-error” concept in spite of adherence to pre-decided strategic plans.

Other expert quotes include: “Strategy should be seen as laying out the general path rather than precise steps”. “Means are as ly to determine ends as ends are to determine means.” “The objectives that an organization might wish to pursue are limited by the range of feasible approaches to implementation.”

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Human Resource Management and Personnel Management

Strategic Human Resources Management: a New concept and New tools

Human Resource Management and Personnel Management have become a very important part of the management process in the twenty-first century, and are getting vital attention in management discussions, or in the business strategy of most organizations.

Some people find Human Resource Management and Personnel Management as jargons, but to serious minded people they seem to make a lot of sense, even if there are differences of opinion. It also seems that even professional managers often differ in their understanding of the role differences between Human Resource Management and Personnel Management.

Many feel that it is the same old wine in a new bottle with a different label, or that HRM is only a more modern terminology.

The management philosophy was undergoing changes, and it showed that most people working not only by supervision and fear, but generally they performed better on their own if they were given the freedom of decision making, adequate skills training, broad guidance and knowledge of the plans – these factors motivated people to perform.

There should be creation of a more positive and far greater level of interaction between the management and employee in a prevailing environment of trust and dependence, as well as in an open organization culture.

The personnel function had to be pioneer and encourage this kind of environment creation in the organization, and to provide the plans & developmental inputs to increase competency across the organization, as well as generate motivation.

Limited function role that was required from the Personnel Management in the past should be expanded to a far more professional manner to meet the organizational goals, rather than the limited functional objectives.

These could be in the areas of strategic manpower planning, organization development, competency analysis and identified training and development of employees, organization culture and employee motivation & morale, team building, career planning, performance appraisal and incentive or reward system management, key employee retention, counselling, responsible labor & management attitude building, labor productivity improvement, environmental management etc., and not just the welfare issues, recruitment and employee records. By these, Personnel Management will be no more an individual working solo in the organization but interacting with other functions in the organization, and not remain limited to the earlier functional boundaries. It is important for personnel management to change and become increasingly necessary for the need of being able to achieve organizational excellence in the highly challenging and competitive environment of the twenty-first century.

Human resource management (HRM) is the strategic and coherent approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices.

The terms “human resource management” and “human resources” (HR) have largely replaced the term “personnel management” as a description of the processes involved in managing people in organizations.

The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. The Human Resource team must also be a good judge of morale and realize when morale boosting incentives are needed.

Human resource management functions are:

  • Planning: Prepare forecasts of future HR needs in the light of an organization’s environment, mission and objectives, strategies and internal strengths and weaknesses, including its structure, culture, technology and leadership.
  • Staffing: Obtaining people with the appropriate skills, abilities, knowledge and experience to fill jobs in the work organization. Key practices are human resource planning, job analysis, recruitment and selection.
  • Developing: Analyzing learning requirements to ensure that employees posses the knowledge and skills to perform satisfactorily in their jobs or to advance in the organization. Performance appraisal can identify employees’ key skills and “competencies”.
  • Motivation: The design and administration of reward systems. HR practices include job evaluation, performance appraisal, pay and benefits.
  • Maintaining: The administration and monitoring of workplace safety, health and welfare policies to retain a competent workforce and comply with statutory standard and regulation.
  • Managing relationship: Encompasses a range of employee involvement/participation schemes in non-union or union workplace. In a union environment, this includes negotiating contracts and administrating the collective agreement.
  • Managing change: This involves helping others to envision the future, communicating this vision, setting clear expectations for performance and developing the capability to reorganize people and reallocate other resources.
  • Evaluation: Designing the procedures and processes that measure, evaluate and communicate the value-added component of HR practices and the entire HR system to the organization.

Human resource management focuses on congruence and commitment instead of compliance and control. In the present day turbulent reality, there is a need to develop industry specific human resource management policy and practices to remain competitive and to develop committed workforce. The role of the human resource manager is to act as a catalyst, focusing on facilitation and co-ordination.

Difference Between Human Resources Management and Personnel Management

It should be clear by now that an important part of the debate on HRM centres on the question: “How does HMR differ from the deeply root personnel management model”.

The traditional version of human resources management, personnel management is a concept that can be conveniently related to the old model of organization, is bureaucratic in nature, with less flexibility, and higher degree of centralization and formalization, for example, adherence to rules and regulation.

Human resources management, on the other hand, is compatible with the organic design of new organization. Such organizations have cross-functional and cross hierarchical teams. They are decentralized and flexible, with low formalization and somewhat looser control.

The new look human resources management focuses more on commitment than on mere compliance.

With the high costs involved in employee selection and recruitment, companies are increasingly concerned with retaining employees.

Generating employee commitment is an important consideration for large and small organizations. Commitment is one of the factors of human resources management policy for an effective organization.

Some experts assert that there is no difference between human resources management and personnel management. They state that the two terms can be used interchangeably, with no difference in meaning.

In fact, the terms are often used interchangeably in help-wanted advertisements and job descriptions.

 Personnel management is traditional, routine, maintenance-oriented, administrative function whereas human resource management is continuous, on-going development function aimed at improving human processes. HRM is, in theory at least, integrated in to strategic planning.

For those who recognize a difference between personnel management and human resources, the difference can be described as philosophical. Personnel Management is built on a legally constructed exchange, dealing with payroll, complying with employment law, and handling related task.

Human resources management, on the other hand, emphasizes the importance of the “psychological contract”. HRM attempt to build a cognitive construct concern with developing a “reciprocal commitment” and an obligation between each of the parties.

In this sense, concept of the employee commitment lies at the heart of any analysis of HRM.

Personnel management is an independent function with independent sub-functions. Human resource management follows the systems thinking approach. It is not considered in isolation from the larger organization and must take into account the linkages and interfaces.

HRM is described as much broader in scope than personnel management. A primary goal of HRM is to enable employees to work with a maximum level of efficiency. The HRM paradigm explicitly emphasizes the importance of learning in workplace.

The theoretical models conceptualize HRM as a proactive central strategic management activities, it involve the continuous development of functions and policies and ongoing strategies to manage and develop as organization’s workforce. That is different from personnel management which can be described as reactive. It implies passive connotations, providing a response to demands and concerns as they are presented.

Personnel management is often considered an independent function of an organization. Human resource management, on the other hand, tends to be an integral part of overall company function.

Personnel management is typically the sole responsibility of an organizations personnel department.

With human resources, all of an organization’s managers are often involved in some manner, and a chief goal may be to have managers of various departments develop the skills necessary to handle personnel-related tasks.

HRM overall focuses heavily on the individual and the way in which individuals might be motivated and managed to achieve individual and organizational goals.

Human resource management considers work groups, challenges and creativity on the job as motivators.

Personnel management typically seeks to motivate employees with such things as the simplification or work responsibilities, compensation, rewards and bonuses.

Human resource management holds that improved performance leads to employee satisfaction. The role of workplace trade union representatives and the collective aspects of relations between the workforce and management are marginalized. In the other hand, personnel management considered that satisfaction was the cause improved performance.

Which One?  Human Resource Management or Personnel Management

Nowadays people do care more about their occupations. The markets become wider and more competitive. People take working environment, benefits, personnel strategies or policies of a company into account when they are considering for their jobs.

Personnel Management may be very profitable for the company but people working in that company or organization then suffer and the thoughts of jumping will come. The cost of turnover and training the new one will automatically go up. Employees feel unhappy, unsatisfied with their jobs, their company then the effectiveness will go down.

Human resources management, on the other hand, will help the company to be more ethical and sustainable than Personnel Management does. 21st century is the period in which there have been many changes in Human Resource Management. Ethics and Sustainability have now become very important factor in a business success of a company.

Big companies around the world have been using soft method of HRM in their business and build their mission, vision their employees; make employees the core to company’s success. Good example is Google.

From the beginning, they were a small company and they had been developing through years and when they became one of the biggest technological companies on earth, made a profit of billions per year, then they started to shine their image and brand by adopting soft method of HRM into business.

People now look at them as the best place to work, look at the places they built for their employees, every corner, every spaces they used all the creativities to boost their staff’s potential abilities and improve their imagination, creativities therefore maximize the daily business’s effectiveness.

One thing that those companies had in common was an extremely strong culture of caring that places great emphasis on the importance of the people working there. For example, the philosophy of Wegmans, a Rochester, New York-based supermarket chain and ranked fifth of Fortune’s Best Companies to Work For, states: “The values at Wegmans are not just something you see hanging on the wall.

They are values our people every day and help guide the decisions we make.” All policies, initiatives, and decisions are linked to this philosophy.

In addition, Wegmans promotes a positive, quality-focused work environment by providing employees with comprehensive training and development opportunities, a long list of financial and family-oriented benefits and perks, and regular feedback regarding individual, store, and company-wide performance. The results are obvious.

Wegmans enjoys an amazingly low employee turnover rate of 8 percent in an industry that average 50 percent. Clearly, this culture of caring is not only good for employees, but it is also good for business. Employee retention is directly related to profitability, and the costs associated with employee turnover can be significant.

Human Resource Management actually is the specialization of personnel management due to the changes of society and the labour market. Every company, organization having HR department or division means that they already practice the personnel management. It depends on each company that which way and how they want their image to be.

Human Resource Management is now playing a role of both personnel management and marketing. By creating the good impression for the workforce, people will respect and know more about the company.

Especially in the hospitality industry where people interact through services, employees will serve the guests better if they themselves get well treated from the company. In the words of Bill Marriot “If we take care of our people, they will take care of our guests.

” Or the motto of Ritz Carlton “We are ladies and gentlemen serving ladies and gentlemen” by which the company highlight their treatment with their own staff, putting them to equal level as guests and customers. This is fundamental reason why Marriot is on the list of best employers for years.


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