ASSIGNMENT 1

ON
STRATEGIC HUMAN
RESOURCE
MANAGEMENT

SESSION: 2018-2020

Submitted To: Submitted By:

Dr. Priyanka Arya Neha

Assistant Professor 25/MBA/18

VAISH COLLEGE OF ENGINEERING, ROHTAK

 WHY AN
ORGANISATION
SHOULD TREAT
HUMAN AS A
CAPITAL?
 What is Human Capital?

Employees are the lifeline of an organization. An organization can’t survive if there are no
employees. Organization runs with the help of individuals who contribute in their own way in its
success and productivity. Employees spend maximum part of their day in offices and strive hard
to achieve the goals and objectives of the organization. Employees ought to be motivated from
time to time so that they develop a sense of attachment towards their organization and also
deliver their best.

Every employee in his/her tenure acquires some set of skills through his experience, exposure,
trainings and so on which further increase his/her productivity eventually benefitting the
organization. Knowledge and expertise which employees develop in due course of time to further
increase the productivity of organizations refer to human capital. Every employee tries his level
best to sharpen his/her skills during his stint with the organization. Human capital is defined as
the collective stock of skills, attributes, knowledge, expertise of employees which further plays
an integral role in increasing the productivity of the organization.

Every organization invests its money and resources to train new employees. Employees in turn
work hard, upgrade their existing knowledge and contribute in their own way to increase the
productivity of their organization.

The word “Human Capital” was introduced by A. W. Lewis in “Economic Development with
Unlimited Supplies of Labour”.

Human capital plays a crucial role in increasing the productivity and output of an organization.
 What is Human Capital Management?

Human Capital management refers to managing an organization’s employees for them to

contribute significantly in the overall productivity of organization. In a layman’s language
managing workforce of an organization refers to human capital management.

Human Capital Management is defined as the process of acquiring, training, managing, retaining
employees for them to contribute effectively in the processes of the organization.

In simpler words, upgrading the existing skills of an employee and extracting the best out of
him/her refers to human capital management.

Human Capital management has more to do with how organizations treat their employees?
Do not treat your employees as mere labours. Senior management must ensure timely growth
and development of every individual concerned for him/her to contribute efficiently when
required.

The key objective of every organization should be to train its employees so that they become
efficient resources later on. In human capital management, organizations treat their employees as
important resources that play an instrumental role in productivity of the organization.

The development and management of individuals in line with their key responsibility areas not
only make them an indispensable resource in the future but also ensure their hundred percent
contributions towards the organization.
 Human Capital Management Drivers

1. Human Capital Management (HCM) Driver 1 - Leadership Practices

HCM Practices

Communication: Employees must be treated well for them to develop a feeling of

attachment and loyalty towards the organization. Managers must understand that their
role is not just to sit in closed cabins and impose ideas on others. They ought to
communicate well with their subordinates. Employees must have an easy access to the
senior management. Communication from management to employees also known as Top
down communication is essential for the employees to be aware of their goals and
objectives and for them to know what is expected out of them.

Inclusiveness: Management ought to sit with employees on a common platform to invite

suggestions and feedbacks from them.

Supervision: Senior executives and management must reduce the various levels of
hierarchy between them and employees’. Management must interact and motivate the
employees from time to time for them to give their level best.

Leadership: Senior executives should support, lead and influence the workforce so that
they contribute effectively towards the organization.

2. HCM Driver 2 - Employee Engagement

HCM Practice

Key Responsibility Areas: Key responsibility areas of an individual should be designed

in line with his education, skills, expertise, experience and also area of interest. This way,
work never becomes a burden for him.

Commitment: Outstanding efforts of employees must be acknowledged for them to feel

motivated and work harder even next time. Employees performing well ought to be
suitably rewarded and appreciated in front of others.

Time: Time management ensures that no employee is overburdened. Responsibilities

must be equally shared among employees.

Evaluation: Employee engagement must be evaluated from time to time by the top
management.
3. HCM Driver 3 - Knowledge Accessibility

HCM Practice

Information Availability: Employees must have an easy access to all relevant

information required to perform their duties. Organizations must organize various
training programs (In house Trainings or Out sourced trainings) to constantly upgrade the
existing skills of employees and acquaint them with new learning’s.

Team Work: Employees must be motivated to work in teams rather than working alone.

Information Sharing: Encourage employees to share information with each other.

4. Human Capital Management (HCM) Driver 4 - Workforce

Optimization

Human Capital Management (HCM) Practice

Work processes: Senior management must define work processes of employees well for
maximum productivity.

Working Conditions: An organization needs to provide excellent working conditions to

the employees to expect the best out of them.

Accountability: Individuals must be held accountable for their work. Get a commitment
from employees and nothing like it, if everything is in writing.

Hiring: Individuals responsible for talent acquisition must ensure that they hire the right
candidate for the right role. Design a strong induction program for all the newly joined
employees.

Performance Management: Employee’s performance needs to be strongly monitored

and managed.
5. Human Capital Management (HCM) driver 5 - Learning Capacity

HCM Practice

Innovation: New ideas should be welcome. Employees must be encouraged to come out
with new and innovative ideas which might benefit the organization.

Training: Trainings must be practical/relevant and designed to sharpen the skills of

employees. Do not design training programs just for the sake of it. They must benefit the
employees.

Career Development: Employees must be aware of their growth plan in the

organization.

Learning’s: New learning’s should be valued by all in the organization.

Importance of Human Capital Management

 Hiring the right talent

 Orienting him/her to the organization
 Making a new employee feel comfortable
 Training employees in order to constantly upgrade their skills
 Retaining employees
 Making employees self sufficient and prepare them for adverse conditions
DIFFERENTIATE
BETWEEN
TRADITIONAL
HRM AND
STRATEGIC HRM?
What is the Traditional Human Resources Role?

In the traditional framework, HR mainly is transactional and reactive. HR staff place job ads
based on departmental requests for additional workers, respond to employee questions about
benefits and payroll, and process terminations and resignations for employees leaving the
company. In this reactive role, HR department actions may be fragmented and even rushed in
some cases.

What is the Strategic Human Resources Role?

Strategic HRM, on the other hand, is proactive because the leaders usually are engaged
partners in formulating the long-range, strategic direction of the company. In this role, HRM
focuses on activities like assessing the availability of workers based on projections for business
growth or the labor market availability. This shift from the transactional recruitment and
selection process to a broad talent acquisition model considers the long-term organizational
goals concerning workforce planning.
 Key Differences between HRM and SHRM
The differences between HRM and SHRM can be drawn clearly on the following grounds:

1. The governance of manpower of the organization in a thorough and structured manner is

called Human Resource Management or HRM. A managerial function which implies
framing of HR strategies in such a way to direct employee’s efforts towards the goals of
an organization is known as SHRM.
2. The process of HRM is reactive in nature. On the other hand, SHRM is a proactive
management function.
3. In human resource management, the responsibility of manpower lies with the staff
specialists, whereas in strategic human resource management, the task of managing the
workforce, is vested in the line managers.
4. HRM follows fragmented approach, which stresses on applying management principles
while managing people in an organization. As against this, SHRM follows an integrated
approach, which involves lining up of business strategy with the company’s HR
practices.
5. Human resource management emphasizes on employee relations, ensuring employees
motivation, and also the firm conforms to the necessary employment laws. Conversely,
SHRM focuses on a partnership with internal and external constituent groups.
6. HRM supports short-term business goals and outcomes, but SHRM supports long-term
goals and results of business.
7. In human resource management, the human resource manager plays the role of change
follower, i.e. he/she responses to change, hence pursues transactional leadership style. As
opposed to SHRM, the human resource manager is a change leader, i.e. an imitator, thus
seeks transformational leadership.
8. The primary element in HRM is the capital and products, but people and their knowledge
are the building blocks of SHRM.
9. If we talk about accountability, a conventional HRM is a cost centre. Unlike a strategic
HRM which is an investment centre.
10. In human resource management, stringent control over employees is exercised. As
against this, in strategic human resource management, no such control is imposed, rather
the rules for managing manpower is lenient.
 COMPARISON CHART

BASIS FOR
THRM SHRM
COMPARISON

Meaning Human resource management SHRM is a managerial function

(HRM) implies the governance of which implies framing of HR
manpower of the organization in a strategies in such a way to direct
thorough and structured manner. employee’s efforts towards the goals
of organization.

Nature Reactive Proactive

Responsibility lies Staff specialist Line manager

with

Approach Fragmented Integrated

Scope Concerned with employee Concerned with internal and external

relations relations

Time horizon Short term Long term

Basic factor Capital and products People and knowledge

Change Follows change Initiates change

Accountability Cost center Investment center

Control Stringent control over employees It exhibits leniency.