Integrating Strategy and Human Resource Management

INTEGRATING STRATEGY AND HUMAN RESOURCE MANAGEMENT

The role of human resource management is one of strategic partner, administrative expert, and consultant (managing all of the organization’s people related processes strategically). It is the job of hr management in to recognize that decreased turnover, higher employee morale, and involved employees in the decision making process are all optimal in providing key leverage in an organization’s strategic plan. Management integrate strategic hr management with the organization’s strategy formulation. This means that management has searched the organization and its environment for opportunities and initiated projects and decisions to bring about changes that are both advantageous and competitive for the organization. Through this integration, HR policies must “cohere and be accepted across all company policy areas and across all hierarchies in the company”. These same HR policies had to be turned into practices that were used by both managers and employees as part of their everyday work. The hr management role has changed tremendously from being a mostly personnel function, consisting primarily of a lot of paper pushing, hiring and firing, to being totally responsible for the maximization of “human capital effectiveness”. Which primarily creates a better-trained, more flexible workforce that will add more to the bottom line. Peoples’ Bank went through some organizational restructuring in order to stay competitive in the market. As a result of the changes that were made in the Bank’s System, HR Management had to do research and analysis in order to scan the banks new environment to see what types of employees would be needed with the “new strategy’s skill and organizational requirements. This was a use of HR’s information management skills, which was followed by HR’s integration and change skills to manage the organizational interfaces, assess the organizations skills (or the current values of the banks human resource investment), set priorities, anticipate the future, and facilitate the changes. This is an excellent example of HR Management’s role being at every level of the strategic planning process.

At Peoples’ Bank, “massive changes began to take place in the business environment of banking with deregulation and the relaxation of ceilings on interest”. This affected what people actually did with their money and where they actually put their money; and these two factors affected the whole money market system of banking. This especially affected the competition between the different levels of banks (regional, district, and local) for various (but the same) sources of funds. In the US Navy, their environmental issue was mostly cost containment. “In the Navy’s case the HR planners analyzed the labor cost savings of a strategy involving its civilian employees, which would substitute local wage policies for national wage policies” which are higher. The Navy basically began operating HR as a profit center to minimize incremental costs. At Ingersoll-Rand, the company was faced with the opportunity for improved productivity through changes in technology. Then at Maid Bess, the company had the environmental influence of intense foreign competition.

The sum of the environmental factors that facilitated the actions and changes in each of the organizations was as follows:

The rapid rate of business change; high uncertainty; rising costs; increasing competitive pressures on the bottom line; the legal environment; increasing demands for new skills through education and retraining; increasing multinational competition and collaborations; and all the rapid technological changes (which is a huge factor). All the new technology causes increased competition by providing vast amounts of market data. This data allows companies to quickly collect, analyze, and interpret changing and emerging customer needs. This affects the rate of business change. Technology also changes the way the work is done; this increases demands for new skills through education and retraining. As a result the ability to access and share information creates a growing need for less hierarchy and more employee empowerment. A common theme running through all these environmental factors is a cost control orientation, which means that organizations (as it relates to remaining profitable and competitive) have a concentrated focus on containing costs. This can most often be done through planning and planning can be done through (first) environmental scanning. Another environmental factor is reengineering, which is also called process innovation, core process redesign, or business process reengineering. Reengineering is directed at achieving large cost savings by eliminating unneeded