The integration of HR and strategic management should begin at the strategic analysis stage. In this stage business goals, external opportunities and competitive advantages are identified. HR must perform environmental scanning to identify the people-related business issues. HR then must play a role in the strategy formulation by clarifying performance expectations and future management methods. At this stage a business mission is determined and action plans and resource allocations are set. HR strategies, objectives and action plans must be set to coincide with and ensure the business strategy is carried out. Finally, HR plays a role in strategy implementation by developing processes for organizational change, strategic staffing, learning and development and employee relations.
As organizations plan for the future, Human Resources (HR) professionals must take on the strategic role of anticipating where the company is going to be down the road and understanding the changing demographics and expectation of the workforce. Essentially, HR is the guardian of information as to who the best people in the organization are and what their talents are. HR must track the skills of the workforce and match them up with the organization’s needs. In addition to being knowledgeable about the organization’s workforce, the strategic role of HR involves being knowledgeable about the labor force outside the organization.
In order to effectively be a part of the strategic planning process, HR must perform environmental scanning. Environmental scanning is the monitoring of the major external forces influencing the organization. (Bohlander1998) Some environmental factors may include: economic factors, competitive trends, technological changes, political issues, socia! l issues, and demographic trends. A vital element of HR’s strategic role is determining if people are available, internally or externally, to carry out the organization’s goals.
Ultimately, successful HR planning helps to increase the organization’s ability to act and change and gain competitive advantage. There must, however, be a reciprocal and interdependent relationship between top management and HR. This is best achieved when a HR manager is part of the organization’s management steering committee or strategic-planning team. HR’s role is to essentially conduct a skills analysis which involves the evaluation of employees’ and applicants’ knowledge, skills and abilities in relation to the future needs of the organization. First, HR must have a clear picture of what the organization will be doing by the end of the planning period and then predict the needs and create a list of job modifications, descriptions and specifications that can meet those needs.
HR must then evaluate knowledge, skills and abilities of employees. Based on this analysis, training and development programs may need to be developed within the organization to ready staff for future business plans. In addition, outside recruitment may be needed to fill the upcoming staffing needs. Outside recruitment is part of the strategic planning process that requires HR to be aware of external factors influencing the labor force. Evaluating and planning for demographic changes are one of the greatest challenges HR managers face. Changes in age, gender, ethnicity, and education are expected to have a significant impact on the labor force in the next 10 years, creating a more diverse and aging workforce. HR managers must consider the shrinking pool of workers and the individual differences of a diverse workforce in order to strategically plan and align the HR goals with the future objectives of the organization. According to the Bureau of Labor Statistics 1996 – 2006 employment projections, the Asian-and-other and Hispanic labor force is projected to increase by 41 percent and 365 percent, respectively. The black work force is expected to grow by 14 percent. Due to the aging of the baby boomer, the labor force age 45-64 will be the largest. These demographic trends indicate a need for HR to be particularly sensitive to the needs of a diverse workforce. The age distribution may indicate a lack of workers in occupations that may require a younger demographic, such as a physically demanding job.
These trends are indicative of workforce issues that may arise in the future. As the labor force ages, the country will undoubtedly experience a labor shortage when baby boomers retire. HR planners need to be aware of this potential problem and strategize to address it. Effectively managing cultural diversity is of even greater significance, as companies become more global. Today’s economy is global and HR must be willing to take on the roles and challenges that a global marketplace brings.
In addition to evaluating external forces effecting the organization, HR is key in examining the attitudes and activities of the organization’s workforce. HR can play a strategic role in enhancing management’s effectiveness. For example, by monitoring the organization’s culture, HR can advise managers on what leadership style works best and how to motivate and reward employees. In working with line managers, HR plays a key role in helping managers measure employee performance and providing learning and development where necessary. By working together, HR specialists and line managers can develop and utilize the talents of employees to their greatest potential benefit to the organization. HR is also instrumental in communicating and implementing cultural change efforts throughout the organization. In order to effectively do this, HR must be aware of the current culture and be involved in the strategic planning of the change efforts.
The strategic role of HR managers requires them to work with line managers and executives to create a vision for the organization’s futures, establish a strategy that enables the strategic plan to be executed, and communicate with employees about the change process in order to achieve the organization’s goals. In order to “compete through people” organizations have to integrate HR into the strategic planning process in order to mange human capital effectively and develop strategies for identifying, recruiting, and hiring the best talent available.
Bohlander, George W., Sherman, Arthur, Snell, Scott. 1998. Managing Human Resources, South-Western College Publishing, Cincinnati, Ohio.
Lake, Gerry, Losey, Michael R., Ulrich, Dave. 1997. Tomorrow’s HR Management, John Wiley & Sons, Inc., New York, New York.
Leonard, Bill, What do CEOs want from HR?, HR Magazine, Nov 1998 v43 n12 p80(7).
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Internet – http://web7.searchbank.com/itw/session/142
Sullivan, John. Clarifying the Strategic Role of HR, Workinfo.com Newsletter. 2006
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