Strategy Formulation and HRM

Abstract

Chapter Overview This chapter focuses on strategy formulation in human resource management (HRM). The chapter delves with the role of human resource (HR) function in the strategic management process and vice versa. It highlights the importance of human resources to strategy. It also discusses the various approaches to integration of strategic planning and HRM and the factors affecting integration. The typology of HR systems in light of strategic issues is also discussed. Learning Objectives To understand the role of HR function in the strategic management process and the role of strategy in HR function To develop an understanding about the intrinsic importance of human resources to strategy To comprehend the various approaches to integration of strategic planning and HRM and the factors affecting integration OPENING STORY Rethinking the Role of HR The increasing emphasis on strategic HR and the need for HR departments to add value got even more evident when the call for change in the HR function was seen on the cover of July–August 2015 issue of the Harvard Business Review ( HBR ). With its subtitle It's Time to Blow Up HR and Build Something New. Here's How, the verdict was clear. However, this is not the first time that HBR has emphasized the need for HR function to reinvent. In fact, the pioneering work of Dave Ulrich that highlighted the changing roles of HR professionals, ‘A new mandate for human resources’, was published in the January–February issue of HBR in 1998. In his path-breaking article, Ulrich begins by asking ‘Should we do away with HR?’ He then goes on to opine, In recent years, a number of people have been debating that question. The debate arises out of serious and widespread doubts about HR's contribution to organizational performance…. There is good reason for HR's beleaguered reputation. It is often ineffective, incompetent, and costly; in a phrase, it is value sapping. Indeed, if HR were to remain configured as it is today in many companies, I would have to answer the question above with a resounding ‘Yes—abolish the thing!’ But the truth is HR has never been more necessary.