Module-I

Introduction to Human Resource Management

PROGRAM: MBA SEMESTER: II
COURSE CODE: 1T4 COURSE TYPE: CORE
COURSE: HUMAN NAME OF THE FACULTY: Ms. DEEPIKA SONI
RESOURCE MANAGEMENT
CO1 Students should be able to explain the importance of
Human Resource Management for an organisation and
also distinguish between Personnel and HR Management.

1. Introduction to Human Resource Management

The advent of the era of liberalization and globalization along with the advancements in
information technology (IT) has transformed the world around us. It has brought to centre stage
the importance of human resources, more than ever before. Human resources being one of the
primary components of management, its effective utilization has become crucial and primary task
of organizations to enhance the organizational productivity and functional efficiency. The purpose
of human resource management (HRM) is to enable appropriate deployment of human resources.
Various terms are used to denote human resources management such as labour management,
labour administration, personnel management, personnel administration, human capital
management, human asset management, employment administration, employee-employer
relations, union management relations, industrial relations and the like.
2. Definitions of Human Resource Management
Human resources management means employing people, developing their resources, utilising,
maintaining and compensating their services in tune with the job and organisational requirements
with a view to contribute to the goals of the organisation, individual and the society.

Process of creating four functions-acquisition, development, motivation and maintenance of

human resources.
-David A. Decenzo & Stephen P. Robbins

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

Personnel management is the planning, organizing, directing, and controlling of the
procurement, development, compensation, integration, maintenance, and separation of
human resources to the end that individual, organizational, and societal objectives are
accomplished.
-Edward Filippo

The field of management which has to do with planning, organising, directing and
controlling the functions of procuring, developing, maintaining and utilising a labour force,
such that the —
(a) Objectives for which the company is established are attained economically and
effectively,
(b) Objectives of all levels of personnel are served to the highest possible degree, and
(c) Objectives of society are duly considered and served.”
- Michael J. Jucius
-
Human resources management (HRM) is managing (planning, organising, directing and
controlling) the functions of employing, developing, compensating and utilising human
resources, resulting in the creation and development of human and industrial relations which
would shape the future policies and practices of human resource management, with a view to
contribute proportionately (due to them) to the organisational, individual and social goals.
- [Link] Rao

HRM can be defined as a strategic and coherent approach to the management of the most
valued assets of an organization, that is, people, who individually and collectively contribute to
the organizational objectives. Storey (1989) has made a distinction between hard and soft
versions
of HRM. The hard approach focuses on the quantitative and strategic aspects of managing the
human resources. It is a rational approach, which deals with human resources like any other
economic factor. It emphasizes the need for managing people to enhance their contribution to
improving the quantitative advantage of the organization. It aims at protecting the interests of
the management and building a strong corporate culture by internalizing the mission and value
statements of the organization.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 The soft approach to HRM, emphasizes on factors such as communication, motivation, and
leadership. It treats employees as the essential means of realizing organizational objectives rather
than mere objects. It focuses on engendering commitment among employees by winning their
hearts.
3. Nature of Human Resource Management
Simply put, HRM refers to the application of management principles to management of people in
an organisation. This is too simple a statement and fails to capture the essence of HRM.
In its essence, HRM comprises the following:
3.1 Comprehensive function: HRM consists of people-related functions such as hiring, training
and development, performance review, compensation, safety and health, welfare, industrial
relations and the like. Appropriately called ‘doables’, these activities are highly routinized
and have been often outsourced.
3.1 People-centric: More important functions of HRM are the building of human capital. Human
capital refers to the stock of employee skills, knowledge and capabilities that may not show
up in a balance sheet but have significant impact on a firm’s performance. Human capital
(also known as ‘deliverables’) lends competitive advantage to a firm. Obviously, building
human capital is the major function of an HR professional. These activities are not carried out
in isolation.
3.2 Administrative function: The very concept of HRM signifies that the role of HR executive
is elevated, from an administrative level, to that of the board. He or she becomes the member
of the board and thus takes part in decision making.
3.3 Competitive advantage through people: HRM hypothesizes that it is the people who make
the difference. They alone are capable of generating value and adding to competitive
advantage to organizations.
3.4 Strategic Focus: HRM is aligned with the overall strategic goals of the organization. It
involves planning and implementing HR practices that support and contribute to the
achievement of the organization's objectives. It also necessitates alignment of HR policies
and practices with organizational strategies.
3.5 Employee engagement & retention: HRM is concerned with creating a positive and
engaging work environment. This involves promoting a culture of open communication,
employee involvement, and recognizing and rewarding achievements.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 3.6 Legal and Ethical Compliance: HRM ensures that the organization's HR practices comply
with legal requirements and ethical standards. This includes adherence to labor laws, equal
employment opportunities, and maintaining ethical conduct in all HR processes.
3.7 Conflict Resolution: HRM plays a crucial role in managing conflicts and grievances within
the organization. This includes addressing issues between employees, as well as disputes
between employees and management.
3.8 Data-driven decision-making: HRM increasingly relies on data analytics to make informed
decisions. This involves using HR metrics and analytics to assess the effectiveness of HR
programs and initiatives.
3.9 Global perspective: In the context of globalized markets, HRM often involves managing a
diverse and international workforce. This includes understanding and addressing cultural
differences, legal requirements in various regions, and global talent management.
3.10 Partnership with Management: HRM works closely with organizational leadership to
ensure that HR strategies are aligned with overall business strategies. It serves as a strategic
partner, advising on people-related matters that impact organizational performance.
4Scope of Human Resource Management
The scope of Human Resource Management (HRM) is broad and encompasses a variety of
functions and activities that collectively contribute to the effective management of an
organization's human capital.
4.1 Staffing and Recruitment:
4.1.1 Identifying workforce needs and planning for future requirements.
4.1.2 Conducting job analysis to determine the skills and qualifications needed.
4.1.3 Recruitment and selection processes to attract and hire qualified candidates.
4.2 Training and Development:
4.2.1 Employee skills assessment and training need identification.
4.2.2 Designing and implementing training programs to enhance skills and knowledge.
4.2.3 Continuous learning initiatives to keep employees updated.
4.3 Performance Management:
4.3.1 Setting performance benchmarks.
4.3.2 Monitoring and evaluating performance through appraisals.
4.3.3 Providing feedback and implementing performance improvement plans.
4.4 Compensation and Benefits:
4.4.1 Designing and managing compensation structures and salary scales.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

4.4.2 Administering employee benefits, including health insurance, retirement plans, and
bonuses.
4.4.3 Ensuring fair and competitive pay practices.
4.5 Employee Relations:
4.5.1 Creating and maintaining positive workplace relationships.
4.5.2 Addressing conflicts and grievances to maintain a harmonious work environment.
4.5.3 Implementing employee engagement initiatives.
4.6 HR Planning:
4.6.1 Forecasting future workforce needs based on organizational goals.
4.6.2 Succession planning to identify and groom future leaders.
4.6.3 Aligning HR strategies with overall business objectives.
4.7 Health and Safety:
4.7.1 Ensuring a safe and healthy work environment.
4.7.2 Compliance with occupational health and safety regulations.
4.7.3 Implementing wellness programs to promote employee well-being.
4.8 Legal Compliance:
4.8.1 Ensuring HR practices adhere to labor laws and regulations.
4.8.2 Staying informed about changes in employment laws and ensuring organizational
compliance.
4.8.3 Handling legal issues related to employment, such as discrimination claims.
4.9 Employee Engagement:
4.9.1 Fostering a positive work culture to enhance employee satisfaction.
4.9.2 Encouraging employee involvement in decision-making processes.
4.9.3 Conducting surveys and feedback sessions to gauge employee engagement.
4.10 Talent Management:
4.10.1 Identifying high potential employees for leadership positions.
4.10.2 Succession planning to ensure smooth transition in key roles.
4.10.3 Developing strategies to attract, retain and develop top talent.
4.11 Technology Integration:
4.11.1 Leveraging technology for HR processes, such as applicant tracking system.
4.11.2 Implementing digital tools for improved efficiency in HR functions.
4.12 Global HRM:
4.12.1 Managing a diverse and international workforce.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 4.12.2 Adapting HR practices to different cultural contexts and legal systems.
4.12.3 Ensuring compliance with global labor laws and regulations.
4.13 Change Management:
4.13.1 Facilitating organizational change through effective communication and support.
4.13.2 Managing the human side of change, addressing employee concerns and resistance.
4.14 Ethical considerations:
4.14.1 Promoting ethical behavior and integrity within the organization.
4.14.2 Upholding ethical standards in HR practices including hiring and promotion decisions.
4.15 Data Analytics & Metrics:
4.15.1 - Analyzing workforce data to make informed decisions and identify trends.
4.15.2 Using HR metrics and analytics to measure the effectiveness of HR programs.
4.16 Employee Welfare:
4.16.1 - Addressing employee well-being by promoting work-life balance.
4.16.2 - Offering mental health support and wellness programs.
4.16.3 - Creating a positive and supportive work environment.
5Importance and functions of Human Resource Management
5.1 Talent acquisition
5.1 Crucial for change management.
5.2 Human Resource Planning
5.3 Employee skilling and development
5.4 Work life quality maintenance
5.5 Employee retention
5.6 Maintenance of healthy work-culture
5.7 Compensation and payroll management
5.8 Productivity management
5.9 Conflict resolution
5.10 Succession Planning
5.11 Learning and development
5.12 Technology integration
5.13 Managing Diversity, inclusion and equality

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

6Human Resource as an Asset in organisation
Considering human resource as an asset simply means viewing them as a source of profits
and thus, nurturing them, investing in them, and growing them for succession planning.
Human resources, in this context are called Human capital, thus comprise:

6.1 Hard and soft Skills 6.6 Fame

6.1 Knowledge 6.7 Education qualification
6.1 Innovation and Creativity 6.8 Experience
6.2 Adaptability 6.9 Intelligence and Emotional
6.3 Critical thinking intelligence
6.4 Professional network 6.10Health
6.5 Resilience 6.11Punctuality

Human capital is an intangible asset unlisted on a company’s balance sheet. Human capital is
perceived to increase productivity and thus profitability. The more investment a company
makes in its employees, the chances of its productivity and success become higher. Since
human asset is based on the investment of employee skills and knowledge through education,
these investments in human asset can be easily calculated. HR managers can calculate the
total profits before and after any investments are made. Any return on investment (ROI) of
human capital can be calculated by dividing the company’s total profits by its overall
investments in human capital.
6.12 Does Human Asset (Capital) depreciate?
Consider an employee who has a specialized skill. If they go through a long period
of unemployment, they may be unable to keep these levels of specialization. That's because
their skills may no longer be in demand when they finally reenter the workforce. Like
anything else, human asset is not immune to depreciation. The most common ways human
capital can depreciate are through unemployment, injury, mental decline, or the inability to
keep up with innovation, lack of upskilling and growth opportunities.

6.13 Ways to increase Human asset/capital:

6.13.1 Through provision of higher education opportunities.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

6.13.2 Through provision of training and development opportunities.
6.13.3 Through provision of work culture that encourages creativity.
6.13.4 Through development of niche skills in workforce.
6.13.5 Hiring a diverse workforce.
6.13.6 Counselling, mentoring and coaching.
6.13.7 Learning and development programs.
6.13.8 Volunteering activities through CSR.
6.13.9 Public speaking opportunities.
6.13.10 Through job-rotation.
6.13.11 Through Performance Improvement Plans (PIP).
6.13.12 Investment in workforce communications platform.
6.13.13 Embrace AI and other automation tools to de-stress the workforce.
6.13.14 Focus on employee experience by fostering a happy work-culture.

6.14 Benefits of treating Human Resource as assets:

6.14.1 Workforce Engagement: Engaged employees are more committed to their work and
the organization's goals. A motivated workforce leads to higher productivity,
increased job satisfaction, and lower turnover rates.
6.14.2 Employee job satisfaction: With enhanced skills, knowledge, and capabilities,
employees can perform better and thus, have reduced levels of stress and anxiety and
so, are more satisfied at work.
6.14.3 Reduced turnover intention: Satisfied and engaged employees results in reduced
attrition rate. A stable workforce further results in increased profits and human
resource turning into competitive advantage and USP.
6.14.4 Enhanced employee productivity and performance: Investment in human
resources aims to make the best use of available human resources for maximum
returns. By investing in training that develops specific capabilities the organization
needs to accomplish its goals, human capital management helps boost productivity. It
also improves efficiency because the system places employees in roles where they can
perform at their best.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

6.14.5 Promotion of organic growth: Since human capital management can identify the
competencies of individual employees, it's a powerful tool for organic growth. It
achieves this by helping the organization optimize internal resources to improve
productivity and boost revenue. This is possible because HCM invests in the growth
and development of employees, equipping them with the capabilities to deliver
positive results.
6.14.6 Matches position with employee skills: Treating Human resources as assets can help
organizations match employees with positions where they can use their skills and
talents. This is because the system has processes that can identify the individual
competencies of employees, which may help management find opportunities for
lateral and promotional moves to better suit employees' interests and strengths. By
pairing people with positions that allow them to use their skills, employees derive
more satisfaction at work and the company enjoys greater productivity, efficiency and
loyalty.
6.14.7 Customer Satisfaction: Employees directly impact customer satisfaction. A well-
trained and motivated workforce enhances the quality of products and services,
leading to increased customer loyalty and positive brand image.
6.14.8 Team Collaboration: Human resources contribute to effective teamwork.
Collaboration among employees helps in achieving common goals and fosters a
positive and cooperative work culture.
6.14.9 Strategic Alignment: Aligning human resources with organizational strategy is
essential. Employees who understand and support the overall goals of the organization
contribute to its success.
6.14.10 Leadership and Management: Effective leaders and managers are critical to
organizational success. Human resources include leaders who guide teams, make
strategic decisions, and create a positive work environment.
6.14.11 Employee Well-being: Focusing on employee well-being is an investment in
the organization's success. Healthy and satisfied employees are more likely to be
productive and contribute positively to the work environment.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

6.14.12 Institutional Knowledge: Long-term employees accumulate institutional
knowledge, understanding the organization's history, culture, and unique challenges.
This knowledge is valuable for decision-making and continuity.
6.14.13 Customer Relations: Employees often serve as the face of the organization in
customer interactions. Positive and knowledgeable employees contribute to favorable
customer relations and loyalty.
6.14.14 Corporate Culture: Human resources shape and maintain the organizational
culture. A positive and inclusive culture attracts and retains top talent and contributes
to employee satisfaction.
6.14.15 Brand Reputation: Employees impact the organization's reputation. Positive
employee experiences translate into positive word-of-mouth, enhancing the
organization's brand reputation.
6.14.16 Employee Development: Organizations that invest in the development of
their employees cultivate a skilled workforce that can adapt to evolving industry
trends and technological advancements.
6.14.17 Decision-making: Human resources contribute to decision-making processes
at various levels. Informed and engaged employees provide valuable input for
strategic decisions.
6.14.18 Commitment and Loyalty: Organizations with a strong commitment to their
employees often experience higher levels of loyalty. Committed employees are more
likely to stay with the organization, reducing turnover costs.
6.14.19 Cost Efficiency: Human resources contribute to cost efficiency by optimizing
workforce management, streamlining processes, and reducing turnover-related
expenses.
6.14.20 Succession planning: Human capital management gives employees more
control over their careers. It identifies capability gaps through training, surveys,
performance reviews and other sources of feedback. This helps top management to
better decide on succession planning.

In summary, human resources are a dynamic and valuable asset in any organization.
Recognizing and investing in the potential of employees contribute to sustained success,
innovation, and positive organizational culture. The effective management and development

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 of human resources can provide a competitive advantage in today's complex business
environment.

7Roles and Qualities of HR Manager.

7.1 Role of HR Manager

7.1.1 Navigating the future workforce: In terms of age, skills, and working arrangements,
the contemporary workforce is diverse. HR will be in charge of recruiting and retaining
personnel from Generation Z to Baby Boomers, each with their own set of demands and
expectations. Human resources must adapt to managing a workforce that includes full-
time, part-time, remote, and gig workers.
7.1.2 Technology integration: HR's role in integrating technology into all elements of
company business will be critical. AI and automation will improve employee
experience while freeing up HR experts to focus on more strategic duties. Data-driven
decision-making will become the standard, with HR serving as a repository for
information and insights.
7.1.3 Employee Happiness and Mental Health: The pandemic has brought to light the
significance of employee well-being and mental health. HR will be at the forefront of
developing and executing well-being programs that promote a healthy and engaged
workforce. Offering mental health support, flexible work arrangements, and efforts that
encourage work-life balance are all examples of this.
7.1.4 Diversity, Equity, and Inclusion: DEI initiatives will remain a primary emphasis for
HR. HR professionals will encourage inclusive recruiting processes, develop diverse
leadership pipelines, and foster a culture of belonging within firms. Diversity is more
than a term; it is a necessary component of any successful enterprise.
7.1.5 Learning and Growth: The skills required in the workforce in will change quickly.
Human resources will be critical in identifying skill gaps, implementing training
programs, and supporting reskilling and upskilling activities. A commitment to learning
and development will be essential for remaining competitive in a rapidly changing
labor environment.
7.1.6 Hybrid Work Models: As remote and hybrid work models become more common,
human resources will be in charge of sustaining employee engagement, promoting

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 collaboration, and ensuring that employees feel connected to their firms. To adapt to
these developments, HR will need to reinvent workplace culture and policies.
7.1.7 Sustainability and Corporate Social Responsibility (CSR): HR will also help an
organization's sustainability and corporate social responsibility efforts. HR experts will
collaborate to establish ecologically responsible workplaces and socially mindful
corporate practices.
7.1.8 Leader and Manager Development: As per the research conducted by Gartner, more
than three quarters of workforce have placed increased importance on manager support.
Managers themselves are juggling 51% more responsibilities than they can handle. HR
manager can play a crucial role by not investing in traditional manager development
program, but by working on the job contents itself, by re-setting expectations, rewiring
manager habits and removing mundane process hurdles.

7.2 Qualities of HR Manager

7.2.1 Great communicator: A core function of every HR manager is to act as an
organization’s facilitator of effective communication between employees and
management. This role requires excellent written and oral communication skills. An
HR manager’s audience includes all current employees, prospective employees,
managers, and ownership, and the full spectrum of modern written communication
methods (including social media) should be properly put to use. Above all,
communications from HR must be open, transparent, caring, and trustworthy. In order
to build strong communication within their organization, a good HR Manager must
focus on employee needs and build trust. He must always seek feedback and be a
good listener.
7.2.2 Awareness of ethical responsibilities: HR managers are entrusted with different
types of confidential information, and nothing less than the absolute security and
protection of that information from unauthorized disclosure is acceptable. HR
professionals must exhibit complete honesty and discretion when working with every
member of their organization.
While HR managers must faithfully ensure that all actions towards employees and
staff are above board, legal, and fair. Understanding the organizational chart and
chain of command is essential to a good HR manager when potential ethical issues
must be addressed to the appropriate person or group in the event that any situation
requires disclosure to a responsible person. While this duty is often difficult, any
organization worth being part of will appreciate candor, honesty, and the highest
ethical standards from their HR professionals.
7.2.3 Develop outstanding leadership skills: One of the other top qualities of a good HR
manager is full confidence in their leadership abilities. Employees often look first to
HR for answers and clarity on many company issues. HR is typically considered the

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 expert, and quality leadership on delivering information and promoting employee
satisfaction can and should be handled at the HR level whenever possible. Leadership
for HR professionals means promoting friendly and helpful relations in all cases while
maintaining company objectives and policies.
7.2.4 Conflict-resolution skills: Successful leadership for an HR professional means
managing the dynamic of being the enforcer of the rules while also being helpful and
caring. This means also being adept at conflict management. Whether that involves
working out disagreements among co-workers or explaining why particular company
policies are important, HR managers should always be prepared to handle
interpersonal relationships. Mediation and conflict resolution training can help
develop the skills needed to help people get along at work
7.2.5 Expert in organization and multi-tasking: Every HR department requires strong
organization, and HR professionals need personally strong work habits and time-
management abilities to be successful. HR offices should set an example for an entire
organization, so sloppy filing or office management should be avoided. Both
employees and management expect timely and proper handling of routine tasks, and
effective organizational skills can help keep things running smoothly.
An ordinary day for an HR professional includes a wide variety of tasks and duties,
including hiring, firing, recruiting, conflict resolution, and management meetings.
Self-discipline and multitasking are an essential part of the job. The needs of
management and employees shift moment to moment, and prioritization on the fly is
essential to success. Effective training with technology and delegation can help HR
managers develop the power to multitask on the move.
7.2.6 Legally Sound - The HR makes key decisions pertaining to policy frameworks for
the organization. He should ensure he consults the legal team regarding the
implications of the same. This will enable him to tackle any loopholes or issues that
might crop up.
7.2.7 Strategic thinking: A key part of being an HR manager is ensuring that HR policies,
strategies, and practices align with the company’s goals. Strategic thinking is an
essential skill that enables them to analyze situations and implement the correct
solution that will benefit the business. For example, when it comes to the hiring
process, they can use their strategic planning and thinking skills to select a stellar
candidate pool full of talented individuals that have the skills and potential to fulfill
long-term business objectives. They also know how to enact strategies that will give
their companies a competitive edge by investing in the right people at the right time.
7.2.8 Embrace technical skills: Technology is an HR manager’s best friend. As well as
enabling you to automate tasks, monitor key metrics, and manage your workforce and
talent pipelines, HR technology can also help you prioritize your most important
objectives. With the right technology, HR managers can also optimize other business
functions. For example, if you’re responsible for managing your company’s business
travel programs, corporate travel management software can help you better manage

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 invoices and VAT, access corporate travel rates, optimize travel spend, and improve
travel policy compliance. Plus, to help you foster efficiency across the business, many
HR software tools have robust integration capabilities to help you obtain data and
insights from other tools and platforms you or other teams already using.

8Difference between Personnel Management and Human Resource Management

The main difference between Personnel Management and Human Resource Management lies
in their scope and orientation. Scope of personnel management is limited and has an
internal approach, wherein workers are viewed as tool. Here the behavior of the worker can
be manipulated as per the core competencies of the organization and are replaced when they
are worn-out.

8.1 Human resource management has a wider scope and considers employees as the asset
to the organization. It promotes mutuality in terms of goals, responsibility, reward etc.
that will help in enhancing the economic performance and high level of human resource
development. In early centuries, when Human Resource Management (HRM) was not
prevalent, then the staffing and payroll of the employees were taken care of, by the
Personnel Management (PM). It is popularly known as Traditional Personnel
Management. Human resource management aligns more with organizational goals. It
comprises employee acquisition, training, utilisation, management, coordination,
development and retention. Their approach fosters commitment and loyalty to the
company. They also perform employee appraisals and performance reviews, evaluate
working conditions and ensure the company complies with labour laws and health and
safety regulations. Today, many companies and corporate enterprises have replaced the
traditional personnel department with an HR department. This type of department
typically serves larger enterprises and corporations that require systems in place to
handle employee concerns. HRM covers a broad spectrum of activities which includes:
8.1.1 Strategic planning
8.1.2 Recruitment
8.1.3 Employee development
8.1.4 Engagement
8.1.5 Compensation management
8.1.6 Employee relations

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

8.2 Personnel Management: Personnel management handles administrative tasks like
recruitment, hiring, and maintaining the required staffing levels. They evaluate jobs in
terms of duties and remuneration and hire on the strength of an employee's ability to
fulfill the job requirements. Personnel managers advise and assist department managers
when establishing staffing requirements, hiring policies, and employee incentives. They
also mediate in matters concerning employee grievances and represent the company in
government-appointed committees and training programs. This type of department often
serves more traditional companies or small- to medium-sized businesses.

The primary functions of the personnel management are divided into two categories:

8.2.1 Operative Functions: The activities that are concerned with procurement, development,
compensation, job evaluation, employee welfare, utilization, maintenance and collective
bargaining.
8.2.2 Managerial Function: Planning, Organizing, Directing, Motivation, Control, and
Coordination are the basic managerial activities performed by Personnel Management.

8.3 Key parameters of differentiation

Sr. Parameter Personnel Management Human Resource

No Management
1 Meaning concerned with the workforce focuses on the most effective
and their communication with use of the manpower of an
each other & management. entity, to achieve the
organizational goals
2 Objective People management Growth & development of
workforce
3 Approach Traditional/Conventional Modern/Advanced
4 Approach Machines/tools Values assets to be preserved
towards
Employees
5 Type of Routine Strategic
function
6 Management Transactional Transformational
Role
7 Communication Obscure/Indirect Direct
8 Labor Collective bargaining Individual contracts
Management
9 Actions Procedural Driven by business needs
10 Focus Employee welfare & maximizing employee
compliance with labor laws contribution and organizational

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 effectiveness
11 Basis of Position related Performance related
compensation
12 Nature Administrative, routine tasks Strategic, aligned with
organizational goals
13 Employee Reactive Resolving
grievances
14 Management Hierarchical and traditional Flat and flexible
structure

9Human Resource Management in Dynamic Environment

Dynamic conditions are becoming the norm as unpredictable environments reduce the
likelihood of long term sustainable competitive advantage. Economic volatility creates
challenges, but it also brings opportunities for HR managers and employers wishing to
differentiate themselves as ‘employer of the choice’ by investing in HRM strategies, such as
extensive training and development, employee incentive scheme. Scholars suggest that during
crises, HR function assumes important role in decisions pertaining to strategic decisions to
reduce costs and increase productivity. Although the HR function has the potential to make a
substantial contribution during periods of environmental dynamism, we make the argument
that if at the time HR professionals are experiencing HR role overload and HR role conflict,
the HR function’s power of meaning is low, and the opportunity to contribute to decision
making will be reduced.

9.1 Dynamic business environment:

A dynamic business environment is characterized by rapid changes and turbulence.

Dynamism in the contemporary era is the ongoing transformation towards a new economy
and technology. Dynamic business environments usually originate from economic turmoil
originating from financial crises, which leaves organizations struggling with unpredictable
changes and adjustments. In such an environment, businesses have to quickly generate novel
ideas and adapt promptly to the changes to keep up with technology and trends. The focus
then shifts from superior performance to survival. Organizations struggle when the rate of
change in their environment outpaces their organizational capacity to keep up with the abrupt
fluctuations. Organizations must be flexible enough to respond to the challenges posed by
dynamism. Such a phase is characterised by:

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9.1.1 Technological changes
9.1.2 Workforce diversity
9.1.3 Labor shortage.
9.1.4 Altered skill requirements.
9.1.5 Continuous learning initiatives.
9.1.6 Decentralized work sites.
9.1.7 Enhanced importance of information, knowledge, innovation and other intangible
business resources.
9.1.8 Increased prevalence of use of high technologies, internet and information and
communications technology (ICT).
9.1.9 Socio-political and legal transformations.
9.1.10 Changes in the way businesses operate.
9.1.11 Enhanced prominence on research and development.

Environmental dynamism has led to a focus on organizational capabilities as the principle

source of competitive advantage in such an environment. These organizational capabilities
are referred to as dynamic capabilities which focus on the process of transformation of
organizations – as a result from changes in the environment – which leads to a break in
routines and involves a shift in competencies and required knowledge.

Researchers have observed a growing interest in an entirely new organizational paradigm –

one that views organizational adaption not as a one-time or even periodic event, but as a
continuous process. That paradigm is Organizational Agility’. Organizational agility is
considered a necessary dynamic capability for organizations operating in a highly dynamic
environment.

A firm must make investments in human assets in uncertain environments to create capability
to flexibly respond to future contingent events.

9.2 Challenges and opportunities faced by HRM in dynamic environment

9.2.1 Globalization: Globalization has led to numerous social, political, economic, and value
movements and, along with the reduced amount of time and place, gives new
explanations of politics, economy, culture, government, power, and security. The main
challenge that arises from globalization is the destruction of existing forms, the

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RTM Nagpur University MBA - 2023-25/ Semester – II

 abolition of monopolies, and the emergence of a lasting competitive space on a global
level, which creates new challenges and opportunities for the workforce.
9.2.2 Non-manual workers: Human resource management has acquired a new direction in
the 21st century. In a world dominated by an economy based on science the importance
of social capital and human capital of each company and every organization has also
doubled. In order to remain competitive on a global level, companies must use white
collar workers along with manual workers and carry out scientific management of these
workers.
9.2.3 Workforce diversity The workforce is becoming more heterogeneous every day, since
women, minority groups, and older people enter it. This heterogeneity is the cause of
increased responsibilities for the management of human resources.
9.2.4 The decrease (reduction) of organization. The reduction of an organization, which is
sometimes called reorganization, a decrease in expenses, or reduction of personnel, is
an attempt to balance excesses or reduce deficiencies in organizational ranks or layers.
The reduction strategy is created on the basis of study and analysis of strategies for
reducing staff, restructuring and renewal of technologies, the need to reduce costs,
closing (end of operation) a department or enterprise, or withdrawal from the market, as
well as actions that arise from the acquisition of property.
9.2.5 Total Quality Management (TQM) Human resource management departments play
an important role in the implementation of TQM programs and should carefully prepare
employees for change. This change may lead to changes in the means of work,
activities, and even to changes in reporting. The human resource management
department should be available to employees and ready to provide assistance to
workers so that they can overcome the difficulties that can arise from these changes, as
well as to help them achieve new levels of skills and abilities.
9.2.6 Reengineering. Reengineering requires a new way of thinking about the work from the
members of an organization. Reengineering cannot give the expected results without a
change in management, changes in the attitudes of employees, involvement of
employees in activities that affect them and their work, and the creation of working
groups. Reengineering may upset some employees and therefore such employees

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RTM Nagpur University MBA - 2023-25/ Semester – II

 should be provided with such conditions so that they could have appropriate answers
and a correct basis for their expectations.
9.2.7 Improvement of human resources. A new paradigm of human resources based on
such concepts as human and intellectual capital leads to the promotion and survival of
successful and growing organizations. The improvement of human resources, despite
different cultural and social foundations of organizations, is a necessity and a challenge
for managers and experts of enterprises and other public institutions.

9.3 Dynamic HRM in dynamic business environment

9.3.1 Globalization
The process of making transactions across international borders is called globalization. The
number of organizations seeking to find a talented workforce, advanced technology,
suppliers, trade information, transfer capital, and move products has increased dramatically
over the last 20 years due to a variety of factors, including technology and the Internet. As
globalization accelerates, national borders reduce in importance to business and global
economies become more interdependent.
Multinational corporations (MNCs) are typically based in a home country, but have
significant operations in many other countries. This allows them to extend their production
and distribution on a regional or global basis to take advantage of the resources and markets
in other countries. These opportunities for growth have enabled many organizations to
develop extensive international operations with subsidiaries in many countries, no longer
identifying with a single “home” country, earning the title of transnational corporation.
General Electric is a good example of one of the largest transnational companies with more
than 70 percent of its over $500 billion in assets held outside the United States and over half
of their approximately 300,000 employees based abroad.

Other familiar multinational and transnational companies include Toyota, Nestle, and Exxon
Mobil. These organizations are able to take advantage of the global pool of talent and
resources as opportunities arise. This requires HRM professionals to adapt to cultures, legal
systems, and business practices in many different countries and ensure that employees with
the appropriate mix of knowledge, skills, and cultural adaptability are available and ready to
handle global assignments.

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RTM Nagpur University MBA - 2023-25/ Semester – II

9.3.2 Understanding Cultural Environments
The rise of multinational and transnational corporations places new requirements on human
resource managers to understand global and organizational cultures and to ensure that
employees have the appropriate mix of knowledge, skills, and adaptability to operate within
those cultures.
Culture is defined as the patterns or thought and behavior that distinguish one group of
people from another. When background, language, custom, or age differences increase,
employee conflict is likely to become more of an issue. HRM must make every effort to
educate groups on cultural differences and to find ways to build teams and reduce conflict.

The variety of values, ethics, religious practices, customs, economic environments, and
political and legal systems in the world puts enormous pressure on HR professionals and
managers to understand the circumstances of each country. The perception of societal issues,
such as status, might affect operations in another country. For example, in France, status is
often the result of factors important to the organization, such as seniority and education. This
emphasis is called ascribed status. In the United States, status is more a function of what
individuals have personally accomplished, also known as achieved status. This may be
important when developing job descriptions or determining how to use promotions from
within as a motivational tool. Organizations that view the global environment solely from a
home country perspective will encounter problems. A more appropriate approach is to
recognize the cultural dimensions of a country’ s environment.

Countries can also be grouped on the basis of cultural variables such as Individualistic
Society such as the U.S., where people are primarily concerned with themselves and their
own family. In a collective society such as that in Japan, people care for all individuals who
are part of their group. A strongly individualistic U.S. employee may not work well if sent to
a Pacific Rim country, where collectivism dominates without training in how to adapt to the
culture. For example, managers may need to focus on the accomplishments of the team rather
than individual when appraising job performance in a society that is highly collectivist.

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9.3.3 Technology

The Internet was the clear winner in CNN’s reader poll of the most influential innovations of
the last quarter century. Internet and technology are responsible for accelerating the
globalization of the world’s economy. The influence of technology and the Internet on our
lives, employers, the way we work, and the economy was on the mind of Thomas Friedman,
a Pulitzer Prize‐winning New York Times author, as he explored the foundations of
globalization in his best‐selling book, The World Is Flat. Friedman explained that countries,
companies, and individuals are now able to compete on an almost level playing field, aided
by the Internet. Fast inexpensive transportation of people and goods have accelerated the
process of globalization. Individuals are now empowered to compete globally, regardless of
their country of origin. Friedman projects that world economies will be dominated by
empowered individuals, creating a business environment that is more diverse and less
dominated by organizations in Western countries. This has created a shift in geographic labor
supply and demand. Just as the industrial revolution changed national economies by shifting
jobs from craftsmen to mass manufacturing, globalization has shifted demand for
manufacturing and services such as customer service to low‐cost providers in Mexico, India,
and China.

9.3.4 Working with Technology

Technology has been a good news/bad news proposition for workers. While technology has
reduced the demand for manufacturing jobs through automation and increased competition
with other countries, it has also generated an increase in the demand for service producing
and technology positions.

Peter Drucker, the late management scholar and consultant, held that the key to the
productivity of knowledge workers depends on the ability to use technology to locate and use
information for decision making.11 It’s increasingly difficult to find careers that do not use
any type of technology, requiring HR professionals to be aware of not only technology
necessary for HR but also the technology skills necessary for everyone in the organization,

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including professionals such as registered nurses, accountants, teachers, lawyers, and
engineers.

9.3.5 Technology and HR

Technology has changed the way human resource managers manage and communicate
information. Many HR tasks have been automated, making it easier for employees to access
HR information quickly and easily via company websites and intranets. These self‐service
systems allow employees to access frequently requested information such as payroll, benefits,
available training, employee handbooks, and deductions conveniently. The Human Resource
Information Systems (HRIS) that make this possible also gather, store, and analyze HR
information allowing HRM professionals to better facilitate payroll, benefits administration,
applicant tracking, training, performance management, and many other important HR
functions.
9.3.6 Labour costs
Labor costs are a significant expense for many organizations during turbulent transitions.
During the recent recession, many were forced to reduce the size of their workforce
significantly using a variety of methods such as reduced hours, pay reduction, downsizing,
outsourcing, offshoring, and using contingent labor. During the recovery, many organizations
have been reluctant to regain their prerecession employment levels and have continued their
use of contingent labor as a way to manage labor costs.
9.3.7 Downsizing

The purpose of downsizing is to cut costs in the face of financial pressures or a downturn in
the economy. It may also be a strategic move when restructuring requires an organization to
close a division or facility. Sometimes, organizations attempt to increase their flexibility to
better respond to change. Quality‐emphasis programs may create a flatter structure and
redesign work to increase efficiency, resulting in the need for fewer employees. Companies
such as GE, and Time Warner have managed to create agility by dividing their organization
into smaller, more flexible units. When downsizing is used as a way of balancing staff to
meet changing needs, it may involve cutting staff in some areas as they increase staff in other

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RTM Nagpur University MBA - 2023-25/ Semester – II

areas. This change in staffing is often called rightsizing. Rightsizing promotes greater use of
outside firms for providing necessary products and services—called outsourcing—in an effort
to remain flexible and responsive to the ever‐changing work environment.

9.3.8 Contingent Workforce.

Many organizations have learned that they can save money and increase their flexibility by
converting many jobs into temporary or part‐time positions, giving rise to what is commonly
referred to as the contingent workforce. The contingent workforce includes the following:
[Link] Part‐time employees.
Part‐time employees are those who work fewer than 40 hours a week. Generally, part‐timers
receive few employee benefits. Part‐time employees allow organizations to supplement their
staff during peak hours. For example, the bank staff that expects its heaviest clientele
between 10A.M. and 2 P.M. may bring in part‐time tellers for those 4hours. Part‐time
employees may also split one full‐time job with another part‐time employee, often called job‐
sharing.
[Link] Temporary employees.
Temporary employees may be employed during peak production periods to meet increased
demand for production or services. Temporary workers also act as fill‐ins when some
employees are off work for an extended time. For example, an administrative assistant
position may be filled using a “temp” while the employee is off work during his 12‐week
unpaid leave of absence for the birth of his daughter.
[Link] Contract workers.
Contract workers, freelancers, subcontractors, and consultants are contracted by organizations
to work on specific projects. These workers are often highly skilled. Their fee is set in the
contract and is usually paid when the organization receives particular deliverables. Contract
workers are used because their labor cost is fixed, and they incur few of the costs associated
with a full‐time employee population.
9.3.9 Offshoring
Offshoring, the process of moving jobs to another country for economic reasons, has been
blamed for the decrease in employment in many industries, particularly in manufacturing. It’s
partly true, but economists estimate that offshoring may explain no more than 3 percent of all

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RTM Nagpur University MBA - 2023-25/ Semester – II

mass layoffs. Instead, many manufacturing jobs are lost to more efficient production methods
such as robotics and computerized tooling.
Offshoring isn’t always a permanent solution to controlling costs. General Electric has
brought production of some appliances back to the United States and a few manufacturers of
large, expensive products such as jet engines and power plant turbines also brought
production back to the United States, a process reshoring, or bringing jobs back to the home
country. Reasons cited include better educated and skilled workers and more dependable
infrastructure such as water, power, and roads. Most economists and business leaders agree
that although some companies have started the process of reshoring, the trend of moving jobs
to places where the work can be performed by lower paid workers will continue.
9.3.10 Continuous improvement programs.
The ability to compete in a global economy requires an emphasis on quality production and
services. The generic terms that describe this revolution are quality management and
continuous improvement.
Components of continuous improvement.
[Link] Intense focus on customer.
[Link] Concern for continuous improvement.
[Link] Focus on quality-improvement on everything organization does.
[Link] Accurate measurement of every crucial variable in organizations’ operations by
statistical tools.
[Link] Employee empowerment.
9.3.11 Work process reengineering
Work process engineering goes beyond incremental change and requires an organization to
face the possibility that what the organization may really need is radical change. Work
process engineering is more radical than continuous improvement and may be a response to
game‐changing developments in technology, competition, or the economy. It usually entails
rethinking or redesigning processes used to accomplish organizational goals with the
objective of dramatic improvements in efficiency and competitiveness. These actions will
ultimately require many changes that will involve human resource professionals.
E.g. After many years of outsourcing manufacturing of household appliances to places such
as China, Vietnam, and the Philippines to take advantage of extremely low wages, General

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RTM Nagpur University MBA - 2023-25/ Semester – II

 Electric took another look at the practice in 2009. Overseas wages and transportation costs
were climbing. Advances in technology made it cost-efficient to bring production of a high‐
tech, energy‐efficient water heater back to the United States. The appliance was completely
redesigned. An existing factory in Louisville, Kentucky, was gutted and redesigned to take
advantage of the latest manufacturing technology. The lessons learned from W. Edwards
Deming and Frederick Taylor were used to increase efficiencies in materials and labor. A new
lower wage structure was implemented for workers and production began. Soon after, a
similar process was followed to bring manufacturing of high‐ end refrigerators back from
Mexico.

10 Introduction to Strategic Human Resource Management

10.1What is Strategic Human Resource Management?
Strategic human resource management is a process that helps the human resources
department maximize the potential of its workforce through strategic planning, talent
management, leadership development, organizational design, and performance management.
It focuses on strategic alignment of organizational objectives with HR strategy and
employees’ personal goals.
Strategic Human Resource Management aims to align the focus of HRM with business to
achieve objectives through the strategic deployment of a highly committed and capable
workforce, using a range of cultural, structural, and personnel techniques.

10.2 Strategic Human Resource Management examples:

Example 1: Nissan

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
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 A business goal to differentiate itself from competitors prompted Japanese auto
manufacturer Nissan Motor Corporation to foster a corporate culture that empowers
employees to innovate its manufacturing processes.
Nissan applies a continuous improvement framework called Kakushin. This philosophy
challenges assumptions about operating in a certain way and embraces brainstorming and
analysis to make changes and move ahead. Employees are encouraged to find ways to
continually improve methods for getting work done.
With the business objectives and the Kakushin method in mind, HR leaders can focus HR
practices where they need to be:
 Recruiting the right talent, and
 Building a secure workplace environment where employees feel entrusted to meet challenges
with autonomy and fresh ideas that drive achievement.

Example 2: Brigham and Women’s Hospital

Brigham and Women’s Hospital is a teaching affiliate of Harvard Medical School. They
recognize that “great patient care begins with great people”. The organization’s strategic
HRM efforts primarily target creating a healthy work-life balance for employees.
HR helps to provide childcare for employees who are caring for children or the elderly, as
well as back-up childcare in case of emergencies. The hospital also assists with home health
services, nursing home placement, and support groups to reduce stress. What’s more,
employees who earn below a certain threshold get subsidized tuition rates.
In general, the hospital actively encourages employees to balance their work responsibilities
with their personal lives and maintain their health and well-being.

Example 3: Sainsbury’s
Sainsbury’s is one of the leading supermarket chains in the UK. The company has been an
innovator when it comes to all aspects of the business. They opened their very first “worker
academy” almost a century ago, pioneered self-service shopping, and recently invested in
raising all its retail staff’s salaries to £11/hour.
The retailer works hard to ensure that its employees are empowered to offer customers a great
experience.

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Sainsbury’s training academies are responsible for training team leaders and store managers
in technical and behavioral skills to boost their confidence, create a more positive employee
and customer experience, and help them advance in their careers. 58% of colleagues who are
in the Leading@Sainsbury’s program will get a promotion within 9 months of completion.
The company has also ditched the requirement for a CV when hiring for retail colleague
roles, creating more opportunities for people who may lack the education or employment
history traditionally required by other employers for similar roles.

10.3 Importance of Strategic Human Resource Management

10.3.1 Connecting employees with organizational goals – The Strategic Human Resource
Management process ensures that HR practices, policies, and strategies link
employees with the company’s path to accomplishing its broader organizational
objectives.
10.3.2 Gaining a competitive advantage – Knowing exactly where leadership wants to take
the organization allows the HR department to focus on the skills and abilities people
need to do the work it takes to get there. Through effective talent management,
training, and development, SHRM can lead to a more competent and skilled
workforce that yields a competitive edge over rivals.
10.3.3 Adapting to change – A strategic approach to HRM means continually looking
ahead, allowing organizations to anticipate and quickly adapt to changes in the
business environment. Plans can adjust to accommodate technological advancements,
market shifts, or evolving workforce demographics. Meanwhile, HR supports,
motivates, and communicates with employees throughout the adjustments.
According to Simon A. Taylor, Head of Organization Effectiveness at Gap Inc., with
an understanding that change is the new constant and no one knows the future, the
best thing an organization can do to prepare for the future is to build the capacity to
change quickly, hone in on what’s important, and quickly adapt.
“Practically, this means two things: 1) building the mindsets, practices, and
capabilities within the organization to spot and rapidly adapt to change, and 2)
designing HRM practices with an understanding that they can – and maybe should –
evolve in the not-too-distant future as the business strategy evolves,” says Taylor.

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10.3.4 Enhancing employee performance – Strategic HRM determines how employees add
value and facilitates performance management systems that ensure they are
motivated, well-trained, and properly evaluated. HR can implement methods for
addressing employee weaknesses and reinforcing their strengths, leading to optimal
job performance and productivity. What’s more, it can strive to improve performance
through improved employee wellbeing.
10.3.5 Driving business growth – With its emphasis on proactive planning, SHRM
identifies gaps in current resources and forecasts future workforce needs. As a result,
the organization is equipped with the necessary human capital to launch initiatives,
enter new markets, and drive growth.
10.3.6 Improving operational efficiency – A strategic approach to HR is about
meticulously designing roles, responsibilities, and workflows to specifically suit the
company’s human capital needs. This clarity streamlines operations to reduce
redundancies and boost overall efficiency, directly contributing to better business
performance.

10.4 How to create a Strategic Human Resource Management Plan?

10.4.1 Create an HR strategic plan that follows the business.
The first step towards making an impact with Strategic HRM is creating an HR strategic
plan linked to overall business goals. An HR strategic plan boils down to:
[Link] Understanding the broader business strategy so you know what success looks like
and how to measure it.
[Link] Evaluating strengths and weaknesses to uncover where you need to make
improvements.
[Link] Aligning what you’re doing in HR with the business strategy to build the capabilities
needed to carry it out.

Here are some questions to ask yourself to help understand the business on a deeper level:
 What are the long-term goals of the organization?
 What are the strengths and weaknesses?
 What are your current resources?
 What current skills does your workforce have, and are there any gaps?

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For example, if the organization plans to grow exponentially over the next five years, you
might need to invest in recruitment programs across different functions. If you’re looking to
launch a new product or service or expand into new markets, think about the skills and
capabilities you need to achieve this.

10.4.2 Align HR activities with the strategy

All HR activities should align with the HR strategy and with each other to create a
compound effect that helps achieve business outcomes. These include
recruitment, selection, performance management, compensation and benefits, organization
and function design, and more.
For example, performance evaluation criteria should be the same qualities you look for
when hiring people. In addition, you should strive to develop these qualities throughout the
workforce. This allows your hiring, performance evaluation, rewards, and learning and
development to align with what the business strategy is trying to achieve.
In research, these groups of HR practices are referred to as bundles. An example of such a
bundle is employee retention, which is associated with several HR practices like good job
design, employee involvement, and equal opportunities.
Another bundle is innovation. Innovation is associated with performance appraisal,
employee involvement, teamwork, job design, training and development, and provision of
information.
Strategic HRM is about prioritizing HR activities that help you carry out your HR strategy,
which, in turn, contributes to the organizational strategy.
10.4.3 Emphasize data
Data is the key to showing the impact of Strategic HRM. Evidence from multiple sources of
workforce data can influence HR practices to sustain better outcomes. You can track
success with HR key performance indicators (KPIs) that are aligned with the strategy of the
organization.
In addition to tracking progress, you can use people analytics to measure how your people
policies contribute to business goals. This makes HR’s contributions very tangible and can
build a concrete business case for HR investments.
For example, Best Buy, an American consumer electronics retailer, found that a 0.1%
increase in engagement leads to an increase in revenue of $100,000 per store.

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 Furthermore, a McKinsey study found that it pays off to shift the best talent to where the
business strategy requires it. Organizations that swiftly reallocate employees to high-priority
initiatives are more than two times as likely to outperform their competition.
10.4.4 Take an outside-in approach
A critical step in being strategic is taking an outside-in HR approach, which provides a
more comprehensive picture of HR’s purpose. Who are the customers of HR? While the
obvious answer here is employees and leadership, there are also other stakeholders,
including shareholders, investors, and customers.
HR practices must align with business strategy, and that strategy also needs to align with
these external stakeholders. Rather than focusing on what it does, HR should gauge the
value it creates for every entity.
When HR practices are in line with the expectations and needs of these stakeholders, it
fosters a positive brand image, strengthens trust, and encourages a balanced business
ecosystem.
By showcasing the impact created for each stakeholder through HR practices, HR can
contribute to sustainable organizational growth and drive business excellence.

11 Organisational and HR Strategies

11.1 Meaning of Strategy.

By strategy, we mean future-oriented plan for interacting with the competitive environment
to achieve organisational goals. Strategy is a framework for managerial decisions. It reflects a
firm’s awareness of how, when and where it should compete and for what purpose it should
compete. The focus is on managing competition. By implication, sans competition firms may
not need strategies at all.

Strategic management refers to the process of crafting strategies, their implementation and
evaluation of their effectiveness. At the core of the strategic management process is a team
comprising the CEO aided by top executives. For example, the core team that formulated and
executed the strategic takeover of Corus by Tata Steel consisted of Ratan Tata, the CEO;
Muthuraman, M.D., Tata Steel; Arunkumar Gandhi, Head of the M&A cell of the Tata
Group; and Kaushik Chatterjee, VP Finance, Tata Steel.

11.2 What is an Organisational strategy?

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An organisational strategy is a detailed plan on how a business allocates resources to best support its
internal processes and work towards achieving long-term goals. The strategy is typically adjusted
every few years or more frequently to stay in line with company goals.

Strategies often include an analysis of where resources might be put to best use, prioritising areas that
require the most help or can potentially drive the biggest impact.

While organisational strategies don’t always have to change, public interest and industry
standards do change. It’s important for companies to keep those shifting realities in mind when
reviewing their organisational strategy.

11.2.1 Corporate Level Strategy.

A corporate level strategy is a high-level overview of the company’s main goal and the broad strokes
of how to achieve them. Top stakeholders formulate it to inform their workforce about upcoming
milestones and provide resources they’ll require to meet them.

This is the level of planning where the current state of the market is most important. If your
company’s product has reached the peak of its value, then stakeholders will create a corporate-level
objective to find new business opportunities. It’s a great example of the adaptability of your
organisation strategy in action. Goal creation processes like SMART goals can help ensure that
corporate objectives are clearly defined and achievable.

11.2.2 Business Level Strategy.

The business level strategy translates the vision set by the corporate level plan into actionable
tasks. Department and team leaders scale down the overall company objective into a step-by-
step process specific to their area of responsibility.

For example, suppose the company’s goal is to double revenue in five years. For HR, this
may translate into an effort to recruit top-quality talent. A business level strategy would
therefore dictate HR’s role in identifying and bringing in the best candidates. For the
marketing department, this could involve developing a plan to train top performers in
emerging technologies or expanding the best-performing marketing strategies.

11.2.3 Functional Level Strategy.

A functional level strategy defines the targets workers need to achieve the organisation’s
main objective. Each department creates its own, so any outlined milestones best fit its

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typical roles and responsibilities. For example, the IT department has different tasks and
deadlines from the finance department.

Action items derived from your functional level strategy are usually specified for each
department. If the company wants a product to appeal to new demographics, R&D may
reimagine the product function while the marketing department researches the most effective
ways to attract people in the target demographic.

11.3 Organizational Strategy Examples.

11.3.1 Cost Leadership Strategy:

Example: Walmart employs a cost leadership strategy by offering a wide range of products at
lower prices than many competitors. This approach focuses on operational efficiency and
economies of scale to maintain a competitive edge.

11.3.2 Differentiation Strategy:

Example: Apple adopts a differentiation strategy by creating unique and innovative products.
The focus on design, user experience, and proprietary technologies differentiates Apple from
competitors in the consumer electronics industry.

11.3.3 Focus Strategy:

Example: Ferrari employs a focus strategy by targeting a niche market for luxury sports cars.
While not catering to the mass market, Ferrari concentrates on delivering high-performance,
exclusive vehicles for a specific group of enthusiasts.

11.3.4 Innovation Strategy:

Example: Google emphasizes an innovation strategy by continuously introducing new

products and services. This includes ventures beyond its core search engine, such as self-
driving cars, artificial intelligence, and other cutting-edge technologies.

11.3.5 Digital Transformation Strategy:

Example: Amazon’s digital transformation strategy involves leveraging technology to

enhance customer experiences, optimize supply chain operations, and diversify into various

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
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RTM Nagpur University MBA - 2023-25/ Semester – II

digital services beyond e-commerce.

11.4 HR Strategy

Acc. to AIHR, An HR strategy is a plan for aligning human capital investments with business
needs. It shapes the character and direction of HR management activities to focus on
supporting what the company is trying to accomplish. The HR strategy sets the direction for
all the key areas of HR, including hiring, performance appraisal, development, and
compensation.

According to Dr. Dieter Veldsman, Chief HR Scientist at AIHR, an HR strategy is always in

response to what has been articulated in the business strategy. “The HR strategy clarifies how
HR will contribute to achieving the business objectives and helps to guide all HR activities,”.

An HR strategy is characterized by:

11.4.1 Requiring an analysis of the organization and the external environment.

11.4.2 An outlook of three to five years.
11.4.3 Forming the base of Strategic Human Resources Management in an organization.
11.4.4 Helping in the deployment and allocation of organizational resources (i.e., money,
time, personnel).
11.4.5 Being revised on an annual basis.
11.4.6 Resulting in a specific behaviour.

11.5 Key components of an HR strategy

The details of an HR strategy will differ according to each organization’s needs. However,
you’ll want to make sure it covers certain key areas to inform your HR practices. These
include:

11.5.1 HR mission statement: Create an HR mission statement to define what you’re trying
to achieve. Ensure that every HR team member is well acquainted with it.
11.5.2 Organizational culture: When HR is in tune with the company’s goals, it can look
for ways to promote the desired behaviors and a culture that will help make them
achievable.

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RTM Nagpur University MBA - 2023-25/ Semester – II

 11.5.3 Talent acquisition and recruitment: HR can target its talent acquisition tactics to
reach and hire qualified talent that can take the company where it’s headed.
11.5.4 Talent management and development: HR must stay on top of
the capabilities required to get work done efficiently and effectively. Then, it can
design appropriate management and development practices to build these up.
11.5.5 Compensation and benefits: With buy-in from senior leadership, HR can ensure
that compensation and benefits are competitive to recruit and retain the kind of
employees who can contribute to organizational success.
11.6 HR strategy framework.

An HR strategy framework gives structure to developing your HR plan and guides its
implementation. Deloitte created an HR strategy framework with three phases – Defining
human capital value, Aligning HR products and services, and Delivering value. This
approach helps HR leaders define the HR strategy in a systematic way. Here is a brief
overview of this method:

11.6.1 Defining human capital value.

[Link] Understand the business strategy: You must have a grasp of what your
organization has to offer and what its future strategies and goals are. Consider
external market forces as well. Then identify how these will impact the HR
strategy and priorities.
[Link] Define HR strategy: Create a roadmap for how HR can sync its functions with
what the business is trying to accomplish. The goal is to leverage human capital in
ways that will help build a competitive advantage for the organization.
11.6.2 Aligning HR products and services.
[Link] Segment HR customers: Not all HR customers are equal. Segment your different
(internal) customer groups and identify the ones that are most crucial in achieving
desired results. Different customer groups require different policies and approaches.
Design programs and services that meet these varied needs.
[Link] Prioritize HR investments: Allocate your HR budget and other resources effectively.
Understand the costs, risks, and benefits of delivering your initiatives and services.
Then you can prioritize the investments that benefit your key customers and provide

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

 the best ROI. A good technique for prioritizing these investments is calculating an
ROI through HR costing.
[Link] Design HR services: Go through all the HR focus areas and analyze and identify any
processes that need to be streamlined or re-engineered.

11.6.3 Delivering value

[Link] Ensure the right HR service delivery model – Evaluate the current HR service
delivery model and assess how effectively it helps to meet the organization’s goals.
You should also analyze the key HR enablers, such as HR systems, processes, and
infrastructure. Optimizing these will help deliver HR services that add value to the
organizational strategy.
[Link] Establish the right HR capabilities: Identify the skills and capabilities that the HR
team needs to execute the HR strategy. Compare that to the current competencies and
discover where the gaps are. Then determine how to train and recruit to overcome the
disparities.
[Link] Improve HR operational excellence continuously: This step is about optimizing the
role of HR. By regularly assessing the efficiency of HR processes, you can find ways
to improve them. This may involve providing tools or infrastructure that HR staff
need to be more efficient and effective.
[Link] Build an HR brand: HR’s value should be apparent to all stakeholders in the
organization. Understand how the HR department is and should be performing by
gathering feedback. Market what HR has to offer through integrated communication
channels.
[Link] Measure the impact of HR products and services: In the end, HR processes must
be effective to fulfill the HR strategy. Measure the impact of your products and
services on the relevant business outcomes through HR analytics.

11.7 How to develop an HR strategy?

11.7.1 Understand how HR delivers value to the organization.

HR models are a tool for articulating the impact of your HR department. One example is the
Standard Causal Model of HRM:

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
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RTM Nagpur University MBA - 2023-25/ Semester – II

This model displays that the HR strategy is a result of the broader business strategy. It shows
that HR activities create value when they align with what the organization is trying to achieve
and can promote higher employee motivation and job satisfaction. This allows HR to
contribute to the internal and financial performance of the organization. If you can
demonstrate this impact, there is a clear justification for the resources that must be invested to
execute the HR strategy.

11.7.2 Consider emerging HR trends.

New developments and technological advancements are constant factors in the world of work.
Emerging HR trends include the boom of generative AI, flexible work arrangements, and an emphasis
on employee wellbeing. As new considerations transpire, expectations for HR and what it should
deliver will continually change.

HR teams must be aware of external and internal dynamics that will require adaptation and how this
influences the strategic HR plan.

11.7.3 Conduct a SWOT analysis

A SWOT analysis is a method for mapping out an organization’s or department’s internal

strengths and weaknesses and its external threats and opportunities. Strengths include the
company’s core know-how and know-what. These are, for example, its production capacity,

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Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

existing brand, marketing channels, sales capabilities, R&D expertise, and other human
capital factors.

Using this assessment, you can decide how these elements affect HR and also conduct your
own SWOT analysis. Then you can make plans for addressing the weaknesses and leveraging
your human capital strengths to make the most of opportunities.

11.7.4 Plan for long term with room for adjustments.

A strategy is, by definition, long-term. This doesn’t mean it isn’t subject to change. You will
need to address limitations and shifting circumstances. Specific actions within a strategy can
and sometimes should be adapted to better fit the environment.

For example, if your commission and bonus structures are not producing the expected results,
you may need to alter them to encourage and reward new behaviors that will improve
business activity.

11.7.5 Get management buy-in.

An HR strategy cannot stand alone. Carrying it out requires an appropriate budget,

technological resources, and skilled staff. This is only possible when management backs the
strategy and is willing to fund and advocate for it.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
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RTM Nagpur University MBA - 2023-25/ Semester – II

Being able to demonstrate how HR practices deliver value is the key to gaining this crucial
support from business leaders. It’s also a great opportunity to clarify what the leadership
expects from you and what you, as HR, will and will not be doing.

11.7.6 Upskill your HR team.

Competent HR professionals are the foundation for implementing and executing an effective
HR strategy. They need HR knowledge, business acumen, HR technology literacy, and
appropriate soft skills. HR leaders need to know where the HR skills gaps are and plan how
to bridge them. Identify the employees who have talent beyond the scope of their current role
and are ready to take on new challenges.

Work with your HR team members to create professional development plans that will guide
their growth and skill building. Focus on future HR skills that will help your team navigate
the fast-changing work environment and successfully guide the organization through these
shifts. If recruiting is necessary, focus on skills-based hiring to find people who are equipped
with the right capabilities, even if they lack direct experience in a similar role.

11.7.7 Monitor your strategy execution through KPIs

A strategy will never be effective without consistent implementation and monitoring of

results. This is done through tracking HR Key Performance Indicators (KPIs) (metrics that
measure strategic objectives) to quantify how successful your HR strategy is.

These metrics could include Absence rate, Turnover rates (voluntary and involuntary),
Internal promotion rate, Employee satisfaction index, Employee engagement index, and
Supervisor and employee feedback statistics.

This will be an ongoing process, so determine a timeline for assessing the KPIs and key
milestones to achieve your goals. As you review the progress, identify the improvement areas
and adjust the related components in your strategy. Continue to evaluate the changes and
whether the HR strategy is supporting the company’s growth.

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Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

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Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II

HR strategy examples

Let’s look at real-world scenarios of how HR can connect its practices to the organization’s
goals. Here are three successful HR strategy examples:

University of Marquette HR mission statement

Many organizations will translate their HR strategy and how it ties to business goals into a
mission statement. Condensing a strategic plan into a short phrase clarifies HR’s purpose for
all stakeholders. It also gives HR staff a guiding principle to keep in mind as they carry out
the department’s responsibilities and initiatives.

The HR department at the University of Marquette in Milwaukee, Wisconsin operates under

the following mission statement:

“The Human Resources Department aspires to be the model for excellence and leadership in
human resources, delivering strategic and progressive human resource solutions and counsel
that support and enable the University’s mission and strategy. We aspire to be a catalyst that
makes Marquette University an employer of choice.”

Digital transformation at Colgate

American multinational consumer products company Colgate-Palmolive wanted to prepare

its operations to be savvier in the new ways of conducting business. Wendy Boise, Senior VP
of Global Talent, Learning, and Organization Development, explained:

“We’re embedding digital in everything we do, from driving digital media efficiencies to new
analytics to our E-commerce business. It’s about accelerating digital upskilling, focusing on
digital frameworks, concepts, and technologies, and how we use them to advance our
purpose and strengthen business results.”

They started by conducting a study to find out which new capabilities its workforce needed to
digitally transform the company. Then, Colgate designed and implemented a learning and
development program to upskill its 16,000 office employees located in 100 different
countries.

The program has fueled employees’ abilities to boost business outcomes in several ways,
including:

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  Using bots to drive efficiencies, resulting in a 100% elimination of product delivery
errors.

 Increasing e-commerce sales.

 Mastering complex analytics to manage digital shelves.

Innovative talent strategies at Canva

Canva, a Sydney, Australia-based online graphic design platform, has experienced

exponential growth since its 2013 start. To keep up with the company’s rising recruiting
needs, they’ve developed a skills-first mindset and fostered a talent community.

Canva uses a skills framework around the four pillars of craft, communication, leadership,
and strategy. The skills required in each pillar are made a priority throughout hiring,
onboarding, and L&D.

Applicants who don’t get hired are invited to join Canva’s talent community with
opportunities to attend events and skills-based webinars. To show further appreciation for job
seekers and keep them engaged with the company, candidates who make it to a certain stage
of the recruitment process are granted a complimentary Canva Pro subscription.

Amy Schultz, Global Head of Talent Acquisition, puts it this way:

“I’ve got this True North vision that one day we will never have to post a job ad again. We
know where we are, we know where they are, we know the skills our people have and that
they have an affinity to work at Canva.”

These inventive approaches have supported Canva’s global team growth from 1,000 to 4,000
employees in three years and produced a talent community with over 20,000 potential hires.

Dr. Ambedkar Institute of Management Studies and Research, Deekshabhoomi, Nagpur – Notes by-
Prof. Deepika Soni (For internal circulation only)

RTM Nagpur University MBA - 2023-25/ Semester – II