People are strategic...What about HRM?

In today's rapidly changing globalized business environment, people are considered to be strategic assets that ensure competitive advantage for an Organization. Senior management rely on intangibles as the key profit lever and primary source for long-term advantage over the firm's competitors. In most of the Organizations, people are not considered as an overhead cost to be cut but rather profitable investment as long as motivated, developed and rewarded via value added, responsive and aligned HR practices. That modern theory of business management puts management of people in the first place as importance and addresses as an imperative, challenging issue in this competitive environment.

The above mentioned and generally accepted view requires a new perspective on what is meant by HR function in the Organization, and a new understanding of how HR creates value in the Organization. This also requires an evolutionary change. Can HR respond on that change? Didn't HR arrive there yet? What should be done ?

These questions and many others are asked frequently and answers are trying to be uncovered within scholars of Human Resources Management (HRM). In this essay, my intent is not to give so detailed theoretical explanations neither on HRM history nor on Strategic Human Resources Management (SHRM). But rather providing some facts based on survey reports, on reputable authors' implications and on my personal synthesis about how to achieve this new vision for HRM.

Defining SHRM

We are all aware that in recent years, the field of human resources experienced an evolutionary change with a revolutionary speed. In the past, HR was heavily responsible for personnel and administrative activities. But today, although it still faces considerable barriers, HRM has started to get rid of its crust and involved on more strategic issues extensively over the last twenty years.

But, attaching the prefix "strategic" does not make you strategic in just one blink. It is a long-term process. Why?

It is just simply because strategic means value added activities that differentiate you from your competitiors and have significant impact to the overall business results of an Organization. The term derived from the most acclaimed concept "strategy". And the strategy may be defined as performing similar activities different than or performing different activities than your competitors do.

You see... As long as you relate to strategy related terms, you will face common concepts: differentiation, value adding, innovation and so on. That's why SHRM can be described as a long and a severe road but also a road if not used will let you out of the competition. From this moment now, it is up to HR professionals' vision whether to sail away from their safe harbor and respond to that challenge or not.

Before going further, let's look at some notable examples of SHRM definitions which i'm sure will let us understand the concept and the philosophy behind it:

• The pattern of planned HR deployments and activities intended to enable the firm to achieve its goals,
• The process of taking a long-term approach to HRM through the development of HR systems, processes, policies that address and solve business problems and directly contribute to major long-term business objectives,
• The linking of people with strategic goals and objectives in order to improve business and develop organizational culture that foster innovation and flexibility,
• Acceptance of HR function as a strategic partner in the formulation and in the implementation of company's strategies through HR activities,
• The process of linking HR practices to business strategy,
• The process by which Organizations seek to link human, social and intellectual capital of their members to the strategic needs of the firm.

Many other descriptions can be found in various sources of information. But, still some question marks may stick in your minds, like for example: at what level is the applicability of Strategic HR Management in the Organizations? Is it irrelevant with the realities of the business world? Is it just a myth or a reality?

Let's try to find out some solutions to those reasonable question marks...

Is it myth or reality?

Strategic HR is not a title that is given to any of HR departments. For example, have you ever encountered with Strategic HR Director/Manager/Supervisor? I don't know about your answer but i didn't that's for sure. As i have tried to explain above that, what makes you strategic is the value added HR activities aligned with corporate business plans. It is not because of the fashion you will be recognized as strategic. Well that intangible side of SHRM makes people think inaccessible and let them see this new way of thinking for HRM as a "myth".

You can see many lecture, certificate programs in most of the leading universities of the world covering Strategic HR Management issues. There are millions of pages on the web and thousands of books on that subject covering the linkage between HRM and business strategies and how to reach there in real business life. All of these scholars, management authorities and thinkers can not be wrong at the same time. Well, if you still think that SHRM has nothing to do with real life and can never be achieved, than i should say that you are not pushing hard enough to get there and feeling much comfortable on your safe chair by just doing what it is said to you.

Society for Human Resources Management conducts every year SHRM survey in US via online questionnaire. In 2006, they have collected data from 427 HR professionals in US regarding Strategic HRM practices in their Organizations. According to some dramatic results;

1. 56% of respondents reported that their HR department had a strategic plan, out of this 96% were aligned with corporate strategic business plan.
2. The majority (59%) of the respondents felt that employees perceived their HR departments as mainly having an operational role.
3. 89% of the respondents indicated that HR could contribute to a large extent through employee relations.
4. 68% stated that HR works closely with senior management in implementing corporate strategies.
5. Less than half of the population (47%) responded that senior management has come to accept and realize their investments in HR make financial sense.
6. The major barriers that HR professionals encounter with; 86% of respondents felt that their departments are focusing on administrative duties, 78% not able to directly measure HR's impact on bottom line and lacks an established method, 63% has limited involvement with board of directors.

As you can see from the survey findings that HR professionals still faces considerable barriers like focus on administrative issues and lack of measurement. Another finding that should be highlighted that HR is focused more on implementation than on the creation of corporate strategic business plans. These were key observations that let us see that we all have some more way to reach fully strategic HRM in our Organizations. I am sure that in the rest of the world, the overall picture is similar or worse than it is in US.

Astonishing similarity that i saw between Jac Fitz-Enz' interviews and the above mentioned survey fndings about the barriers or the perception of employees. In 1990, Fitz-Enz asked more than 1.200 line managers from US, Brazil, Canada, Australia, Denmark, France and South Africa, three strongest images that they have of the HR function in their company. The responses were similar to that of Society for HRM's survey;

• HR is too costly (401 respondents);
• It doesn't add value (287 respondents);
• It's bureaucratic (184 respondents);
• We can do it ourselves (163 respondents);
• They don't know the business (118 respondents).

Roadmap for SHRM

From 1990 to 2006, two different set of findings similar in nature can be seen above. Only these two instruments are enough to understand how slowly that change in HR function is happening and how that change is a must for managing people as strategic assets within the Organization.

Strategic Human Resource Management is neither a myth nor a mission impossible for HR professionals. It is a long-term process not a "me-too" exercise. It must be considered as a new vision, a new roadmap for every HR department. In order to be succesful on this long journey;

• Be one of the members in creation process of Corporate Strategic Business Plans,
• Establish an HR vision and communicate it not only to HR Department, but to all employees,
• Develop your HR Strategic Plan aligned with Corporate Business Plans,
• Continously improve, innovate or re-design your HR applications, systems according to the changing needs of your Organization,
• Know your business and the environment in which it operates,
• Be the pioneer of Human Capital Management by facilitating change, developing your people,
• Show by figures the impact of your work by HR metrics and benchmark with your competitors.

These highlights may seem almost hard to accomplish in some of the Organizations, but never should be considered as unachievable ones. I strongly do believe that HR must re-position itself and choose a new way towards the quest for SHRM. Success will come sooner or later...

References:

- Making HR a Strategic Asset; Becker, Huselid, Ulrich; 2001
- Strategic Management and HRM; Allen, Wrigth; 2 006
- Partner or Guardian?; Wright, Snell; 2004
- 2006 Strategic HR Management Survey, SHRM
- Human Value Management; Fitz-Enz; 1990
- Strategic Human Resource Management; Bratton
- Toward a SHRM Model of High Reliability Organization Performance; Ericksen, Dyer; 2004