HRM also supports strategy formulation by providing input on the company’s internal human strengths and weaknesses. Several years ago Signicast Corp decided that to compete effectively it had to move its operations to a new highly automated plant. However, doing so required that production workers command a whole new set of competencies and skills: using computers, reading technical manuals, working in teams, and so on. Therefore before the CEO could move far along in his strategic planning, he needed input from HR on his employees’ competencies and skills. How many were computer literate? How many had the educational background to assimilate the new training? What math competencies did they have? And, could the company provide the necessary training in time or would they have to turn to outside vendors or to hiring all new workers?
Some firms, thanks to such input, even build new strategies around human resource strengths. For example in the process of automating its factories, farm equipment manufacturer John Deere developed a workforce that was exceptionally expert in factory automation. This in turn prompted the firm to establish a new technology division to offer automation services to other companies.
Similarly in India Bharti Airtel, the telecommunications company, leveraged its internal expertise in training employees, specifically in customer management and formed a separate company, Bharti Connect to offer training solutions to other Indian companies.
In creating a strategically relevant human resource management system, it’s useful to focus on three main components. There are the HR professionals who hopefully have the strategic and other skills required to build the strategy oriented HR system. There are the HR policies and practices (such as how the company recruits, selects, and trains and rewards employees) and, there are the employee behaviors and competencies that the company’s strategy requires, and that hopefully emerge from the human resource system’s policies and practices. See below:
The HR Functions: HR professionals with strategic management competencies >>
The HR System: High Performance Work System (HPWS) consisting of strategically aligned HR policies, practices, and activities >>
Employee behaviors: Employee competencies, values, motivation, and behaviors required by the company’s strategic plan.
Again, the human resource professionals should design their policies and practices so that produce the employee competencies and behaviors the company needs to achieve its strategic goals. It is futile for Signicast Corp to plan a new high tech plant, if it won’t have the workers with the skills and competencies to run it.
The High Performance work system:
Every company to create a human resource that’s uniquely appropriate to its needs, for instance with recruitment and selection practices that make sense for it. However, there is certainly a trend toward installing HR systems that broadly share many characteristics. Mangers call these high performance work systems (HPWS). The need for such systems became apparent as global competition intensified in the 1990s. Companies needed a way to better utilize human resources as they strove to improve quality, productivity, and responsiveness, to compete with the Toyotas of the world. In the early 1990s, the US Department of Labor identified several characteristics of high performance work organizations. These include multi-skilled work teams; empowered front line workers; extensive training; labor management cooperation; commitment to quality; and customer satisfaction. The aim of such a system is to maximize the competencies, commitment and abilities of the firm’s employees.
In practical sense, some of human resources policies and practices that typically characterize high performance work systems. First, it shows the sorts of things human resource systems need to do, to be high performance systems. For example, they hire based on validated selection tests, fill more jobs from within, organize work around self managing teams, and extensively train employees. Second, high performance work systems have a bias toward helping workers to manage themselves. Indeed, the point of such a system’s recruiting screening, training, and other human resources practices is usually to build the highly trained empowered, self motivated and flexible workforce that companies today need as a competitive advantage. Third, we can measure the extent to which our human resource system is (or is not) consistent with those of a high performance work system. Note the measurable differences between high performance and low performance companies’ systems.