Strategic Human Resource Management

"Human Resource Management will be regarded as valuable business partner and important organisational resource when the Business Units are satisfied with the results achieved through Human Performance and Process Improvement." This is how human resource management has been described by an unknown source and quoted in many books and journals on the same subject.

Human Resource Management, unlike Personnel Management, is linked to and plays a vital role in the organisations strategic planning and execution in order to make a decisive impact on the organisation's overall performance. Human Resource Management is concerned with philosophies, practices, and policies influencing the management of people in organisation so as to attain competitive advantage. That's why before moving on to describe the process oriented steps that organisation execute to bring human resource management in alignment with the companies strategy we need to understand a few things like strategy, business policy, strategic human resource assignment etc.

I will begin my discussion by considering a few questions, the answers to whom will also form the outline of the discussion. These questions are:

1. How is strategy defined?

2. How do we define business strategy?

3. What are the business strategies of Tata Steel?

4. What are the approaches of Tata Steel towards its Human Resource assets? What are their Major Human Resource policies?

5. What is strategic human resource management?

6. How are these approaches towards HR linked to their business strategy or how do these approaches help them achieve their strategic goal?

Let us begin our discussion by taking up the first question, i.e. what is strategy or how is strategy defined in a business environment or context.

The American Heritage Dictionary describes strategy as "the science and art of military command as applied to the overall planning and conduct of large-scale combat operations." This definition reflects the military root of strategy, but what is worth noting here is the planning theme which remains an important component of most management definitions of strategy. Strategy was defined by Alfred Chandler of Harvard Business School as "the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals." The idea of rational planning quite clearly comes out in Chandler's definition. What it means is that organisations first decide on their long term objectives or goals. Then they move on to identify the courses of action which will help them to fulfil their goal and allocate their resources more correctly. Strategy has similarly been defined as "the pattern or plan that integrates an organisation's major goals, policies, and action sequences into a cohesive whole" by James B. Quinn. It has also been described by William F. Glueck as "a unified, comprehensive and integrated plan designed to ensure that the basic objectives of the enterprise are achieved."

But of all the definitions of strategy the best probably came from Henry Mintzberg. He pointed out in his paper "Patterns in strategy formulation" Management Sciences, 24(1978), pp 934-948, that the planning approach to strategy always rides on the assumption that organisations strategy is always a result of rational planning. He stressed that these definitions of strategy ignore the fact that strategies can emerge from within the organisation without any formal planning. This means that even in the absence of intent, strategies can emerge from within the organisation. According to him strategy is not just a sum of what a company intends to do, it is also what it actually does and strategies are often the emergent response to unforeseen circumstances. Mintzberg has thus defined strategy as a "pattern in a stream of decisions or actions" the pattern being a product of intended or planned strategies and emergent or unplanned strategies. This explanation can be better illustrated by the following diagram.

Source: "Strategy in an Adhocracy," by Henry Mintzberg and Alexandra McHugh, published in Administrative Science Quarterly, Vol. 30, No.2, June 1985

What has ultimately come out of our discussion is a contrasting view to some classical explanations that all strategies are planned. According to Mintzberg successful strategies can emerge from within an organisation without prior planning and may be as a result of any unforeseen circumstances. Strategies can take root in all kinds of places where people have the capacity to learn and the resources to support that capacity. The strategies of most companies are a combination of the intended and the emergent. What it means for the management is that it needs to recognise this process of emergence and to intervene when required, to ward of bad emergent strategies and encourage good ones. And to make this judgement management needs to wear the strategic thinking hat.

After having a fair idea of what a strategy means to an organisation, we can move on to the next question as to what exactly is a business strategy. To understand the business strategy of an organisation we need to understand the terms such as mission and vision of an organisation. Mission statement is a description or declaration as to why a company is in operation. It describes the very propose of the existence of any enterprise. It also provides the framework or context within which strategies are formulated within the organisation. The mission statement has three major components the

- Mission or vision

- Values or guiding standards that drive and shape the actions and behavior of employees

- Major goals or objectives

The mission sets out why the organization exists and what it should be doing. Major goals specify what the company is trying to achieve in the medium to long term. The company while defining its mission and major goals must define its business in terms of three dimensions: as suggested by Derek F. Abell, as to who is being satisfied (what customer groups), what is being satisfied (what customer needs), how are customer needs being satisfied (by what skills or distinctive competencies). The figure given below illustrates this more properly.