Role of HR in Strategic Management Planning Term Paper

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HR in Strategic Management


It was after the Korean War that an entirely new breed of college educated managers appeared on the scene and exuded a greater sense of responsibility that translated into a wave of consciousness for social well-being and social upheaval that swarmed through the second half of the 20th century (Losey 1998). Their influence markedly changed the thought of the American employee. But another group in the 60s and the 70s heightened the established interest in laborers welfare and feelings to the point of affecting all facets of business, including the growth of market research, communications and public relations. This second wave shifted focus from scientific management to the employer-employee relationship. The new gear led to the development of programs that increased wages and fringed benefits and the eliciting of worker ideas and initiative in recognizing the link organizational philosophy or policy to greater productivity (Losey).

This social phenomenon, called the Great Society (Losey 1998), generated laws that protected employees from unsafe jobs and basic civil rights violations. It became the manager's function and responsibility to motivate his subordinates and help them through the organizations regulations, executive orders and court decisions. The nature of work itself began to evolve and human rights and self-fulfillment became a priority concern. An employment was not only be a source of income to the employee, but also of challenges and opportunities, whereby the employee becomes part of the company as a stakeholder (Losey).

It was an awesome deviation and departure from the attitude of the early 1900s during which workers were mere machines or part of machines like cogs. The strong influence of psychology and other behavioral sciences in the century put the machines in the power of high skilled and knowledgeable workers who made decisions for greater customer satisfaction, at the same time (Losey 1998). It was an age that saw work as meaningful and aimed at enriching the work environment. It imaged and communicated the organization's objectives along with the employees as a blend in enhancing and insuring greater productivity (Losey). The results of the blend have been convincing and propelled resource innovations beyond the human departments. The importance of human resource is now part of long-range strategic planning itself. The human resource leader or professional in the organization is expected to optimize employee skills, match individuals to jobs, and maximize their potential as a valuable organizational resource Losey). This brief study will delve into the development, grasp and current developments of this new wave of consciousness as a significant part and input into the management planning strategy of today.


The new vision on the place and value of human resources in an organization evolved from studies conducted by Elton Mayo, the Father of Human Relations and from the Hawthorne Studies between 1924 and 1932. The Hawthorne Studies re-evaluated Frederick Taylor's behavioral assumptions, while Mayo investigated the effects of changes in the work environment on productivity (Losey 1998). Mayo's study found that employee productivity was affected more by the level of attention shown by management on employees' behavior than their physical working condition, such as the level of lighting. This meant that the human factor was more important than the physical factor. The enlightening conclusion led to a then controversial proposition that a worker's feelings were important and to the development of human relations or HR management concept. Employee motivation achieved focus in the 40s. After the Second World War when the economy was revived, there was a labor shortage because the men served in the army. Women, teen-agers and color people had to be hired. The personnel manager's role was expanded to include recruiting, testing, training, mediating and maintaining employee morale in addition to production efficiency (Losey). Employees worked better when their employers did not look over their shoulders while they worked but behaved more like good leaders, counselors and facilitators who cared about their conditions. Non-monetary compensation and benefits became an important supplement to monetary rewards. Newer and more responsive theories were developed to improve the relationship between management and the labor force (Losey). When the men came in from the Second World War ill-equipped for technological know-how, the federal government launched suitable measures, such as the GI Bill of Rights, which awarded the veterans with university-level educational assistance.

An ensuing severe inflation was followed by wage freezes and labor unrest. Union membership grew from 6% to 23% when the National Labor Relations Act was passed in 1947 (Losey 1998). There were more and more strikes and other union tactics, which created a strong anti-union sentiment. President Truman vetoed the 1947 Labor-Management Act, but Congress overturned the veto. Joining the union was a condition to employment and the government assumed the role of mediator of unions and management disputes.

By then, it was beyond dispute and argument that the human capital was the most important asset of a corporation, both economically and strategically (Weatherly 2003), and thus, the desirable thing was to increase the number of HR practitioner in the organization. The attainment of this objective required the best understanding of the customer and market-driven factors that affected businesses, effectively influenced and contributed to the strategic decision-making process, adapted quickly to, and enabled change in, organizations, and managed and influence the culture of those organizations. All these required HR leaders to better appreciate or understand the value of people and to keep only looking for ways to use human capital measurement systems in optimizing the value of people in organizations (Weatherly).

In the planning process, human resource managers were traditionally mandated to acquire, train and maintain personnel who would guarantee that the organization's objectives were met (Singer 2000). This required that appropriate government rules and regulations were followed, policies and procedures justly and equitably implemented, and labor unions and employee relations remained in harmony. The HR manager faced more and more challenges by swift technology changes, the escalating need for accurate research, planning and faster proactive steps or responses. Shifting demographics of the workforce, global competition, shortage of skills, changes in union strategies and increasing demands for technical position all clamored for the most adequate methods of staffing and training (Singer). The conclusion was that HR managers had to be more proficient in research, forecast and planning.

In time, the fitness of human resource management came into question as a coherent theoretical framework and the superseding interest in strategic management of organizations (Wright and McMahan 2003). Eventually, HRM and strategic management became integrated and produced the mold called strategic human resource management or SHRM. SHRM was defined as a "set of processes and activities by human resources and line managers to solve people-related business problems (Guest 1989 as qtd in Wright and McMahan)." It insured the full integration of HRM into strategic planning, that HRM policies remained consistent with policy areas and across hierarchies and line managers accepted HRM practices in everyday work. Simply put, SHRM is the macro view of the HRM in a larger organization (Wright and McMahan).

Strategic HRM differs from traditional HRM in two dimensions. First and vertically, it links HRM practices with the strategic management process. Second and horizontally, it puts emphasis on the coordination or congruence among HRM practices (Wright and McMahan 2003). The four HRM strategic theories are the resource-based view of the firm, the behavioral-based theory, cybernetic systems, and agency or transaction cost theory. The resource-based view held that competitive advantage could be gained only conditions of firm resource heterogeneity and immobility and this was where it differed from the traditional strategic management model. Firm resource heterogeneity constitutes all the resources of the firm -- physical capital, human capital and organizational capital -- and their differences across firms (Wright and McMahan). On the other hand, these resources were viewed as homogenous in the traditional strategy model. Firm resource immobility was the inability of competing firms to acquire resources from other firms, in contrast with the traditional model wherein models were mobile and could be purchased by a competing firm (Wright and McMahan).

The behavior-based theory viewed employee behavior as mediating between strategy and firm performance, which assumed that the objective of employment practices was to elicit and control employee attitudes and behaviors (Wright and McMahan 2003). These attitudes and behaviors were as varied as organizational structures and these differences in strategy required different HRM practices to elicit and reinforce the different attitudes and behaviors, because employee role behaviors were pivotal in implementing competitive strategies. These role behaviors could be repetitive or innovative, low or high-risk, and flexible or inflexible, and did not involve the employees' knowledge, skills, or abilities required to perform a specific task (Wright and McMahan). It focused on the throughput process, which served as the mediator between strategy and its effective implementation (Wright and McMahan).

The third model consists of cybernetic systems models, some closed and others open.

Closed systems set up mechanisms to buffer the technological core from the environment, while the open systems could interact with the environment. A central mechanism in…

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