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Economic Studies
EC50012 : Human Resource Management Strategies
Session 2012-13
Essay Title
Q1 : Explain the importance of integrating Human Resource Management into a
business’s strategic planning process.
Submitted To
Dr. Paul Seaman
University of Dundee
By
Swapnil Mali 120004897
School of Business
EC50013: International Human Resource Management Page 1
1.0 Introduction-
Western Europe, North America and most of the developed countries are trying their best to
get out of the economic slowdown. There are many problems due to the changes in the
economic, political, and technical environments. Talent shortage is one of the biggest
problems for big companies. Google is managing to attract new talent and retain their
workers due to their innovative and flexible HR practices (Talent Search, 2010). Business
plan should recognise at first that human resource management as an integral part of the
business strategies. To compete in the highly changing environment, companies need to come
out with new innovative products in market. But for the innovation it is necessary that
talented and experienced employees should be there with company for long enough time to
develop such products. HR helps to hire and train new talent and develop innovative
approach. The most important thing is to keep “star” or “A list” managers with company for
long time. These human capitals are irreplaceable so need to handle them in accordance with
their expectation. This essay will argue about the importance of integrating Human Resource
Management 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 business
as well as a team.”
Jeffrey D. Morgan, Director, Licensing, Polo Ralph Lauren
Strategic planning includes a plan of all actions intended for competitive advantage over the
competition through strategic and organizational innovation (Joe Evans, n.d.). Strategies
involve practices which lead company to work with more efficiency. Take an example of
strategy by Anglo American which is one of the world’s largest mining companies. They
achieve maximum turnover by using their skillful talent. Their program was called as Asset
Optimisation (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 new
ways of efficient working. This AO was inclusive of holistic approach to both the health and
performance of company. The AO approach was all about sharing and learning practice
across a very large company (Anglo American case study, 2011). The strategy of Asset
Optimisation worked very well for Anglo American. There are many examples where
companies changed their strategies in order to be more efficient and competitive in market.
EC50013: International Human Resource Management Page 2
The strategy here with Asset Management had direct involvement of HR department. There
are many other examples where HR is not directly related to strategies but somehow has
indirect 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 their
skilful workers which was nothing but their human capital. HRM deals with human capital of
company. 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 by
changing managerial approach. It helps organization to work with more capacity by
attracting new talent and keeping experienced employees with company, specially talking
about the new technology based small or medium enterprises which are totally depend on the
individual talent in company. HR helps to focus on the individuals and teams in organisation
and motivated them to achieve the strategic target by the top management. Any business
leader needs to create right kind of working environment for the employees to work
efficiently.
Douglas McGregor (1906 - 1964) developed a philosophical view and came with theory X
and Y. According to his theories, X type of people have tendency to avoid work and get away
with responsibilities. Buy Y type of people are naturally self-motivated and ready to take
responsibility 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 X
type of people to direct them in order to work more willingly. “Management has not yet
considered in any depth what is involved in managing an organization heavily populated with
people whose prime contribution consists of creative intellectual effort.” — Douglas
McGregor. HRM may have soft approach which concern about people more or may have
hard approach which concern about resource part. These approaches depend on kind of
workforce and core business of organization. Targets in the strategic plans are totally
depending on employees. When HR is included in planning process, targets are set to the
appropriate level, because of having more knowledge of productivity of employees. With HR
department they can check the percentage of well performing and underperforming
employees in company.
EC50013: International Human Resource Management Page 3
When company want to grow in new emerging markets like Vietnam and Indonesia rather
than India or Brazil then most important task is to transfer the knowledge and working
culture. The problems in emerging market are find new talent, and develop new talent.
Generally company adopts method of sending business leader from eastern developed market
to new developing country and train local talent. Also some companies do reverse things as
well. Some time it may happen that home country market is slower and bureaucratic, then
company may adopt working culture from new market. More innovative and more
performance focused approaches are necessary to get and maintain intellectual workforce
with company. The organization should be more flexible in order to keep employees’ own
interested under the organizational interests. Employees must come with own ideas and share
it with company rather than leave company to develop on own.
Elton Mayo (1880-1949) gave human relation theory of management. He came up with
theory which says employees’ relation with each other is also important to create good
working environment. Mary Parker Follett (1868-1933) came with theory which more depend
on human behavior and its importance while managing employees. All these theories are
trying to say that there is something more than a money or financial incentives to motivate
employees and create good working environment. Take an example of Google. It became the
best 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 getting
free and really good meal. Employees have more flexible options for buying stocks. Special
care is taken for children and their education (Doshi D, 2011). This shows how HR policies
can help to create good environment within organization and help to grow better. Any
business 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 in
succession management, expansion process, or mergers and acquisitions. Future planning of
human capital through succession planning is generally related to the strategic planning of
organization. This planning ensures that company will have enough human capital in future
to successfully implement the strategic plans (Dave Yost, 2011). After mergers and
acquisitions, HR has very important role to play. They need to make sure about
communication between all new and old employees. Also need to deal with the new
employees 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
EC50013: International Human Resource Management Page 4
Sigma program at GE. Company used to fire lowest 10% performers every year. GE’s
success 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 strategies
compared to competitors. Organization should have proper communication between their
technical, financial and human resource departments while making any strategy. These
departments are three main important parts is any organization. Generalized definition says
that management is nothing but getting work done through people. Definition itself quotes the
importance of “people” part of management. Google’s strategy of giving employees more
freedom at work, Anglo American’s strategy of asset management where more focus given
on training of employees; these cases shows the importance of human resource management
in organization. Integration of HR department during any strategic decision gives extra edge
to company, as this department which is responsible for recruitment, selection, and training of
employees at first stage. Performance appraisal is also a task of HR department. General
Electric used this in their strategy to manage efficiency in their company. Involvement of HR
department can make targets set by company more realistic and achievable. With various
aspects and examples, this essay concludes that it is very important to involve HR department
in the strategic planning process.
EC50013: International Human Resource Management Page 5
References-
Anglo American case study, 2011, viewed 19 Nov 2012,
<http://businesscasestudies.co.uk/anglo-american/adding-value-through-asset-
optimisation/introduction.html#axzz2CnVb2Ewd>
Dave Yost, 2011, Succession management, viewed 21 Nov 2012,
<http://skinnyohio.org/humanresources/successionplanning.html >
Doshi D, 2011, 10 things learn from Google, viewed 23 Nov 2012,
<http://www.chillibreeze.com/articles_various/working-at-Google.asp>
Joe Evans, n.d., viewed 19 Nov 2012,
<http://www.methodframeworks.com/article/definition-strategic-planning-white-
paper/index.html>
Kallokane, 2009, Performance Evaluations, Business Strategy, and Agile Methodologies,
viewed 21 Nov 2012, <http://kallokain.blogspot.co.uk/2009/06/performance-evaluations-
business.html>
Senga Briggs, William Keogh, 2011, Integrating human resource strategy and strategic
planning to achieve business excellence, viewed 20 Nov 2012,
<http://www.management.com.ua/hrm/hrm017.html>
Talent Search, 2010, viewed 18 Nov 2012, <http://www.hrmreport.com/article/Talent-
Search/>

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

  • 1. Economic Studies EC50012 : Human Resource Management Strategies Session 2012-13 Essay Title Q1 : Explain the importance of integrating Human Resource Management into a business’s strategic planning process. Submitted To Dr. Paul Seaman University of Dundee By Swapnil Mali 120004897 School of Business
  • 2. EC50013: International Human Resource Management Page 1 1.0 Introduction- Western Europe, North America and most of the developed countries are trying their best to get out of the economic slowdown. There are many problems due to the changes in the economic, political, and technical environments. Talent shortage is one of the biggest problems for big companies. Google is managing to attract new talent and retain their workers due to their innovative and flexible HR practices (Talent Search, 2010). Business plan should recognise at first that human resource management as an integral part of the business strategies. To compete in the highly changing environment, companies need to come out with new innovative products in market. But for the innovation it is necessary that talented and experienced employees should be there with company for long enough time to develop such products. HR helps to hire and train new talent and develop innovative approach. The most important thing is to keep “star” or “A list” managers with company for long time. These human capitals are irreplaceable so need to handle them in accordance with their expectation. This essay will argue about the importance of integrating Human Resource Management 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 business as well as a team.” Jeffrey D. Morgan, Director, Licensing, Polo Ralph Lauren Strategic planning includes a plan of all actions intended for competitive advantage over the competition through strategic and organizational innovation (Joe Evans, n.d.). Strategies involve practices which lead company to work with more efficiency. Take an example of strategy by Anglo American which is one of the world’s largest mining companies. They achieve maximum turnover by using their skillful talent. Their program was called as Asset Optimisation (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 new ways of efficient working. This AO was inclusive of holistic approach to both the health and performance of company. The AO approach was all about sharing and learning practice across a very large company (Anglo American case study, 2011). The strategy of Asset Optimisation worked very well for Anglo American. There are many examples where companies changed their strategies in order to be more efficient and competitive in market.
  • 3. EC50013: International Human Resource Management Page 2 The strategy here with Asset Management had direct involvement of HR department. There are many other examples where HR is not directly related to strategies but somehow has indirect 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 their skilful workers which was nothing but their human capital. HRM deals with human capital of company. 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 by changing managerial approach. It helps organization to work with more capacity by attracting new talent and keeping experienced employees with company, specially talking about the new technology based small or medium enterprises which are totally depend on the individual talent in company. HR helps to focus on the individuals and teams in organisation and motivated them to achieve the strategic target by the top management. Any business leader needs to create right kind of working environment for the employees to work efficiently. Douglas McGregor (1906 - 1964) developed a philosophical view and came with theory X and Y. According to his theories, X type of people have tendency to avoid work and get away with responsibilities. Buy Y type of people are naturally self-motivated and ready to take responsibility 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 X type of people to direct them in order to work more willingly. “Management has not yet considered in any depth what is involved in managing an organization heavily populated with people whose prime contribution consists of creative intellectual effort.” — Douglas McGregor. HRM may have soft approach which concern about people more or may have hard approach which concern about resource part. These approaches depend on kind of workforce and core business of organization. Targets in the strategic plans are totally depending on employees. When HR is included in planning process, targets are set to the appropriate level, because of having more knowledge of productivity of employees. With HR department they can check the percentage of well performing and underperforming employees in company.
  • 4. EC50013: International Human Resource Management Page 3 When company want to grow in new emerging markets like Vietnam and Indonesia rather than India or Brazil then most important task is to transfer the knowledge and working culture. The problems in emerging market are find new talent, and develop new talent. Generally company adopts method of sending business leader from eastern developed market to new developing country and train local talent. Also some companies do reverse things as well. Some time it may happen that home country market is slower and bureaucratic, then company may adopt working culture from new market. More innovative and more performance focused approaches are necessary to get and maintain intellectual workforce with company. The organization should be more flexible in order to keep employees’ own interested under the organizational interests. Employees must come with own ideas and share it with company rather than leave company to develop on own. Elton Mayo (1880-1949) gave human relation theory of management. He came up with theory which says employees’ relation with each other is also important to create good working environment. Mary Parker Follett (1868-1933) came with theory which more depend on human behavior and its importance while managing employees. All these theories are trying to say that there is something more than a money or financial incentives to motivate employees and create good working environment. Take an example of Google. It became the best 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 getting free and really good meal. Employees have more flexible options for buying stocks. Special care is taken for children and their education (Doshi D, 2011). This shows how HR policies can help to create good environment within organization and help to grow better. Any business 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 in succession management, expansion process, or mergers and acquisitions. Future planning of human capital through succession planning is generally related to the strategic planning of organization. This planning ensures that company will have enough human capital in future to successfully implement the strategic plans (Dave Yost, 2011). After mergers and acquisitions, HR has very important role to play. They need to make sure about communication between all new and old employees. Also need to deal with the new employees 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. EC50013: International Human Resource Management Page 4 Sigma program at GE. Company used to fire lowest 10% performers every year. GE’s success 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 strategies compared to competitors. Organization should have proper communication between their technical, financial and human resource departments while making any strategy. These departments are three main important parts is any organization. Generalized definition says that management is nothing but getting work done through people. Definition itself quotes the importance of “people” part of management. Google’s strategy of giving employees more freedom at work, Anglo American’s strategy of asset management where more focus given on training of employees; these cases shows the importance of human resource management in organization. Integration of HR department during any strategic decision gives extra edge to company, as this department which is responsible for recruitment, selection, and training of employees at first stage. Performance appraisal is also a task of HR department. General Electric used this in their strategy to manage efficiency in their company. Involvement of HR department can make targets set by company more realistic and achievable. With various aspects and examples, this essay concludes that it is very important to involve HR department in the strategic planning process.
  • 6. EC50013: International Human Resource Management Page 5 References- Anglo American case study, 2011, viewed 19 Nov 2012, <http://businesscasestudies.co.uk/anglo-american/adding-value-through-asset- optimisation/introduction.html#axzz2CnVb2Ewd> Dave Yost, 2011, Succession management, viewed 21 Nov 2012, <http://skinnyohio.org/humanresources/successionplanning.html > Doshi D, 2011, 10 things learn from Google, viewed 23 Nov 2012, <http://www.chillibreeze.com/articles_various/working-at-Google.asp> Joe Evans, n.d., viewed 19 Nov 2012, <http://www.methodframeworks.com/article/definition-strategic-planning-white- paper/index.html> Kallokane, 2009, Performance Evaluations, Business Strategy, and Agile Methodologies, viewed 21 Nov 2012, <http://kallokain.blogspot.co.uk/2009/06/performance-evaluations- business.html> Senga Briggs, William Keogh, 2011, Integrating human resource strategy and strategic planning to achieve business excellence, viewed 20 Nov 2012, <http://www.management.com.ua/hrm/hrm017.html> Talent Search, 2010, viewed 18 Nov 2012, <http://www.hrmreport.com/article/Talent- Search/>