Strategic HRM (SHRM) and Business Performance

Dr Rajendra K Gupta Delhi India

First Published in 2006

“To make profits, you need people who can perform consistently. Period! “

Introduction

In most organizations until recently and even now in smaller firms, the
HR Department was a decorated time office or Personnel department
to compile CVs of various candidates.

The main responsibilities were:

Manage attendance and discipline.

Manage payroll every month or weekly as case may be.
Arrange namesake employee welfare programs
Comply with various labor laws including payment of Bonus Act
Recruit lower level persons as per requirements as laid down by
functional Boss or Big boss
Be ears of Boss and tip off management about gossip and rumors
and any inappropriate actions by any employee (spying)
Keep records of employees update and go through rigmarole of
yearly appraisal of employees. In government the fancy name is CR
(confidential report) which was later allowed to be seen and signed by
employee before submission.
Organize internal or external training programs, which later on have
became compulsory for compliance with ISO 9000 format, at least in
records.
An HR executive walking swiftly on floors across halls flip flopping
sandals in smart Sari or suit and folder in hand was more of motion
than work. All kinds of theories and arguments have been created by
so called HR experts to secure a seat in board of directors. WE found
most of trouble originated form there in various companies and
government departments with unhealthy politics, favoritism and
opportunism as HR guys are closer to the Big Boss on routine basis.
The fact remains that HR personnel have failed to answer and find
solution of various problems of organizations like:

-Motivation of workers and Managers

-Retention of outstanding employees
-Check employee attrition like in BPO industry and many more
-Align employee functions and objectives with that of strategic
objectives set by organization (which itself are not clear to
organizations bosses, themselves). Strategy has become a fancy
word right from Boston to Botswana.
-Draw effective skill up-gradation and training programs for giving
competitive edge to employees and thus to the organization despite
all their talks of competency mapping and HR card, new jargons
developed in last 5 decades.

The list can be longer, but it would suffice to mention only above few
points.

In fact HR was never taken seriously by owners and senior

executives themselves. Basically an important function of all Line
supervisors, this was hived off to HR department to shift the blame for
failures and to get rid of complex employee development and
appeasement task. The gun could easily be fired from shoulders of
HR department. When someone is to be got rid of, consultants( if
beyond scope of HR department) are appointed to study restructuring
the organization or part of its activity in face of emerging challenges (
read challenge from inconvenient or undesirable employee to boss).

Despite voluminous literature available on various aspects of HRM,

the fact remains that HRD has yet to prove its value in most
organizations even as most of routine tasks are handled now by
system managers on ready made software or are outsourced to
professional firms at cost effective rates in the popular BPO practice.

Desperate and frantic efforts of HR specialists to justify existence of

department, their huge pay packets, and continuation of HR
department as a separate and distinct discipline, as the globalizing
world takes chaotic turn with competitive conundrum, have resulted
into development of several HRM processes and models like
competency mapping and HR score cards and many more. The
unproven academicians churn out volumes of garbage as research
work in a bid to weather ‘Publish or perish’ dictates of entrenched
tenured professors.

Ken Hammonds’ article, “Why We Hate HR,” in Fast Company,

shocked the HR community. Hammonds quoted a college professor
stating, “The best and the brightest don’t go into HR.” Pretty harsh
words, especially when the HR professionals are trying to reinvent
HRM.

We now list the following goals for HR Personnel:

How to Make Values Live in Your Organization

Build a Strategic Framework: Mission Statement, Vision, Values...
Help in goal setting. Look Beyond Traditional SMART Goals.
Create Leadership Vision and culture of innovation
Support Company’s Brand
View employees as internal customers and convince them to believe
in organization and its products and claims
Manage a cross cultural work force and manage the young
overambitious guys who are desperate to blow off the hook.
Manage continuous competitiveness in changing business
environment and technology and product delivery systems
On top of it keep HR cost to minimum possible as it sure is
burgeoning as skilled and committed (repeat committed) employee
are becoming rare commodity. The wages and dissatisfaction are
rising in strange consonance
Create employee loyalty programs.

All this has to be done in consultative mode with senior

functionaries and the top management. Often we see lower rung
employees and even floor managers hating HR guys even on their
sight.

Roughly the list above can be called Strategic Human Resource

management and its challenges

We have all heard that HR needs to be more strategic to gain a seat

at the “proverbial” table, and that we need to be more business-
oriented. However, unless the whole HR community starts investing
in educating, certifying, and mentoring junior HR professionals, we
will never see the industry gain the respect it deserves

What does organization need from Human Resources professionals

in the twenty-first century? They need to:

• clearly demonstrate their value-added contribution to the

success of the overall strategic goals of the organization;

• provide measurements that show the success of the initiatives

and processes you provide as an HR service;

• recognize and treat all the members of your organization as

customers; and
• Change the perception of these customers about the role of the
HR professional.

Many people in organizations still relegate the HR professional to a

traditional policing, systematizing, and administrative role.

People are the real differentiators in modern business environment of

cut throat competition and fast changing technology product
deliveries. So what are the implications for HRM function? Go
strategic.

To succeed, HR must be a business driven function with a

thorough understanding of the organization’s big picture. It must
be viewed as a strategic consulting partner providing innovative
solutions and influencing key decisions and policies. While doing all
this they have to avoid putting their nose or leg as you may call into
working of senior line function executives.

Some of the HR surveys show that many of today’s younger workers

exhibit persistence and older workers are adopting this newfound
attitude. They believe their desired changes are good for everyone--
company and employees. If they don’t win change immediately, they
regroup, rethink their strategy, and try again. They believe in
speaking the unspeakable, in being pragmatic, not cynical. They want
to be treated as customers, not commodities. Many senior managers
complain about the arrogance. Today’s workers view assertiveness
as their right. They prefer to persist rather than quit because they
know it doesn’t get better elsewhere.

By understanding today’s workers, HR professionals can help

companies find ways to balance employees’ increasing work and
family challenges so they are satisfying and profitable to both
employee and employer.

Human Resource systems and processes are expected to enhance

the effectiveness of organizational learning process and develop
leadership pipeline. Actually semantics don’t matter whether you call
human resource or human assets. The fact remains the employees
are just workers working in various positions and command centers to
carry out requisite functions towards organization goals and targets.
Employee motivation, good healthy and friendly environment, visibly
fair compensation and encouragement is need besides sharing
developments in and outside organization which can be shared
without any harm to key technology and other information . Conflict
management and invisible politics and group forming, are inevitable
and have to be weakened as far as possible since the informal
groups of similar background persons are preferable and enhance
productivity.

Sharing the real life secrets

My long experience in corporate sector in India and in academics

management reveals startling issues to be addressed by HR function:

1. Excellent communication ,both horizontal and vertical is

essential for involving employees at various levels in
pursuing both long term and short term goals
2. Organizations in India have been traditionally lacking solid
values and ethical practices that support the propagated
policies and value system by top management, thus making
employees cynical form the double talk like elephants two set
of teeth.
3. Job insecurity and negative punitive management style in
most of firms
4. Inability to create dramatic effect and sustained
excitement in the organization to achieve better.
5. Failure to develop a visible work culture and organization
culture
6. Political rather than merit and loyalty based appraisals
and rewards (systems?). Most of these are ad-hoc and to
retain some employees, temporarily.
7. Superficial intentions for training and develop employees
viewing it as financial cost, time waste and fear of employee
leaving, thereafter. This is a realistic serious issue.
8. My view always has been that if your employee is not
suitable for the nearest higher competitor or equally good any
another organization, then that employee is liability for you. I
also view the employee who is good and trained is national
asset and even if he leaves, he will multiply and enrich
industrial environment in country and its effect will return to
you. At the same time organizations patented processes and
development plans have to be protected. But these any way
leak out somehow.
9. Loosening of process and quality standards after initial
success is serious issue in most organizations, which are
many times intentional, particularly true with Indian
entrepreneurs.
10. Strange but true that even in INR 10 Billion organizations
the delegation is partial, lacking or superficial thus limiting
innovative capability of organization.
11. Treating employees as commodity even now.
12. Trying to have same policies across the multi ethnic and
multi cultural organization in different location, especially
transnational, is definitely fatal.
13. Cohesive training and development program giving
adequate exposure to employees about, market conditions,
consumer preferences and competition evolving globally.
14. Poor ability to absorb quality models and new technology
processes and plant & machinery.
15. Lack of leadership and motivation by functional managers
lacking leadership qualities.
16. In Asian system like India, seniority matters a lot as
cultural subset and should be given due respect and
recognition.
17. Installing MIS and ERP and rule books without turning
organization into bureaucratic monolith is major challenge for
 large organizations. Such organization can’t operate as
learning organizations and able to adapt quickly to
environment changes and challenges as well as absorption
of new technology, products and processes.
18. Cost cutting in Personnel cost for super profits or
profiteering (A typical Indian attitude).

I have been reasonably successful in diverse work settings by

employing aggressive policies of HR management as senior
functionary by up gradation of technology, leading upfront, creating
excitement and dramatizing work environment and utilizing resources
better. Delegation, trust and participation with involvement were
major plank in these situations. It is strange but true that major
resistance and lack of support came from Owner/CEOs rather than
from employees and it appeared they are in comfort zone. It is sure
recipe for failure of business soon. Lack of stimulating environment
with freedom to work and experiment are main causes of lower
productivity, high attrition rate, lack of innovation.

Research evidence also supports that there are four factors that
affect the degree to which HRM can improve business
performance –the ultimate purpose of any model.

• The organizational context

• The views of top management
• The competence of the HR leader and the team
• The attitude and behavior of senior and middle level line
managers

One method of defining HR strategic policy and practice areas is

to consider various strategic models:

High-performance model (Stevens 1998)

High-commitment (Walton 1985 )

High-involvement (Pil and Macduffie 1999)

Let us now have a look at HRM good practices elements

suggested by US department of labor (1993)
{Michael Armstrong and Angela Baron: Handbook of strategic
HRM}

Careful and extensive systems for recruitment selection and

training (RST); Formal system for sharing information with
employees; Clear job design; High level participation processes ;
Monitoring of attitudes ; Performance appraisals(self appraisal
system should be followed for all executive positions in my view);
Properly functioning grievance procedures (with both procedural
and technical justice visible); promotion and compensation
schemes that provide for the recognition and reward of high-
performing employees.

This point should not be lost while discussing Strategic HRM that
every employee has a right and looks forward to both horizontal
and vertical growth with room for experimenting with ideas and
testing entrepreneurial spirit within and organization have to
continuously adapt to this requirement by changing and
expanding. No one likes to work with stagnant organization or
organization without sharing growth with employees-Promotions,
participations and financial rewards.

The changing profile of New Age young workers especially in

digital and ITES field has to be built in HR policies like flexibility of
work time, freedom for experimenting and innovation, quicker
growth than conventional industries, and sense of identity with
projects of company. There is another challenge –distributed
members of project team geographically, and even in other
countries. Further the work from home system that is fast
emerging. Their work monitoring and appraisal therefore is
different than working at single location office. This is emerging
area of HRM and Strategic Management as data security and
integrity are big concerns in this work environment.

It is also seen that Top management/owners in Indian companies

still have commodity approach underpaying, disallowing
delegation, curbing enterprise and failing to communicate
organizational goals. Such organizations have little chances of
growth or survival for long in new environment. Here role of HR
leadership is most crucial to transform the organizations into
innovative, learning and flexible organization where employees
find it exciting to work with lot of room with all round positive
environment within the organization.

Strategic Human Resource Management

Despite all sorts of definitions available in literature SHRM is

simply: Sourcing and making best use of human assets towards
achieving business goals of organization on long term basis. It is
thus a planned & proactive process of partnership with top
management to achieve desired long term organizational growth
and direction while satisfying the individual objectives and growth
of best employees; A tall order indeed.

About Author and acknowledgments:

The references and text taken for fair use has been acknowledged
at respective places. This article is attempt to document various
findings in HR literature and besides it is based on practical
experience of author as senior manager in Indian corporate sector
for over 20 years, mostly with growing organizations. The author,
Presently a Business Consultant and Professor of Management,
has worked in several Indian multi-unit multi-location well
managed cash rich industrial houses across various sectors like
engineering, special steels, textiles, chemicals and food
processing and exceeded previous records, almost everywhere.

The books and research used in preparing this paper have been
mentioned where applicable.