Q2 : Explain the importance of integrating Human Resource Management into a business’s strategic planning process.
An organisation’s strategy can be defined as it’s long-term direction and the process involved in achieving goals and objectives. Whittington, R. et al (2010) classes strategy as the allocation of resource necessary for achieving an organisations long-term goals. A business must develop a strategic planning process in order to ensure that it is successful and can compete in current, ever-growing competitive markets. To do this, human resource management must be integrated throughout the strategic process. Human Resource Management is classified by Bratton, J. & Gold, J. (2007) as a strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies and practices. The business environment is dynamic, continuously changing and a business must adapt their strategy to this to stay successful. This is done through the use of the business responding rapidly to change, using it’s best resources in the most effective way, which is something Human Resource Management assists in as it involves ensuring the best possible resources are employed and facilitated. Flexibility is a core element in a business’s competitive advantage, and Human Resource Management allows this as it keeps on track of business policies and is continuously monitoring to ensure all aspects of a business are as efficient and effective as possible. In order for an organisations strategy to be effective, it must be communicated and understood by all sections of the organization, and this can be done through training and communicating with staff, which is an element of human resource management.
In order for an organization to create an effective strategy, it must conduct a SWOT analysis, as stated by Whittington, R. et al (2010) to identify it’s strengths, weaknesses, opportunities and threats. This allows the identification of the firm’s key competencies, which provides assistance in the creation and implementation of a new strategy as it highlights which areas to emphasise and which areas need work. Human resource management is a central element in the creation of a new strategy as it is human resources who will obtain and deploy the resources necessary to achieve the firm’s objectives. The communication of this strategy to all areas of the business is essential to ensure that it is successful and this is done through effective human resource management, as without proper knowledge and understanding of a new strategy, as well as the required training and development, the implementation of the strategy may fail.
Porter created a ‘five forces framework’ which can be used to assess where a business’s competition comes from, which is useful for a business in terms of analysing it’s strategic process, as competition is a major problem for firms, so having more information about this is extremely useful in order to prepare an effective strategy. The threat of potential entrants is one point identified by this and this involves the role of human resource management as it may be difficult for new threats to enter the market at a competitive scale as there may be scarce human resources available, which may already be employed by the apposing firm. The model also suggests that there are threats from both suppliers and buyers. The threat of suppliers depends on the importance of the firm to the supplier. The potential for backward integration is another dependent on the threat from suppliers, and human resource management must be integrated through this as the availability of available human resources may affect the ability to do this. The threat from buyers depends on the market dominance of suppliers and the level of switching costs. The potential for forward...
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