Importance of integrating Human Resource Management into a business’s strategic planning process


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Importance of integrating Human Resource Management into a business’s strategic planning process

  1. 1. Economic StudiesEC50012 : Human Resource Management StrategiesSession 2012-13Essay TitleQ1 : Explain the importance of integrating Human Resource Management into abusiness’s strategic planning process.Submitted ToDr. Paul SeamanUniversity of DundeeBySwapnil Mali 120004897School of Business
  2. 2. EC50013: International Human Resource Management Page 11.0 Introduction-Western Europe, North America and most of the developed countries are trying their best toget out of the economic slowdown. There are many problems due to the changes in theeconomic, political, and technical environments. Talent shortage is one of the biggestproblems for big companies. Google is managing to attract new talent and retain theirworkers due to their innovative and flexible HR practices (Talent Search, 2010). Businessplan should recognise at first that human resource management as an integral part of thebusiness strategies. To compete in the highly changing environment, companies need to comeout with new innovative products in market. But for the innovation it is necessary thattalented and experienced employees should be there with company for long enough time todevelop such products. HR helps to hire and train new talent and develop innovativeapproach. The most important thing is to keep “star” or “A list” managers with company forlong time. These human capitals are irreplaceable so need to handle them in accordance withtheir expectation. This essay will argue about the importance of integrating Human ResourceManagement into a business’s strategic planning process.2.0 Importance of strategic planning-"The Strategic Planning Process provided clarity and concreteness to our goals, strategies,and timetables. It also created a bond that brought my group together both as a new businessas well as a team.”Jeffrey D. Morgan, Director, Licensing, Polo Ralph LaurenStrategic planning includes a plan of all actions intended for competitive advantage over thecompetition through strategic and organizational innovation (Joe Evans, n.d.). Strategiesinvolve practices which lead company to work with more efficiency. Take an example ofstrategy by Anglo American which is one of the world’s largest mining companies. Theyachieve maximum turnover by using their skillful talent. Their program was called as AssetOptimisation (AO). The company had combined the top experts from central technical team,and local team. Local team had gone through the training program and had learnt many newways of efficient working. This AO was inclusive of holistic approach to both the health andperformance of company. The AO approach was all about sharing and learning practiceacross a very large company (Anglo American case study, 2011). The strategy of AssetOptimisation worked very well for Anglo American. There are many examples wherecompanies changed their strategies in order to be more efficient and competitive in market.
  3. 3. EC50013: International Human Resource Management Page 2The strategy here with Asset Management had direct involvement of HR department. Thereare many other examples where HR is not directly related to strategies but somehow hasindirect relation.3.0 Involvement of Human Resource Management in strategic planning-In the case of Anglo American, company had managed to achieve growth by leveraging theirskilful workers which was nothing but their human capital. HRM deals with human capital ofcompany. To stay ahead in the race, company need to be faster than the competitors.Workers’ and organisations’ expectations are changing; HR helps to cope up with this bychanging managerial approach. It helps organization to work with more capacity byattracting new talent and keeping experienced employees with company, specially talkingabout the new technology based small or medium enterprises which are totally depend on theindividual talent in company. HR helps to focus on the individuals and teams in organisationand motivated them to achieve the strategic target by the top management. Any businessleader needs to create right kind of working environment for the employees to workefficiently.Douglas McGregor (1906 - 1964) developed a philosophical view and came with theory Xand Y. According to his theories, X type of people have tendency to avoid work and get awaywith responsibilities. Buy Y type of people are naturally self-motivated and ready to takeresponsibility of work. Managers have to deal with these people with different approaches.Identifying Y type of people is very important for development but also needs to identify Xtype of people to direct them in order to work more willingly. “Management has not yetconsidered in any depth what is involved in managing an organization heavily populated withpeople whose prime contribution consists of creative intellectual effort.” — DouglasMcGregor. HRM may have soft approach which concern about people more or may havehard approach which concern about resource part. These approaches depend on kind ofworkforce and core business of organization. Targets in the strategic plans are totallydepending on employees. When HR is included in planning process, targets are set to theappropriate level, because of having more knowledge of productivity of employees. With HRdepartment they can check the percentage of well performing and underperformingemployees in company.
  4. 4. EC50013: International Human Resource Management Page 3When company want to grow in new emerging markets like Vietnam and Indonesia ratherthan India or Brazil then most important task is to transfer the knowledge and workingculture. The problems in emerging market are find new talent, and develop new talent.Generally company adopts method of sending business leader from eastern developed marketto new developing country and train local talent. Also some companies do reverse things aswell. Some time it may happen that home country market is slower and bureaucratic, thencompany may adopt working culture from new market. More innovative and moreperformance focused approaches are necessary to get and maintain intellectual workforcewith company. The organization should be more flexible in order to keep employees’ owninterested under the organizational interests. Employees must come with own ideas and shareit with company rather than leave company to develop on own.Elton Mayo (1880-1949) gave human relation theory of management. He came up withtheory which says employees’ relation with each other is also important to create goodworking environment. Mary Parker Follett (1868-1933) came with theory which more dependon human behavior and its importance while managing employees. All these theories aretrying to say that there is something more than a money or financial incentives to motivateemployees and create good working environment. Take an example of Google. It became thebest company to work for. The main reason was their impressive and innovative HR policies.Google allowed employees to work on their own projects for 20% of time. They are gettingfree and really good meal. Employees have more flexible options for buying stocks. Specialcare is taken for children and their education (Doshi D, 2011). This shows how HR policiescan help to create good environment within organization and help to grow better. Anybusiness leader dreams about this kind of excellent working environment at workplace.HR has many more aspects and various tasks in business. HR may be direct involved insuccession management, expansion process, or mergers and acquisitions. Future planning ofhuman capital through succession planning is generally related to the strategic planning oforganization. This planning ensures that company will have enough human capital in futureto successfully implement the strategic plans (Dave Yost, 2011). After mergers andacquisitions, HR has very important role to play. They need to make sure aboutcommunication between all new and old employees. Also need to deal with the newemployees with different working culture. Keep the communication alive upwards,downwards and across the department is also very important.Performance appraisal is also a part of HR department. Jack Welch, General Electric CEO(1981-2001) is known for his hard approaches towards employees. He had started with Six
  5. 5. EC50013: International Human Resource Management Page 4Sigma program at GE. Company used to fire lowest 10% performers every year. GE’ssuccess and strategy was very much dominated with this Six Sigma system (Kallokane,2009).4.0 Conclusions-Successful businesses are able to manage their growth because of their unique strategiescompared to competitors. Organization should have proper communication between theirtechnical, financial and human resource departments while making any strategy. Thesedepartments are three main important parts is any organization. Generalized definition saysthat management is nothing but getting work done through people. Definition itself quotes theimportance of “people” part of management. Google’s strategy of giving employees morefreedom at work, Anglo American’s strategy of asset management where more focus givenon training of employees; these cases shows the importance of human resource managementin organization. Integration of HR department during any strategic decision gives extra edgeto company, as this department which is responsible for recruitment, selection, and training ofemployees at first stage. Performance appraisal is also a task of HR department. GeneralElectric used this in their strategy to manage efficiency in their company. Involvement of HRdepartment can make targets set by company more realistic and achievable. With variousaspects and examples, this essay concludes that it is very important to involve HR departmentin the strategic planning process.
  6. 6. EC50013: International Human Resource Management Page 5References-Anglo American case study, 2011, viewed 19 Nov 2012,<>Dave Yost, 2011, Succession management, viewed 21 Nov 2012,< >Doshi D, 2011, 10 things learn from Google, viewed 23 Nov 2012,<>Joe Evans, n.d., viewed 19 Nov 2012,<>Kallokane, 2009, Performance Evaluations, Business Strategy, and Agile Methodologies,viewed 21 Nov 2012, <>Senga Briggs, William Keogh, 2011, Integrating human resource strategy and strategicplanning to achieve business excellence, viewed 20 Nov 2012,<>Talent Search, 2010, viewed 18 Nov 2012, <>