HR Strategies and Business

Performance
Week 9 and 10

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Improving business performance through
strategic HRM

 Strategic HRM is about improving business performance through

people.

 Organizations in all sectors (private, public or voluntary) have to

be business-like in the sense that they are in the business of
effectively and efficiently achieving their purpose, whether this is
to make profits, deliver a public service or undertake charitable
functions

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Improving business performance through
strategic HRM (cont’d)

The major concerns of strategic HRM are to meet the business

needs of the organization and the individual and collective needs of
the people employed in it.

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HOW HR strategies IMPACTS ON
ORGANIZATIONAL PERFORMANCE

 The assumption underpinning the practice of HRM is that people are the organization’s
key resource and organizational performance largely depends on them.

 If, therefore, an appropriate range of HR policies and processes is developed and

implemented effectively, then HR will make a substantial impact on firm performance.

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HOW HR strategies IMPACTS ON
ORGANIZATIONAL PERFORMANCE (Cont’d)

 The purpose of strategic human resource management is to

improve business performance through people management.

 The organizations need to manage their human resources

effectively and efficiently to achieve the desired goals and
objectives. The achievement the goals and objectives translate
also in better performance.

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HOW HR strategies IMPACTS ON
ORGANIZATIONAL PERFORMANCE (Cont’d)

 So, How should organizations manage their main source – human resources?
 Does strategic human resource management help to meet the needs, the goals
and objectives of the business?
 As should be adapted strategic human resource management to realize the
performance?
 How should adapt strategic management of human resources to increase
organizational performance?

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HOW HR strategies IMPACTS ON
ORGANIZATIONAL PERFORMANCE (Cont’d)

 Strategic HRM is a process that involves the use of overarching approaches to

the development of HR strategies, which are integrated vertically with the
business strategy and horizontally with one another.

 These strategies define intentions and plans related to the overall

organizational considerations, such as organizational effectiveness, and to
more specific aspects of people management, such as; resourcing, learning and
development, reward and employee relations. Strategic HRM focuses on
actions that differentiate the firm from its competitors

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES

 The practice areas covered by HR strategies that impact on performance are :

 Attracting, developing and retaining high-quality people:
Matches people to the strategic and operational needs of the organization. Provides for the
acquisition, development and retention of talented employees who can deliver superior
performance, productivity, flexibility, innovation and high levels of personal customer
service and who ‘fit’ the culture and the strategic requirements of the organization.
 Talent management
Wins ‘war for talent’ by ensuring that the talented and well-motivated people required by
the organization to meet present and future needs are available.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

 Working environment – core values, leadership, work–life balance,

managing diversity, secure employment
Develops ‘the big idea’ (Purcell et al, 2003), ie a clear vision and a set of
integrated values. Makes the organization ‘a great place to work’.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

 Job and work design

Provides individuals with stimulating and interesting work and gives
them the autonomy and flexibility to perform their jobs well.
Enhances job satisfaction and flexibility, which encourages high
performance and productivity.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

 Learning and development

 Enlarges the skill base and develops the levels of competence required in the
workforce. Encourages discretionary learning, which happens when
individuals actively seek to acquire the knowledge and skills that promote the
organization’s objectives. Develops a climate of learning – a growth medium
in which self-managed learning as well as coaching, mentoring and training
flourish.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

Managing knowledge and intellectual capital

Focuses on both organizational and individual learning and on providing
learning opportunities and opportunities to share knowledge in a systematic way.
Ensures that vital stocks of knowledge are retained and deals with improving the
flow of knowledge, information and learning within the organization.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

Increasing motivation, commitment and role engagement

Encourages people to identify themselves with and act upon the core
values of the organization and willingly to contribute to the
achievement of organizational goals. Develops a climate of
cooperation and trust, clarifying the psychological contract.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

 High-performance management
 Develops a performance culture that encourages high performance in such
areas as productivity, quality, levels of customer service, growth, profits and,
ultimately, the delivery of increased shareholder value. Empowers employees
to exhibit the discretionary behaviours most closely associated with higher
business performance such as risk taking, innovation, knowledge sharing and
establishing trust between managers and subordinates.

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HOW STRATEGIC HRM CONCEPTS IMPACT ON
PRACTICES (cont’d)

 Reward management
Develops motivation, commitment, job engagement and discretionary behaviour
by valuing and rewarding people in accordance with their contribution.

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The Impact of SHRM on Organizational
Performance
 Strategic HRM focuses on actions that differentiate the firm from its competitors .
 It has seven meanings:
 • the use of planning;
 • a coherent approach to the design and management of personnel;
 • systems based on an employment policy and workforce strategy;
 • often underpinned by a “philosophy”;
 • matching HRM activities and policies to some explicit business strategy;
 • seeing the people of the organization as a strategic resource;
 •achievement of competitive advantage.

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The Impact of SHRM on Organizational
Performance (cont’d)
 Strategic HRM has a clear focus on implementing strategic change and growing the
skill base of the organization to ensure that the organization can compete effectively in
the future .
 SHRM facilitates the development of a human capital that meets the requirements of
business competitive strategy, so that organizational goals and mission will be
achieved. Strategy of human resource management is an integral part of business.The
main focus of this strategy is to achieve organizational objectives

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The Impact of SHRM on Organizational
Performance (cont’d)
 Strategic management of human resources represents a transformation that is relatively
new in the field of human resource management. An important role of strategic human
resource management is about focusing the management in employees as a tool to gain
competitive advantage. Now, organizations are made aware that successful human
resources policies and practices of appropriate can increase performance in various
areas such as productivity, quality and financial performance.

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The Impact of SHRM on Organizational
Performance (cont’d)
 organizations are trying to create as much competitive in the market, reaching
to manage their human resources in achieving organizational performance
required.
 Some of the goals are cost reduction, achieving sales levels, increasing the
number of customers, increasing the market percentage, increasing product
quality, innovative products, improve productivity.
 Human resources are playing an important role in achieving these performance
indicators.

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The Impact of SHRM on Organizational
Performance (cont’d)
 But before that, organizations should realize the expectations required from employees
and so the employees show their skills, be
 Strategic HRM is a detailed process for human resource management throughout the
organization that it’s integrated with the organization's overall strategy.
 It enables the organization having employees with the right skills and putting them in
positions according to the level of their qualification and skills.

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The Impact of SHRM on Organizational
Performance (cont’d)
 What is organizational performance and how can be achieved?
 Organizational performance is related to the achievement of the objectives
required by the organization.
 The achieving organizational performance is a result of the behavior of
employees in the organization. Policies and practices of organizations motivate
employees and they give impact on organizational performance.
 Some of these are: human resource planning, recruitment, selection, training
and development, compensation, performance management and employee
relations.

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The Impact of SHRM on Organizational
Performance (cont’d)
 What is organizational performance and how can be achieved?(cont’d)
 A link between Strategic HRM and organizational performance has been
developed by author Michael Armstrong. According to him, the performance
is a function of the Ability + Motivation + Opportunity (AMO).
 By achieving the expectations of employees, it will be reached the
performance required by the organization. Organizations need to consider
human resource as a tool to gain competitive advantage needed to create
appropriate policies and practices.

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Thank you

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