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ADVANCED
Human
Resource
Management
D`enan Kulovi}
Nedim :elebi}
Sead Omer~evi}
1
st
edition
ADVANCED
HUMAN RESOURCE MANAGEMENT
Authors:
Associate Professor Dženan Kulović, Ph.D.
Associate Professor Nedim Čelebić, Ph.D.
Assistant Professor Sead Omerčević, Ph.D.
Title:
ADVANCED HUMAN RESOURCE MANAGEMENT
Edition:
1st Ed.
Publisher:
University Sarajevo School of Science and Technology
For publisher:
Professor Vjekoslav Domljan, Ph.D.
Reviewers:
Professor Ellen McMahon, Ed.D.
Professor Jovo Ateljević, Ph.D.
Professor Adisa Delić, Ph.D.
Proofreading:
Emina Kahrimanović, M.A.
Senad Mujičić, M.A.
Design:
Adis Duhović, B.A.
Print:
Perfecta, Sarajevo
ISBN 978-9926-8542-6-3
CIP zapis dostupan u COBISS sistemu Nacionalne i univerzitetske biblioteke BiH pod
ID brojem 50195462
© 2023, University Sarajevo School of Science and Technology
ALL RIGHTS RESERVED. This book contains material protected under International Copyright Laws and
Treaties. Any unauthorized reprint or use of this material is prohibited. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without express written permission of the publisher.
ADVANCED
HUMAN RESOURCE MANAGEMENT
Dženan Kulović
University of Zenica
Nedim Čelebić
University Sarajevo School of Science and Technology
Sead Omerčević
University of Zenica
Sarajevo 2023
PREFACE
The number of publications in the field of human resource management has been steadily rising as a result of the development of
special disciplines in this field. These special disciplines – career
management, performance management, knowledge management, payroll management, talent management… – abound in
numerous books and papers whose study has not yet been adequately systematized and presented.
The integration of two processes separate in theory but deeply
entwined in practice, strategic management process and human
resource management process, represents a backbone of what
we call advanced human resource management. Advanced human
resource management encompasses two different perspectives:
strategy-oriented human resource management and strategically-oriented human resource management. The first perspective is
aimed at shaping human resource strategies such as competency
management, talent management, knowledge management,
intellectual capital management, and diversity management,
while another perspective is aimed at the role of human resource
in the process of strategy formulation and implementation.
This is why, when dealing with both of these approach at the same
time – strategy-oriented human resource management and strategically-oriented human resource management – many authors
will most commonly use a unique term, advanced human resource management.
The demands of the Bologna process have been a significant
influence on the content of this book. The book has six chapters
organized within three parts. The first part consists of a one chapter, which is: chapter one, entitled Strategic role of human resource
management, aim to present the strategic challenges, the historical evoulution, the changing nature, the theorethical approach, the
main objectives, the strategic benefits, the strategic role and the
strategic framework of human resource management. The second
part consists of three chapters, which are: chapter two, entitled
the Relationship between strategic management and human resource
5
PREFACE
management, aims to present the relationship between these two
seemingly theoretically separate but practically deeply connected
processes through the notional definition of relationship, basic
connection model and basic strategic human resource management model, chapter three, entitled the Role of human resource in
strategy formulation, aims to present the proactive role that human
resource take during the strategy formulation process through
the connection between human resource and strategy formulation, the role of human resource in corporate strategy formulation,
the role of human resource in business strategy formulation, and
role of human resource in human resource strategy formulation
as well as chapter four, entitled the Role of human resource in strategy implementation, aims to present the proactive role that human
resource take during the strategy implementation process through
the interaction between human resource and strategy implementation, and the role of human resource in strategy implementation.
The third part consists of two chapters, which are: chapter five,
entitled Strategic role of human resource function, aims to clarify the
necessity of transforming the human resource function towards a
completely new business orientation through the transformation
process of the human resource function, new organization of the
human resource function, and four new roles of the human resource function as well as chapter six, Strategic role of human resource
managers, aims to clarify the new roles of human resource managers performing within the transformed human resource function
through the new responsibilities of human resource managers,
and new roles of human resource managers.
In addition to the main text, each chapter has a table of contents,
practical examples, a chapter summary, and references. The
reviewers, Professor Ellen McMahon, Ed.D., Professor Jovo Ateljević, Ph.D., and Professor Adisa Delić, Ph.D. have made a significant contribution to the book with their suggestions. Further, Emina
Kahrimanović, M.A., and Senad Mujičić, M.A., provided additional
quality to the book with their expert proofreading. In the end, special
gratitude goes to our colleagues Elvir Kesedžić, B.Sc., and Danny
Spahić, B.A., who read the manuscript before it was published.
Sarajevo, January 2023
6
Authors
BRIEF CONTENT
PREFACE
5
PART ONE
13
CHAPTER ONE
STRATEGIC ROLE OF HUMAN RESOURCE MANAGEMENT
15
PART TWO
43
CHAPTER TWO
RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT AND
HUMAN RESOURCE MANAGEMENT
45
CHAPTER THREE
ROLE OF HUMAN RESOURCE IN STRATEGY FORMULATION
81
CHAPTER FOUR
ROLE OF HUMAN RESOURCE IN STRATEGY IMPLEMENTATION 105
PART THREE
137
CHAPTER FIVE
STRATEGIC ROLE OF HUMAN RESOURCE FUNCTION
139
CHAPTER SIX
STRATEGIC ROLE OF HUMAN RESOURCE MANAGERS
161
LITERATURE
179
7
CONTENT
PREFACE
5
PART ONE
13
CHAPTER ONE: Strategic role of human resource management
15
CONTEMPORARY TRENDS OF HUMAN RESOURCE MANAGEMENT
17
HISTORICAL EVOLUTION OF HUMAN RESOURCE MANAGEMENT
19
CHANGING NATURE OF HUMAN RESOURCE MANAGEMENT
23
THEORETICAL APPROACHES OF HUMAN RESOURCE MANAGEMENT
25
STRATEGIC BENEFITS OF HUMAN RESOURCE MANAGEMENT
28
STRATEGIC ROLE OF HUMAN RESOURCE MANAGEMENT
29
STRATEGIC FRAMEWORK OF HUMAN RESOURCE MANAGEMENT
35
Summary
References
38
39
PART TWO
43
CHAPTER TWO: Relationship between strategic management and
human resource management
45
IMPORTANCE OF STRATEGIC MANAGEMENT
47
STRATEGIC MANAGEMENT PROCESS
49
CONCEPTS AND TECHNIQUES OF STRATEGIC MANAGEMENT
52
Strategic management concepts
Strategic management techniques
53
55
STRATEGY-ORIENTED VS. STRATEGICALLY-ORIENTED HUMAN RESOURCE MANAGEMENT
57
RELATIONSHIP BETWEEN TWO PROCESSES
63
THE FUNDAMENTAL MODEL OF STRATEGIC HUMAN RESOURCE MANAGEMENT
65
68
72
Schuler’s 5-P model of strategic human resource management
Pierce’s 10-C model of strategic human resource management
Summary
References
76
77
9
CONTENT
CHAPTER THREE: Role of human resource in strategy formulation
81
IMPORTANCE OF HUMAN RESOURCE IN STRATEGY FORMULATION
83
INTEGRATION OF HUMAN RESOURCE IN STRATEGY FORMULATION
85
ORGANIZATIONAL MISSION
87
STRATEGIC GOALS
88
ENVIRONMENTAL ANALYSIS
89
External analysis
Internal analysis
89
90
STRATEGIC CHOICE
91
Corporate strategy
Business Strategy
Human resource strategy
Summary
References
CHAPTER FOUR: Role of human resource in strategy implementation
105
IMPORTANCE OF HUMAN RESOURCE IN STRATEGY IMPLEMENTATION
107
INTEGRATION OF HUMAN RESOURCE IN STRATEGY IMPLEMENTATION
109
STRATEGIC CHOICE
111
HUMAN RESOURCE NEEDS
113
Readiness
Motivation
113
115
HUMAN RESOURCE PRACTICES
117
HUMAN RESOURCE CABILITIES
119
Competencies
Empowerment
HUMAN RESOURCE ACTIONS
Behaviors
Results
119
120
121
121
123
ORGANIZATIONAL SUCCESS
124
Business Scorecard
HR Scorecard
124
125
EMERGENT STRATEGIES
131
Summary
References
10
91
94
97
101
102
133
134
CONTENT
PART THREE
137
CHAPTER FIVE: Strategic role of human resource function
139
THE TRANSFORMATION PROCESS OF HUMAN RESOURCE FUNCTION
141
NEW FORMS OF HUMAN RESOURCE FUNCTION
147
NEW ROLES OF HUMAN RESOURCE FUNCTION
151
Summary
References
158
159
CHAPTER SIX: Strategic role of human resource managers
161
NEW RESPONSIBILITIES OF HUMAN RESOURCE MANAGERS
163
NEW ROLES OF HUMAN RESOURCE MANAGERS
169
Summary
Reference
LITERATURE
175
176
179
11
PART ONE
CHAPTER ONE
STRATEGIC ROLE OF
HUMAN RESOURCE MANAGEMENT
Chapter
one
STRATEGIC ROLE OF
HUMAN RESOURCE
MANAGEMENT
CHAPTER OUTLINE
• Contemporary trends of human resource management
• Historical evolution of human resource management
• Changing nature of human resource management
• Theoretical approaches of human resource management
• Main objectives of human resource management
• Strategic benefits of human resource management
• Strategic role of human resource management
• Strategic framework of human resource management
CONTEMPORARY TRENDS OF HUMAN RESOURCE MANAGEMENT
T
he modern business environment imposes many challenges to
which human resource management needs to respond. The rapid
changes in the business environment that are taking place during this
century have significantly affected the redefining of strategic directions
that touch on human resource issues. A notable interest for the development of human resource management arose after the human segment of the organization was recognized. Early stage is characterized
by production as the generator of economic development. According
to Ulrich, Losey, and Lake1, the position of employees in production is
regulated by a series of legal regulations that govern various aspects of
work and employer - employee relationship. A series of changes leads to
the chaos in workplaces, which imposes the need for an organizational
approach and the response of human resource management to changes.
Such responses impose the need for strategic thinking, which enables a
calmer approach to continuous changes in the organization.
Bogićević-Milikić2 cites several contemporary trends that have significant implications for human resource, among which the following can
be highlighted:
First, health crises and the COVID-19 pandemic. During the first
half of 2020, the global pandemic caused by the outbreak of the COVID19 virus harmed certain economic sectors, disabling the normal operation of organizations. Organizations had to make adjustments through
the flexible organizational structure while ensuring the protection of
their employees. Strategic challenges for human resource management
during the pandemic are: redesign of day-to-day operations, regrouping
of business units, redesign of organizational structure, development of
efficient decision-making, provision of a safe work environment, organization of remote working, employee stress management, redundancies, reduction of necessary salaries, the introduction of flexible working
hours, and the like.
1
2
Ulrich, D., Losey, M. R., and Lake, G. (Eds.) (1997): Tomorrows HR Management, Joh Wiley & Sons, Inc., New
York, 182-189.
Bogićević-Milikić, B. (2020): Uvod u menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Beogradu, Beograd, 22-31.
17
PART ONE I CHAPTER ONE Strategic role of human resource management
Second, technological change and dominance of Industry 4.0.
With the promotion of the “High Technology Strategy”, the German government introduced the term Industry 4.0 in 2006, which became widely
known thanks to the Hannover Fair (ger. Hannover Messe). Industry 4.0 is
an abbreviated name for the Fourth Industrial Revolution, which is a significant technological breakthrough over the previous three revolutions.
Human resource management strategic challenges caused by Industry
4.0 are: the dominance of e-HRM, increasing human resource efficiency,
reducing administrative burdens, facilitating human resource planning,
adapting the organizational design, using artificial intelligence, automating recruitment processes, evaluating performance through Big Data, cafeteria-benefit plans, flexible forms of rewarding, and the like.
Third, economic change and the knowledge economy. Economic
changes as a result of the knowledge-based economy pose major challenges
to human resource managers. By following such an oriented economy, the
main driver of the economy becomes knowledge that generates new ideas.
Human resource management strategic challenges caused by the development of the knowledge economy are the slowdown of economic growth,
effects of the COVID-19 pandemic, increasing unemployment, changes
in economic structure, changing forms of employment, changes in work,
meeting of stakeholder needs, increase in product quality, increase in the
number of immigrants, significant redundancies, and the like.
Fourth, demographic change and the increasing number of immigrants. Demographic challenges represent changes in the human population that are becoming more pronounced at the beginning of the 21st
century among developed countries. As a consequence of these changes,
there is an increase in the degree of diversification of the working-age population, thus creating conditions for equal employment opportunities for
all citizens. Human resource management strategic challenges caused by
the impact of demographic change are: prolonging seniority, equal pay
among the sexes, prolonging working life, achieving life balance, tackling
unemployment, using flexible working practices, introducing self-management teams, strengthening organizational culture, strengthening social
responsibility, increased health problems, need for continuous learning,
development of individual abilities, and the like.
Fifth, change in legislation and new forms of employment.
Among the most significant strategic challenges for human resource
management over the past few years is the obligation of organizations to
comply with strict legal regulations governing the relationship between
employers and employees. The change in legislative practice is directed
18
Strategic role of human resource management CHAPTER ONE I PART ONE
towards the establishment of equal opportunities for “vulnerable” social
groups, which society most often exposes to vilification. Human resource
management strategic challenges based on new forms of employment are
the introduction of flexible work practices, employment of people with
disabilities, employment of national minorities, giving preference to war
veterans, the introduction of remote working, zero tolerance towards
minorities, and the like.
Sixth, social change, and development of the Society 5.0. With
the publication of the document “The 5th Science and Technology Basic
Plan” in 2016, the Japanese government introduced the term Society 5.0
or the so-called “Super-smart society” which brings a vision of a new
society driven by technological innovation. Society 5.0 is an abbreviated name for the vision of a super-smart society that brings significant
changes in people’s habits that are more pronounced than in the previous
four versions of society’s development, the realization of which should
follow during the 21st century. Human resource management strategic
challenges caused by the characteristics of Society 5.0 are the emergence
of i-HRM (intelligent HRM), the inclusion of cognitive computing (artificial intelligence), talent management development, continuous development of organizational skills, development of IT skills, full digitalization, attentiveness to employee feelings, and the like.
To summarize, there are six strategic challenges of human resource
management. The stated challenges had their influence on the change
of human resource role which received a completely different significance. Accordingly, the new roles occupied by human resource today are
becoming an increasingly important aspect of research.
HISTORICAL EVOLUTION OF HUMAN RESOURCE MANAGEMENT
More substantial interest in the evolution of human resource management appeared in the period of the 1990s. According to McKee3, the
appearance of human resource management was preceded by five stages,
between which an imaginary timeline can be drawn:
•
3
The period between 1940s and 1950s is characterized as a mechanistic period, when production was the holder of the economy and it
was believed that the mechanical way of performing the task of human
resource is optimal.
Ulrich, D., Losey, M. R., and Lake, G. (Eds.) (1997): Tomorrows HR Management, Joh Wiley & Sons, Inc., New
York, 182-189.
19
PART ONE I CHAPTER ONE Strategic role of human resource management
•
•
•
•
The period between 1960s and 1970s is called the legalistic period, characterized by the reaching of a large number of legal regulations that regulated different aspects of work and the employer-employee relationship.
The period of the 1980s is considered the organic period, characterized by organizational changes that emerged as a result of fusing,
restructuring, reengineering, and downsizing. The mentioned changes
resulted in chaos at workplaces and the human resource function was
supposed to respond to all changes.
The period of the 1990s is considered a strategic period. At the end of
the last century, the economy was characterized by strategic thinking,
which enabled a calmer approach to continuous changes in the organization and its developmental plans.
The period following the 2000s was marked as a catalytic period,
characterized by a dominance of HR professionals with a task of helping their colleagues stuck in the mechanistic, legalistic or organizational period to transfer to the strategic period to achieve the human
resource management role.
The previously mentioned approaches, according to McKee4 largely rely
on historical evolution of human resource management. Every period
is marked by significant institutionalizing of human resource practices.
The early stage is characterized by production as the generator of economic development. Early stage is characterized by production as the
generator of economic development. As the Authors states, in analyzing
how the HR practitioners of those periods spent their time, five dimensions emerged which allowed for the development and comparison of
what practitioners were dealing with and how they spent their time:
demographics (who comes to work in America), employee relations
(union, management and relations with employees), pay/jobs (what pay
and benefits practices were and are), organization development (organizational process and content issues as well as management and employee
development) and the profession (what was/is happening to the profession: the role HR staffs play in their organizations). The position of
employees in production is regulated by a series of legal regulations that
govern various aspects of work and employer - employee relationship.
A series of changes leads to the chaos in workplaces, which imposes the
need for an organizational approach and the response of human resource
management to changes. Such responses impose the need for strategic
thinking, which enables a calmer approach to continuous changes in the
organization.
4
20
McKee, K. D. (1997): The Human Resource Profession: Insurrection or Resurrection?, Human Resource Management, 36, 151–156.
Strategic role of human resource management CHAPTER ONE I PART ONE
BOX 1.1. A BRIEF HISTORY OF HUMAN RESOURCE MANAGEMENT
The term Human Resource Management is an area of science on organizations
developed in the late 1970s and early 1980s researching all aspects of employment within an organization. A significant contribution to the creation of the term
human resource management was offered by Dartmouth College, alongside other
famous American universities such as Harvard and Columbia, following the initiative of the War Industry Council, together with numerous papers published by
authors such as Elton Mayo, Abraham Maslow, Renesis Likert and others. They
insisted that the focus on human resources should be the focus of management.
Such a view makes sense, considering that only people are a living part of an organization, each with his/her own unique and idiosyncratic traits leaving no room
for a unique pattern when trying to successfully work with them. Undoubtedly,
human resource management isn’t just a new name for an old manner of work,
it represents a completely new relationship towards people within an organization. Human resource management is more than just a modern name: it suggests
a different philosophy which is more effective and efficient for a contemporary
organization, compared to the traditional personnel management. It was initially
used by American authors, later becoming a standard name in other languages.
However, as American authors focused on structures, strategies and systems, i.e.
hard variables, as the basic tools for directing human behavior in an organization,
the standardization of the term in other languages led to its focus on skills, staff
and shared value, i.e. soft variables. The terms soft and hard variables were introduced by Tom Peters and Robert Watherman around 30 years ago in the book In
Search of Excellence: Lessons from America’s Best-Run Companies, which explained the secret of success of American organizations. The book contains their concept introduced in management theory two years earlier known as McKinsey 7S
(acronym consisting of seven major concept variables).
Source: From Kulović, Dž. (2012): Strategijski menadžment ljudskih resursa, Kemigrafika, Sarajevo.
Table 1.1. systematically shows characteristics of the previously mentioned approaches dimensions to historical evolution of human resource
management over decades.
21
22
1960s-70s
Legalistic
1980s
Organicistic
Beginnings of
Management Science:
Odiorne/Drucker
T-Groups
Hierarchical
Little employee/
mgmt development
Hierarchical;
dehumanized assembly
lines
Full strategic partnership “Staff-less” HR function
Labor Relations still
Labor Relations powerful
HR managers powerful Relationship managers
Organization Development
powerful Compensation/
Records; benefits
Continued specialization are generalists
as king
Benefits emerge as
administration; recruiting
of HR disciplines
HR Back Office or
The Internet as a staff
specialties
outsourcing
member
Organization
development
The profession
Source: From McKee, 1997, 153. Reproduced with permission of Human Resource Management.
Continue M&A
Webs/networks
Telecommuting
Continued restructuring
Employee selfdevelopment
Pay for competencies
Variable pay all levels
CEO pay regulated
Portable benefits
Pay/Jobs
Team pay
Rewards and recognition
options in lieu of high
base
Executive pay caps
Restructuring
M&A
Androgenous
Downsizing
Management styles
Emergence of Leadership
Learning organizations
Management process
Virtual corporation
entrenched
Powerful leaders
Sales and Management
incentives
Stock Options
An experiment with
cafeteria benefits
Fair day’s work for a fair
day’s pay
Bonuses; profit- sharing
Pensions Beginnings of
health insurance
Differentiated pay
Rewards systems
Cafeteria compensation
commonplace
“Greed is Good”
Steel union strikes
Loyalty to one’s profession
Just-in-time workforce
Psychiatry at work
Borderless employment
Unions increase
Women as CEOs
Beauty, Obesity
Sexual preference as
diversity issues
Increase in racial tensions
Impact of Baby Boomers
A Salad Bowl
White males threatened
Women in powerful
places
Baby Busters not
committed
Waves of immigration
Teams contingent
workers
Roles vs. Jobs StressEAP’s Diversity
2000s
Catalytic
1990s
Strategic
Employee relations
Employee involvement
Beginning of decline of
Union power
Boomers/Yuppies bring
kids to work
White male/female
White male dominated
White-males Racism
competition for jobs
Blacks hired in offices
Sexism-Rosie the Riveter
More Blacks and Asians
Women start to move up
No upward mobility
in high places
Other minorities invisible
More Hispanics
1940s-50s
Mechanistic
Labor-management
adversarial
Unions powerful
Demographics
Dimensions
TABLE 1.1. Historical evolution of human resource management
PART ONE I CHAPTER ONE Strategic role of human resource management
Strategic role of human resource management CHAPTER ONE I PART ONE
As seen in Table 1.1., we are all citizens of a Global Village so the time
differences do not pose a problem anymore. Accordingly, the workforce
has become very varied and members of various ethnic groups work
together, although not always without conflicts. Hence, it is inevitable
to accept employee’s heterogeneity, not only in thought, but in concrete
actions which take into account family, religious, professional, age,
nationality, and other differences between employees.
CHANGING NATURE OF HUMAN RESOURCE MANAGEMENT
The role of human resource management was drastically changing in
the early 1990s. Such organizations do not only work differently, but also
people think and feel differently, too. The change of culture that follows
strategy implementation, results in increased participation of employees
in problem identification, baseline setting of performance standards, and
efforts for continuous improvement. According to Bahtijarević-Šiber5,
large turbulence in the environment of modern organizations that disables the foreseeing of business future with a relevant degree of certainty
and the making of detailed, long-term activity plans leads to different
strategic options. Top management of every organization should realize
that humans are their key resource - capital. According to Leopold and
Harris6 organizations are unstable. It is not certainly known whether they
are restructured, whether they have undergone re-engineering, teamwork, how they reward themselves, and what happens with their human
resource. As the Authors state, employees are expected to be flexible, to
plan their development and career by themselves, not to count on permanent employment, but to be loyal to the organization for the whole period
of work.
According to Noe, Hollenback, Gerhart, and Wright7 employees become
more energetic in performing tasks that they supervise and improve.
Organizational structures are flatter, people participate in decision-making more directly, and they are recognized and rewarded for performing
improvements and a team approach to problem-solving.
5
6
7
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 128.
Leopold, J., and Harris, L. (2009): The Strategic Management of Human Resources, 2nd Ed., Prentice Hall,
Harlow, 27-29.
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, Toronto.
23
PART ONE I CHAPTER ONE Strategic role of human resource management
All these factors influenced the change in employees’ attitudes, as demonstrated in Table 1.2.
TABLE 1.2. The change in employees’ attitudes
From
To
Other people are bad and
untrustworthy. Betrayal and failure are
natural ways of living.
Other people are good and deserve a climate
of trust. Showing trust and establishing
relationships at work is natural.
Blaming others when things go wrong.
Working together to execute improvements
when things go wrong.
Focus on the statement of others
about how they did something wrong.
Focus on training people to do something
right.
Life is a competition. Cooperation is
exceptional.
Life is cooperation. The competition is
exceptional.
Personal success is measured in
competition. In order to succeed, you
endure.
Success is measured in terms of cooperation
equal to the earning of trust.
Excellence is an idealistic dream.
Excellence requires far more work.
Although it requires discipline and hard work,
excellence is within reach. Once the skills are
mastered, excellent life is being led easily.
My identity is with my group, not the
organization.
My identity is connected with the organization,
as well as with the group.
Rewards are fixed. If you want a share,
you must compete.
Rewards can grow if we cooperate.
Source: Adapted from Morehouse, 1996, 97-98.
In order to bring closer to the readers the foreseeing changing nature
of human resource management in the best possible way, one study will
be used which is implemented in a ten-year period which covered six
key areas, including strategic human resource management. According
to Šušnjar-Štangl and Zimanji8 “Workforce”, acknowledged US expert
magazine in the field of human resource management, organized a
research on future trends in the field of human resource management
during the last ten years. They asked ten leading experts in the field to
make forecast of situation in six specific fields of human resource management for the next ten years. The forecasting was conducted with Delphi method and had the following sequence: associates of “Workforce”
defined six areas that are most likely to be changed in the next ten years.
As the Authors states, then they selected ten leading experts, renowned
consultants in human resource management. The selected experts first
had to make individual forecasting for the mentioned areas of human
resource management. Then, they had to rank the significance of the
8
24
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 414.
Strategic role of human resource management CHAPTER ONE I PART ONE
foreseen changes. After that, associates of the Magazine summed up the
forecast of all experts and returned to them for another ranking. The end
list consists of ten highest ranked changes. The generated list serves not
only as a forecast of future events, but also for the defining of areas that
are in the focus of human resource management experts.
Based on the previously mentioned it is possible to conclude the importance of the described forecast in the fact that it is a vision of the future, a
vision of potential changes and ways in which the human resource professional should respond to them. However, if human resource managers
have a vision of future changes, they will be able to make them.
THEORETICAL APPROACHES OF
HUMAN RESOURCE MANAGEMENT
As it was pointed out, human resource management is about the process
of its immediate and organizational connecting with the strategic management process. In that approach, according to Leopold and Harris9,
human resource management obtains the key role in the environmental
analysis, directing, strategy formulation and implementation, and strategy control.
In that sense, according to Boljanović-Đorđević10 human resource
management highlights interactivity between organizational strategy
and human resource decisions. From the theoretical and practical perspective of human resource management, there are many developed
models of adjustment of organizational strategy and human resource
decisions. As the Author state, those models can serve as a conceptual
framework for the adjustment of these elements, as well as the foundation for their coordinated operating in the business. Internal and external strategy, adjusted in this way, also includes the implementation of
corresponding strategic management methods and techniques.
Human resource contributes to successful strategy implementation
while performing their tasks.11 According to Fisher, Schoenfeldt, and
Shaw12 this is why the discussion about human resource ­management is
9
Leopold, J., and Harris, L. (2009): The Strategic Management of Human Resources, 2nd Ed., Prentice Hall,
Harlow, 27-29.
10
Boljanović-Đorđević, J. (2018): Menadžment ljudskih resursa, Univerzitet ”Singidunum“, Beograd, 54.
11
Možina, S. (Ed.) (2002): Menadžment: nova znanja za uspeh, Didakta, Radovljica, 447.
12
Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton
Mifflin Company, Boston, 50-51.
25
PART ONE I CHAPTER ONE Strategic role of human resource management
launched with the question: “What can human resource ­management do?
What is its range? What does it have to ensure for the organization?” Primarily, as the Authors states, these ensure the necessary analytical framework for the research of human resource in conditions of an intertwined
effect of different situational variables, wherein loyalty, management,
selection, and capability of people appear as key variables in all stages of
the strategic management process. In recent literature, four approaches
to human resource management are being mentioned as shown in Table
1.3.
TABLE 1.3. Theoretical approaches to strategic human resource management
Approaches
Explanation
UNIVERSALIST
There is one the best way to manage human resource.
Human resource management is the process of transforming
traditional human resource practices and into a limited set of
“correct” procedures and human resource policies.
STRATEGIC BEST-FIT
Human resource management involves matching specific
human resource practices in the overall organizational
strategy.
RESOURCE-BASED
Human resource management engenders organizational
success by enhancing organizational capabilities to acquire,
develop, utilize and retain employees with a high level of
competencies relevant to organizational activities.
CONFIGURATION
When observed collectively various configurations or “bundles” of
human resource practices can improve organizational
performance.Certain bundles are effective in certain industries or
in certain business conditions, while other bundles can be used in
other industries or under difference business circumstances.
Source: From Fisher, Schoenfeldt, and Shaw, 2006, 49.
According to Torrington, Hall, Taylor, and Atkinson13 universalist
approach focuses on the concept of one best way of managing human
resource aiming to improve the business. The foundation of this principle is the assumption that one human resource management model, the
high degree commitment model, is related to the high degree of organizational activity in every context, regardless of competitive strategy.
Traditional theory of human resource management, as a representative
example of this approach, is based on four outcomes for human resource
management: (1) strategic integration, (2) commitment, (3) flexibility,
and (4) quality. Strategic integration represents the certainty of complete
integration of human resource management into strategic management.
13
26
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed., Pearson,
Harlow, 50-51.
Strategic role of human resource management CHAPTER ONE I PART ONE
Commitment refers to the way employees feel about the organization,
i.e., feeling like being a part of the organization. Flexibility means the
existence of an adjustable organizational structure and functional flexibility, which is based on multiple competencies. Quality stands for the
achievement certainty of high-quality products serviced by highly- qualified and flexible employees.
According to Torrington, Hall, and Taylor14 strategic best-fit focuses
on the need for adjusting the employment and labor policy with demands
of organizational strategy for a more successful business based on the
concept where different types of organizational strategies demand different human resource strategies. Human resource strategy is primarily
observed in the light of the strategy implementation. Harvard model is
somewhere between the first and the second approach presented here
(the universalist approach and the fit or contingency approach).
According to Torrington, Hall, Taylor, and Atkinson15 resource-based
approach focuses on the source of human capital instead of the longterm maintenance and survival of the organization. It concentrates on the
quality of human resource available to the organization and their ability
to learn and adapt faster than the competition. This derives from the concept of strategy as learning, content, and process and supporting strategy
as the process of change. Changes in environment must be felt based on
weak signals, then developed, and then the strategy that derives from that
should be implemented. The central statement of the resource-oriented
approach is that organizations possess a specific organizational heritage
and they develop their learning methods which represent barriers to conveying the best practices. Thereby, the approach does not advocate for imitation of successful human resource strategies of other organizations, but
the creation of the organization’s instruments, techniques, and forms of
organizing. The given approach creates the foundation for the claim that
not every strategy can be universally implemented, but different strategies must be created or human capital must be further developed through
human resource practices. In other words, the direction of achieving the
fundamental development orientation are developed alongside strategy.
This approach provides an ex-post explanation for the success of human
resource strategies, whereas its prescriptive content is limited.
14
15
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Ibidem, 52-53.
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Ibidem, 50-51.
27
PART ONE I CHAPTER ONE Strategic role of human resource management
According to Fisher, Schoenfeldt, and Shaw16 configuration approach
focuses on the concept that the strategic effectiveness of human resource
management depends on the comprehensiveness of human resource
practices, rather than on individual human resource programs and policies. The idea is based on the fact that human resource practices are often
mutually complementary. The configuration approach is based on the
implementation of the comprehensiveness of human resource practices
that are better to be jointly developed than individually. For example, the
configuration approach to human resource management recognizes the
success of employees as a sum of many factors (such as motivation and
competency). Their joint activity increases the success of employees, while
human resource practices are necessary to raise the motivation (for example, compensation system) and capabilities (for example, staffing system).
The configuration approach combines several practices that are distributed within the systems of human resource management.
As seen, there are four major theoretical approaches to studying human
resource management. The stated approaches must provide the single
best way of managing human resource.
STRATEGIC BENEFITS OF HUMAN RESOURCE MANAGEMENT
There are numerous strategic benefits of successful human resource
management. According to Gomez-Meija, Balkin, and Carson17 the most
common advantages utilized by organizations are as follows:
(1) Stimulation of proactive instead of reactive behavior. Proactive
behavior requires looking toward the future and developing a vision
about where the organization wants to be and how it can use its human
resource to get there. By contrast, reactive behavior means subsequent
reacting to problems that, by the rule, disable the insight into the longterm directing of business.
(2) Explicit communication of organizational goals. Human resource
management can help the organization to develop a series of specific
goals that turn its talents and know-how into capital. In this way, with
constant and continuous human resource development, an organization contributes to achieving and strengthening the competitive position of the organization.
16
Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton
Mifflin Company, Boston, 50-51.
17
Gomez-Meija, L. R., Balkin, D. B., and Carson, K. (2019): Managing Human Resources, 9th Ed., Pearson, Harlow,
43-45.
28
Strategic role of human resource management CHAPTER ONE I PART ONE
(3) Stimulation of critical thinking and constant reconsideration of
strategic assumptions. The process of human resource management
can help the critical reconsideration review of those assumptions and
the development of new initiatives. Many organizations in the world
form strategic teams and boards in which human resource managers
are shoulder to shoulder with other managers.
(4) Identification of the gap between the present situation and
future vision. Human resource management can help the organization identify the gap between where it is and where it wishes to be. By
forcing managers to turn toward the future and think ahead, strategic management can be a catalyzer of change and it can mobilize resource necessary to achieve or strengthen the competitive position in the
future.
(5) Encouragement and stimulation of participation of executive
managers. Human resource management will be of little use if it does
not involve those who are supposed to strategy implementation in practice. Involving human resource managers in the strategic management
process largely enables the discovery of potential problems from which
successful implementation of strategy is expected.
(6) Establishment of shared values. A well-set human resource management, as well as its process that includes all levels, can lead to the
creation and strengthening of shared values and responsibilities. Developing a strong sense of identity, shared values, and awareness of who
we are becoming an advantage and a relevant success factor for many
organizations.
As seen, the crucial part of the overall strategic management process is
the strategic dimension of human resource. The strategic dimension of
human resource management offers vast benefits which should be utilized by an organization.
STRATEGIC ROLE OF HUMAN RESOURCE MANAGEMENT
A precondition for the of human resource management is the organizational acceptance that the success of the strategic management process
depends on the degree of involvedness of human resource function in the
strategic management process. According to Noe, Hollenback, Gerhart,
and Wright18, the human resource function should give input ­during the
18
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, Toronto, 77.
29
PART ONE I CHAPTER ONE Strategic role of human resource management
strategy formulation and strategy implementation, know which type
of competencies are needed to support strategy implementation, and
develop corresponding programs that will ensure employees’ possession
of those needed competencies.
According to Bahtijarević-Šiber19, as a result of participation of
human resource in the strategic management process, the organization ensured competitive advantage in contemporary, uncertain and
extremely competitive business environment. As the Author states,
since those conditions require great flexibility and constant changes,
thus disabling the development and reliance on some set, clearly elaborated long-range plans that describe steps and activities that must be
undertaken in order to achieve goals, people become the main support
for strategic success, together with their continuous development and
the use of their competencies.
According to Rahimić20 pointing out the strategic role of human resource
management is caused by the increase in turbulence and uncertainty
of the business environment, constant changes, increasingly demanding customers, and tightening of the competitive match. Building and
strengthening of competitive position in such an environment are only
possible with rapid and immediate response to changes, permanent
improvement of existing and the creating of new products, services, and
processes, and fulfilling of the wishes and expectations of the buyers
(users of services). As the Author states, to be able to adjust to changes
happening in the environment, organizations need to develop the competencies of their employees. Knowledge, skills, and abilities (KSAs) of
human resource, i.e. competencies, become the most important stimulus
for building and maintaining competitive advantages of an organization.
Initiation, or the launching of the process of organizational changes,
comes from people. During changes, according to Janićijević21, people
in the organization experience personal transition, reflected in different
emotions and psychological reactions. That transition has its usual stages
during which employees experience different emotional conditions.
In such conditions, it is considered necessary to make the human
resource function strategically responsible, which would mean the
necessity for offering the best practice to contribute to the achievement
19
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 133.
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 91.
21
Janijćijević, N. (2010): Upravljanje organizacionim promenama, Ekonomski fakultet Univerziteta u Beogradu,
Beograd, 464.
20
30
Strategic role of human resource management CHAPTER ONE I PART ONE
of the mission, vision, and strategic goals of the organization. According
to Bogićević-Milikić22, the traditional human resource function was perceived as an administrative function with a focus on operational activities, that do not play an important role in the strategy formulation and
strategy implementation. Human resource management success indicators in the traditional model usually rely on employees, operations,
and individual practices (selection, training, simulations, and the like).
As the author states, the traditional model of human resource management is based on the assumption that the increased individual success of
employees will automatically lead to better organizational success.
In this way, according to Šušnjar-Štangl and Zimanji23, the human
resource function will also change and develop from service to advisory
function. For human resource managers to be more successful in their
new role, they should primarily understand the nature of the business
that the organization deals with.
According to the Authors, the strategic role of human resource management represents the transformation of the function to a new notion
of “becoming a leader, not only a partner”. The transformation entails
that the successful human resource function will focus on organizational success ensuring overall wellbeing of organization. In addition,
the primary value of human resource management will be the following approach: “real people must be ready for action in the right time”
which is achieved with the recruitment of leaders who are ready to join
the talents and trained employees of organization. The focus of human
resource management will shift to human capital development and
organization productivity. Further, the human resource function will
most likely get a new title that will imply this new function and it will
develop from strategic business partner to a leader in strategic business
(with focus on changes and results, not only on their monitoring). The
key task of human resource function will be giving multidisciplinary
advice for improvement of individual success, teams, business units and
the organization.
In the future, managers will increasingly depend on human resource
managers because they will become aware that they can represent strategic competitive advantage. Additionally, Change Management will be
the most important contribution of human resource function to organ22
Bogićević-Milikić, B. (2020): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Beogradu, Beograd, 40.
23
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 419.
31
PART ONE I CHAPTER ONE Strategic role of human resource management
izational operation and an increasingly large number of organizations
will consider the human resource function as a strategic partner. Finally,
human resource managers will have a “seat at the big table”, as a part of
the top management team, and will directly respond to the top manager
with the main role of human resource function being the management
of increasingly scarce human and intellectual capital.
Moreover, people represent the source of creative and innovative solutions to respond to the increasingly frequent customer demands as well
as possible and on time. Since the emergence of the notion of human
resource management, the foretoken strategy is increasingly present.
That foretoken, in relation to the notion of human resource management, appears in several different meanings:24
•
•
•
When the term strategic human resource management is used, it refers
to the first organizational level - top management - that also includes
activities of human resource management. The top management has a
stressed role in decisions in the field of human resource and strongly
influences, whether positively or negatively, the efficiency of the human
resource management system.
The foretoken strategic is thus most often placed before the term human
resource management to state explicitly clear, the two-sided relationship between external organization strategy and human resource decisions. External organization strategy contains the selected formulated
way of competitiveness. At the same time, also necessary is the internal organization strategy in terms of implementation, motivation, and
control of internal resources. The external and internal strategies must
be mutually conformed. A certain strategy requires the selection of an
adequate tactic and technique and certain compliance with the tactic
and technique, and this can altogether be channeled towards the conscious choice of the policy that will support the external strategy.
Others point out that the rationality of human resource strategy can be
found in the advantage that derives from the agreement and negotiation about basic elements of a long-term approach to human resource
management. Apart from the abovementioned, the integration of the
needs of an organization and the individuals must also be conducted in
the field of human resource management.
What differentiates human resource management from the usual,
personal management is the dedication of significantly greater attention to its context and development perspective. Such expansion of a
common task is especially characteristic of strategic human resource
24
32
Beamont, P. B. (1994): HRM: Key Concept and Skills, Sage, London, 16-18.
Strategic role of human resource management CHAPTER ONE I PART ONE
management. Different authors give somehow different definitions of
this approach. To provide a more precise opinion of strategic human
resource management, the following are some of the opinions from
recent literature.
TABLE 1.4. Systematization of strategic human resource management opinions
Author
Opinions
Hendry, and
Pettirgrew25
Strategic human resource management is concerned with
seeing the people of the organization as a strategic resource
for the achievement of competitive advantage.
Dessler
Strategic human resource management means formulating
and executing human resource policies and practices that
produce the employee competencies and behaviors the
company needs to achieve its strategic aims.
Wright, and
McMahan27
Strategic human resource management is the pattern of
planned human resource deployments and activities intended
to enable an organization to achive its goals.
Schuler28
Strategic human resource management includes the
undertaking of all those activities affecting the behavior of
individuals in their efforts to formulate and implement the
strategic needs of business.
Nel, and
Werner29
Strategic human resource management is a way to establish
a strong bond between human resource management and
organizational strategy - synchronization and integration of
organizational business needs and plans with all aspects of
human resource management.
Armstrong30
Strategic human resource management is an approach
to making decisions on the intentions and plans of the
organization concerning the employment relationship and
the organization’s recruitment, training, development,
performance management, and the organization’s strategies,
policies, and practices.
Noe, Hollenback,
Gerhart, and Wright31
Strategic human resource management can be thought of
as the pattern of planned human resource deployments and
activities intended to enable an organization to achieve its goals.
Purcell32
Strategic human resource management focuses on actions
that differentiate organization from its competitors.
26
25
Hendry, C., and Pettigrew, A. (1986): The Practice of Strategic Human Resource Management, Personnel Review, 5, 3-8.
Dessler, G. (2019): Human Resource Management, 16th Ed., Pearson, Harlow.
27
Wright, P. and McMahan, G. (1992). Theoretical Perspective for Strategic Human Resource Management. Journal of Management. 2. 295-320.
28
Schuler, R. S. (1992): Strategic Human Resource Management: Linking the people with the strategic needs of
the business, Organizational Dynamics 1, 18-32.
29
Nel, P. S., and Werner, A. (2014): Human Resource Management, Oxford: Oxford University Press.
30
Armstrong, M. (2020): Armstrong’s Handbook of Strategic Human Resource Management: Improve Business
Performance Through Strategic People Management, 7th Ed., Kogan Page, London.
31
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2018): Fundamentals of Human Resource Management, 8th Ed., McGraw-Hill, New York.
32
Purcell, J. (1999): Business Strategies and Human Resource Management: Uneasy Bedfellows or Strategic
Partners, School of Management University of Bath, Bath.
26
33
PART ONE I CHAPTER ONE Strategic role of human resource management
There are Authors33 who opt for a highly pragmatic approach, accentuating that strategic human resource management means ensuring that
everyone from the top to the bottom of an organization does whatever
it takes to successfully implement the organizational strategy. The idea
is to wisely use people regarding the strategic needs of the organization.
In such conditions, according to Bahtijarević-Šiber34, strategic management and the discovery of new, innovative solutions in ensuring competitive advantage and a better position in relation to competitors in the future
becomes the foundational precondition for both the development and the
survival of an organization. The concept and approach of strategic human
resource management represents a novel and insufficiently explored
approach, both theoretically and scientifically. The basis of this approach
is the attempt to present the latest cognitions on the importance of human
resource in the strategic management process. Strategic human resource
management is largely about integration and adaptation. Its concern is to
ensure that human resource management is fully integrated with the strategy and strategic needs of the organization. Also, human resource policies
cohere both across policy areas and hierarchies. Finally, human resource
practices are adjusted, accepted, and used by line managers and employees
as part of their everyday work. Together, according to Schuler and Jackson35, these viewpoints suggest that strategic human resource management
has many different components, including policies, culture, values, and
practices. The various statements also imply what strategic human resource
management does, i.e., it links, integrates, and coheres across different levels in organizations. Implicitly or explicitly, its purpose is to more effectively
utilize human resource vis-a-vis the strategic needs of the organization.
BOX 1.2. BOILED FROG SYNDROME
Place a pot full of water on a stove at room temperature and place a frog in the pot.
The frog will swim around. If the water temperature increases by one degree every
30 minutes, the frog will continue swimming in the water and it will swim until it
boils. Why? Because the frog cannot feel that the environment around it is changing.
On the other side, if you take another frog and heat the water initially to 80 degrees,
it will jump out before you snap your fingers. Majority of businesspeople are boiled
frogs. They are in the water. Water temperature is changing. They can feel it. They
continue swimming. They cannot respond to changes.
Source: From Janićijević, N. (1997): Organizaciona kultura: kolektivni um preduzeća,
Ulisex, Novi Sad.
33
Cascio, F. W. (2021): Managing Human Resources - Productivity, Quality of Work Life, Profits, 12th Ed.,
McGraw-Hill, New York, 40-50.
34
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 132.
35
Schuler, R. S., and Jackson, S. E. (1987): Linking Competitive Strategies with Human Resource Management
Practices, The Academy of Management Executive, 3, 207-219.
34
Strategic role of human resource management CHAPTER ONE I PART ONE
STRATEGIC FRAMEWORK OF HUMAN RESOURCE MANAGEMENT
Certain aspects of human resource management have been more strategically observed since the 1980s. It is not meaningless for human
resource to choose the right practices of human resource management,
especially in a situation when they have a number of different options at
disposal. Dynamics of the environment significantly aid in the right choosing of those human resource practices that will give the right answer
to the dynamics of the environment. According to Rahimić36 since early
1980s, it has been thought more intensely about a comprehensive model
of strategic human resource management which would be included in
organization strategy based on which it is possible to systematically
connect programs and human resource activities on one side as well as
strategic and operational needs on the other side. They emphasize strategic and important aspects of human resource management which will
facilitate the achieving long-term and short-term goals of organization.
Many business schools have tried to present their strategic framework
of human resource management such as the Michigan model, one of the
most famous models, appeared in the USA at the beginning of nineteen-eighties. The Michigan model was developed by Fombrun, Tichy,
and Devanna37 in 1984. at the Michigan State University. The model
offers emphasizes the importance of internal coherence (strategy, structure, and human resource management) with external conditions economy, politics, and culture).
According to Torrington, Hall, and Taylor38 the fit or contingency approach is based on two critical forms of fit. The first is external fit (sometimes referred to as vertical integration) - that HR strategy fits with
the demands of business strategy; the second is internal fit (sometimes
referred to as horizontal integration) - that all HR policies and activities
fit together so that they make a coherent whole, are mutually reinforcing
and are applied consistently. As the result of empirical research, authors
of the model Fombrun, Tichy and Devanna39 found that more than 80
percent out of 252 surveyed personnel managers and strategic planners
advocated for the attitude that human resource instruments should be
more included in the process of strategy implementation. According
36
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 78.
Fombrun, C. J., Tichy, M. M. l., and Devanna, M. A. (1984): Strategic Human Resource Management, Sloan
Management Review, 2, 47-61.
38
Torrington, D., Hall, L., and Taylor, S. (2008): Human Resource Management, 7th Ed., Pearson, Harlow, 37.
39
Fombrun, C. J., Tichy, M. M., and Devanna M. A. (1984): Strategic Human Resource Management, Sloan Management Review, 2, 47-61.
37
35
PART ONE I CHAPTER ONE Strategic role of human resource management
to Rahimić40 despite the integrative perspective from the viewpoint of
human resource management, this is one strategic dominant model,
since strategy has been given a priority both from the perspective of content and the perspective of time.
Hence, the fundamental components of the model include:41 (1) strategic management elements (organizational strategy, organizational structure and human resource management), and (2) organization external
environment (economic forces, political forces and cultural forces). The
model suggests that the fundamental components of the model are conceptually connected through the influence of the form of factors.
This is clearly shown in the Figure 1.1.
FIGURE 1.1. The Michigan model of human resource management
Source: From Fombrun, Tichy, and Devanna, 1984. Reproduced with permission of
Sloan Management Review.
40
41
36
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 84.
Fombrun, C. J., Tichy, M. M., and Devanna M. A. (1984): Strategic Human Resource Management, Sloan Management Review, 2, 47-61.
Strategic role of human resource management CHAPTER ONE I PART ONE
As it can be seen from the Figure 1.1., the Michigan model can be seen
as an attempt to reach as high level of compliance as possible between
all the mentioned areas (strategy, structure, human resource management) and the existing areas from the environment (economy, politics
and culture).
According to Torrington, Hall, and Taylor42 the strength of this model
is that it provides a simple framework to show how selection, appraisal,
development and reward can be mutually geared to produce the required
type of employee performance. Također, prednost ovog modela je the
match between organization strategy and human resource strategy can
only be at the expense, not the benefit of an organization as a whole. As
the Authors states, this model has been criticised because of its dependence on a rational strategy formulation rather than on an emergent
strategy formation approach. It has also been criticised owing to its unitarist assumptions, as no recognition is made for employee interests and
their choice of whether or not to change their behaviur.
The Authors43 of the model think that conclusion can be drawn that the
largest contribution of strategic human resource management is reflected in dealing with the structure of personnel in accordance with the
strategy of the organization.
According to Rahimić44 an important critique of these models, however, is that they do not represent a theoretical model, but only put at
disposal a systematic framework for design and analysis of human
resource management. Based on the aforementioned facts, a conclusion that can be made is that there is no integrative model of human
resource management.
42
Torrington, D., Hall, L., and Taylor, S. (2008): Human Resource Management, 7th Ed., Pearson, Harlow, 39.
Hendry, C., and Pettigrew, A. (1990): Human Resource Management: An Agenda for the 1990s., International
Journal of Human Resource Management, 1, 17-43.
44
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 79.
43
37
PART ONE I CHAPTER ONE Strategic role of human resource management
Summary
The concept of human resource management and the approach
derived from it represent a new theoretical and scientific
approach. It shapes the latest findings on the role and importance of human resource in strategic management. In order to
understand human resource management, it is necessary to
understand theoretical perspectives of human resource management: universalist perspective, strategic best-fit perspective,
resource-based perspective, and configuration perspective. The
idea is to use people as wise as possible, given strategic needs
of the organization. Human resource management must achieve
several key main objectives: stimulation of proactive instead of
reactive behavior, explicit communication of organizational goals,
stimulation of critical thinking and constant reconsideration of
strategic assumptions, identification of the gap between the present situation and future vision, encouragement and stimulation
participation of executive managers, the establishment of shared
values, which results in a series of organizational benefits. Due
to actuality and importance of human resource management, it is
possible in future to talk about a forecast of changes that implies
that the key strategic role of human resource will be directed at
“becoming a leader, not just a partner”. With the appearance of
human resource management, significant attention was paid to
the term strategic which implied several of its meanings in the
context of human resource management. Until today, many definitions and perspectives on strategic human resource management have been developed. Nowadays, the trend is that more and
more authors opt for a pragmatic approach to strategic human
resource management, pointing out how human resource management means ensuring that everyone, from top to the bottom
of an organization, does whatever it takes for successful strategy
formulation and implementation.
38
Strategic role of human resource management CHAPTER ONE I PART ONE
References
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Hendry, C., and Pettigrew, A. (1986): The Practice of Strategic Human Resource
Management, Personnel Review, 5, 3-8.
Hendry, C., and Pettigrew, A. (1990): Human Resource Management: An agenda for
the 1990s., International Journal of Human Resource Management, 1, 17-43.
Janićijević, N. (1997): Organizaciona kultura: kolektivni um preduzeća, Ulisex, Novi
Sad.
Janijćijević, N. (2010): Upravljanje organizacionim promenama, Ekonomski fakultet
Univerziteta u Beogradu, Beograd.
Kulović, Dž. (2012): Strategijski menadžment ljudskih resursa. Kemigrafika, Sarajevo.
Leopold, J., and Harris, L. (2009): The Strategic Management of Human Resources,
2nd Ed., Prentice Hall, Harlow.
McKee, K. D. (1997): The Human Resource Profession: Insurrection or Resurrection?, Human Resource Management, 36, 151–156.
Milkovich, G, T., and Boudreau, J. W. (1994): Human Resource Management,
McGraw-Hill, New York.
Možina, S. (Ed.) (2002): Menadžment: nova znanja za uspeh, Didakta, Radovljica.
Nel, P. S., and Werner, A. (2014): Human Resource Management, Oxford: Oxford
University Press.
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2018): Fundamentals of
Human Resource Management, 8th Ed., McGraw-Hill, New York.
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource
Management: Gaining a Competitive Advantage, 12th Ed., McGraw-Hill, Toronto.
39
PART ONE I CHAPTER ONE Strategic role of human resource management
Purcell, J. (1999): Business Strategies and Human Resource Management: Uneasy Bedfellows or Strategic Partners, School of Management University of Bath,
Bath.
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta
u Sarajevu, Sarajevo.
Schuler, R. S. (1992): Strategic Human Resource Management: Linking the people
with the strategic needs of the business, Organizational Dynamics 1, 18-32.
Schuler, R. S., and Jackson, S. E. (1987): Linking Competitive Strategies with Human
Resource Management Practices, The Academy of Management Executive, 3,
207-219.
Šušnjar-Štangl, G. and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski
fakultet Univerziteta u Subotici, Subotica.
Torrington, D., Hall, L., and Taylor, S. (2008): Human Resource Management, 7th Ed.,
Pearson, Harlow.
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed., Pearson, Harlow.
Ulrich, D., Losey, M. R., and Lake, G. (Eds.) (1997): Tomorrows HR Management, Joh
Wiley & Sons, Inc., New York.
Wright, P., and McMahon, C. (1992): Theoretical Perspectives for Strategic Human
Resources Management, Journal of Management, 18, 295-320.
40
PART TWO
CHAPTER TWO
RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT
AND HUMAN RESOURCE MANAGEMENT
CHAPTER THREE
ROLE OF HUMAN RESOURCE IN
STRATEGY FORMULATION
CHAPTER FOUR
ROLE OF HUMAN RESOURCE IN
STRATEGY IMPLEMENTATION
Chapter
two
RELATIONSHIP BETWEEN
STRATEGIC MANAGEMENT AND
HUMAN RESOURCE MANAGEMENT
CHAPTER OUTLINE
• Importance of strategic management
• Strategic management process
• Concepts and techniques of strategic management
• Strategy-oriented vs. strategically-oriented human resource management
• Relationship between two processes
• The fundamental model of strategic human resource management
IMPORTANCE OF STRATEGIC MANAGEMENT
L
ooking back at history, it can be seen that the development of an
organization profoundly depended on its adaptivity to changes, i.e., its
readiness to meet the challenges of its environment. Accordingly, organizations have constantly developed new systems to overcome the challenges they are faced with. According to Ansoff45, long-range planning
was developed in the 1950s. Considering its nature, it integrated several
aspects vital for business operations such as budgets, plans, programs,
and goals. However, the main setback of these systems was the fact that
foreseeing was based on the extrapolation of events from the past.
Further, Ansoff46 believes that different management systems are similar to drugs used to cure symptoms of an illness, without investigating the cause. If the illness is cured, the procedure is repeated until the
same symptoms appear again. If new symptoms appear, the system is
no longer used, and new “drugs” and systems are introduced to cure the
new symptoms alongside the old ones.47
The early 1960s have brought a more active organizational approach to
marketing which introduced a very rapid change in trends. Since longrange planning was based on extrapolation from the past, it was no longer
significant support to managers. Strategic planning occurred in the 1960s
as a logical next step of long-range planning which could no longer offer
quality problem-solving of external issues. Its essence was creating an
organizational strategy. It included decision-making in the present based
on the systematic identification of opportunities and threats which lay
ahead in the future. Opportunities and threats, alongside strengths and
weaknesses, present the foundation for making sound decisions which
should be used to avoid threats and utilize future opportunities. Seen as a
process, strategic planning starts with clear definitions of the vision, mission, and goals of an organization, which is used as a baseline for defining the policy and creating the strategy for its facilitation. In addition, it
requires the manager and all employees in the organization to believe in
what they are doing and to be persistent in their work.
Increasingly dynamic business operation conditions, as well as a continuously turbulent environment, have brought about that each new system
developed was more advanced and more productive than its ­predecessor.
45
Ansoff, I. H. (1984): Strategic Management, The Macmillan Press, London.
Ansoff, I. H. (1976): Managing Surprise and Discontinuity-Strategic Response to Week Signals, European Institute for Advanced Studies in Management, (18) 2, 21-33, 25.
47
Mašić, B. (2021): Strategijski menadžment: osnove, proces i koncepti, Data Status, Beograd, 70.
46
47
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
To manage processes within the system of business operation management, it is necessary to answer the following question: “What needs to be
done to foresee the changes in the environment to increase the number of
appropriate solutions for the given situations?” Strategic management was
developed from the need to shape the functional system which can provide an appropriate answer to the changes in the environment. Hence,
strategic management presents an upgrade of strategic planning in the
direction of the implementation and the control stage. Unlike strategic
planning (which focuses on dealing with shaping, defining, and setting
the direction of development), strategic management goals focus on
adapting to the environment in such a way to take into account and realize the long-term goals (interests) of an organization.
Strategic management is a process that analyses the current situation,
and crafting (produces) responding strategies that are implemented in
practice and modified and evaluated depending on the requirements.
The concept of strategic management enables managers to utilize specific methods and instruments to reduce the complex environment into
gradable and clear processes which are used as the baseline for creating,
shaping, and implementing new strategies directly associated with the
future development of an organization.48
The orientation of strategic management is both external and internal.
External orientation included the interaction of an organization with its
environment. Because employees take up a considerable share of strategic management, an important fact to understand includes the nature
of the circumstances outside an organization which is used to establish
the factors (economy, competition, or demography) which could have
a significant effect on strategic decisions and activities (environment).
Unlike the external orientation, the internal orientation of strategic
management includes the analysis of specific resources and capabilities.
In this case, the role of the employees is to determine the capabilities
at the disposal of the organization or the ones that are missing, i.e., the
organizational competence (what it does well, and what not).49
The role of strategic management is highlighted particularly because the
strategic management process prompts the organization to determine
and develop certain competence which will play an important role when
determining the strategic position and simultaneously developing com48
Kurtić, A. (2011): Menadžment poslovnih sistema: sistem, proces, funkcije, Centar za napredne studije, Sarajevo, 133.
49
Coultard, M. (2007): Strategic Management in Action, Pearson, London, 7-8.
48
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
petence that will be used to focus the energy needed to achieve the effect
of synergy. All employees must be involved in the process to realize the
planned activities. However, process leaders must be determined, i.e. the
employees supervising and managing the processes. Accordingly, it can
be concluded that the employees essentially held the most responsible
for the implementation and realization of the plans are the instruments
of strategic management.
According to Buble et al.50, the instruments of strategic management
are The Board of directors, Top management, and The Planning department. Their influence is undoubtedly the highest. The Board of directors
is a group of directors (the group is most often formed through a selection made by shareholders to advocate-represent their interests). Their
foremost task is to define the organizational mission as well as the strategic goals and the organizational strategies needed for its realization.
The Board is seldom active in the process of planning. Top management
consists of a relatively small group of people including the CEO-chief
executive, VP-vice president, and EO-executive officer. The top manager
(CEO) is a vital organizational resource since he/she is at the very top
of the organizational structure. Top managers are described as people
working very hard and under constant pressure in decision-making.
They are forced to make decisions daily lacking sufficient information
and guided solely by the logic of their mindset. Considering their manner of work and operation, according to Šunje51 one must have in mind
that the top management is only a human being with a certain value system, experience, knowledge, competencies, and a certain mindset.
STRATEGIC MANAGEMENT PROCESS
Technological prosperity constantly brings about changes with speed as
their fundamental feature. Namely, to be certain that its operations will
be realized, the organization must anticipate the future flow of events
and have to adapt to the altered surrounding quickly and adequately.
Such new scenarios indicate that modern organizations, in addition to
rapid technological changes, are faced with new challenges such as the
short life cycle of a product, threats of new entries, common and unpredictable changes related to the tactics of competitors, as well as the rapid
50
51
Buble, M. (Ed.) (2005): Strateški menadžment, Sinergija, Zagreb.
Šunje, A. (2002): Top-menadžer: vizionar i strateg, Tirada, Sarajevo, 206.
49
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
evolution of demands and customer expectation.52 Such an environment
requires permanent investment in the research of the future to identify
in advance the threats and opportunities an organization will face.
There are different aspects or dimensions as some call them, of the strategic management process mentioned in the literature. In most cases, the
process is considered a series of steps, stages or routes.53 The five stages
model is a strategic management model that uses a precise sequence of
steps in strategy formulation and implementation:54
•
•
•
•
•
Define mission, vision, and goals
External and internal analysis
Strategy formulation
Strategy implementation
Strategy control
If an oganization fails to react to the challenges of the future, it risks
the possibility of finding itself in a crisis. According to Kurtić55 strategic
management presents an integral factor of each successful organization
since it presents a permanent process of organization adaptation and its
influence alongside its mission and goals used to increase the capabilities
and readiness to react to changes in the environment timely and in the
right way. The strategic management process includes the existence of
successive and mutually associated activities leading to a certain result.
The ultimate result of mutually associated phases is a series of organizational strategies applied in its business. Simply said, the shaping of
strategy presents a rational reaction of an organization to the changes in
its environment by selecting methods and mechanisms needed for the
reactions to achieve the strategic goals.
Namely, one of the most popular Japanese consultants Ohmae56 noticed
that the success of the most significant Japanese organizations is the result
of sound strategies. At the same time, there was a paradox since such
successful organizations lack the departments for planning, and even
lack the strategic processes of planning. Such diversity in the approach
to determining the definition of organizational strategy indicates that it
is a rather demanding phenomenon, with a note that each approach to
52
Todorović, J. (2003): Strategijski i operativni menadžment, Conzit, Beograd, 218.
Mintzberg, H., Raisinghani, D., and Theoret, A. (1976): The Structure of “Unstructured” Decision Processes,
Administrative Science Quarterly, 21, 246-275.
54
Simon, H. A. (1959): Theories of Decision-making in Economic and Behavioral science, American Economic
Review, 49, 253-283.
55
Kurtić, A. (2011): Menadžment poslovnih sistema: sistem, proces, funkcije, Centar za napredne studije, Sarajevo, 134.
56
Ohmae, K. (1983): The Mind of the Strategist: The Art of Japanese Bussines, Penguin Books, London.
53
50
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
defining the notion of organization strategy offers an additional opportunity to understand the phenomenon more completely. It is quite clear
that the organizational strategy perceived in a wider sense contains both
the elements of the plan and the elements of maneuver and such strategy
is always the result of consistent behavior based on a synchronized value
system and a developed organizational identity.57
Viewed from the context of defined key strategic actors, business strategy can be accepted as an instrument for realizing above-the-average
economic performances and such strategy is perceived by Ohmae58 as an
instrument of an organization to differentiate itself from its competitors
using its strengths to better please the demands of the aimed category of
customers. Many authors believe that the organization strategy actually
shows guidelines for achieving long-term goals, and therefore it can be
defined as a plan that includes all the main activities through which the
company intends to achieve its long-term goals in a turbulent environment. Since each strategy should be a package for achieving the longterm goal, we must state that to achieve these goals, it is necessary to
combine the main strategies due to the specifics of the business and the
environment in which the enterprise operates.
Certain strategy specificities must be known to have a better understanding
of the role and significance of strategy (with particular consideration of its
formulation). Because strategy is expected to be the most effective way of
realizing the strategic goals in a dynamic and hostile environment, it makes
sense for it to include a wide specter of different orientations of methods
and instruments to apply depending on the goals and circumstances.
The strategy implementation phase comes after the formulation and
selection phase. When formulating a strategy, it is certainly of great
importance to anticipate (or at least try to anticipate) barriers that will
stand in the way of successful strategy implementation. On the other
hand, there are always objective circumstances that could not have been
foreseen and to which the company’s management must find an answer.
According to Certo and Peter59, for these reasons, the strategy implementation is in the qualitative sense the most demanding process because we
have to turn it into tactics (tactical plans) that will lead to the realization
of the process. This phase is extremely demanding because it implements
“words in action” and encounters all the problems that are not foreseen
(covered) by the wording.
57
Šunje, A. (2002): Top-menadžer: vizionar i strateg, Tirada, Sarajevo, 206.
Ohmae, K. (1983): The Mind of the Strategist: The Art of Japanese Bussines, Penguin Books, London.
59
Certo, P., and Certo, S. (2018): Modern Management: Concepts and Skills, Pearson, Boston.
58
51
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
The last phase is the evaluation phase and it involves evaluating the way
the strategy has been implemented. If it is determined that the strategy
itself did not meet the goals that were set, it will be necessary to revise
the strategy and even change it completely. On the other hand, it is also
necessary to determine whether there was a misconception at the very
beginning or in the analysis of the situation. To successfully implement
the new strategy, it is necessary that the persons in charge of implementation carefully consider all internal factors that, to a greater or lesser
extent, have an impact on the concretization (implementation) of the
strategy. The strategy must be identified or correspond to the organizational structure of the company, and as such must be a concrete and
clear guideline for each member of the organization. Of course, during
the implementation, there are almost constant deviations, but because of
that, the top management is the one that should constantly monitor the
implementation and take concrete steps to ensure the implementation
of the strategy through corrective measures. A prerequisite for the successful implementation of the strategy is the construction of an effective
control system. The type of strategic control will also depend on the circumstances in which an organization operates. The control of the current movement is most often used for the analysis of current business,
and it is applicable when an organization operates in a predictable environment. In contrast, when a company operates in turbulent conditions,
change control is used, the characteristics of which are irreversible.
In the end, it can be concluded that defining strategic management is not
at all simple, no matter how it may seem, because it is a continuous iterative process aimed at maintaining the organization as a whole, which
is shaped by its environment. Different business operation conditions
create different opportunities and threats and the top management must
prepare a reaction plan to deal with them.60
CONCEPTS AND TECHNIQUES OF STRATEGIC MANAGEMENT
As noted, several times previously, we are currently living in a time characterized by turbulence and unpredictable business trends. The term
hyper-changes can often be encountered in literature denoting rapid
turning points with unpredictable results.61
60
61
52
Todorović, J. (2003): Strategijski i operativni menadžment, Conzit, Beograd, 174.
Mašić, B. (2021): Strategijski menadžment: osnove, proces i koncepti, Data Status, Beograd, 419.
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
Influenced by increasingly dynamic movements and turbulence, learning
is becoming the basic premise for the organization to develop the essence
of their competitiveness which enables them to cope with new managerial
challenges. Learning itself is characterized by a certain level of difficulty
since it is limited by time because it is important to be ahead of the competition, i.e. to acquire and apply new knowledge faster than the competition. Nowadays, it can be even said that we live in a century of learning
and applying discoveries. Everyone works hard to implement knowledge
into practice as fast as possible to reach favorable results, i.e. to achieve a
competitive advantage. Hence, organizations, too, learn (copy) one from
another and use the acquired knowledge to achieve an advantage. Readiness to learn will depend on the personal attitude of all employees, strategic behavior and strategic policy, as well as entrepreneurial attitude.
Consequently, planning and goal setting of an organization, as well as
strategy crafting cannot be a fixed strategy, no matter how much one
would desire such a scenario. The change of business operations conditions and almost a complete reorientation towards the marketing
approach conditions the top management to adapt its strategies to new
business trends and to integrate several strategic approaches into a single approach to answer the increasingly more profound actions by the
competitors on one side and increasingly higher demands from the end’s
customers, on the other.
Strategic management concepts
New challenges arising before management, coupled with technological,
social, political, and economic factors heavily influencing the dynamics
of changes have led to the formation of new concepts and creation of new
management theory and practice. Today, the generation of new concepts
and approaches in strategic management consists of the following:62
1.
2.
3.
4.
5.
6.
62
Learning Organization
Core Competence
Knowledge Management
Customer Relationship Management
Total Quality Management
“Strategy as a revolution”
Mašić, B. (2021): Ibidem, 419-581.
53
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
Mašić63 offers the following overview of the most significant concepts
and their features.
Learning Organization is essentially capable of creating, collecting,
exchanging, and modifying its behavior in a way that reflects new knowledge. Senge cites a lifelong learning program that includes five learning
disciplines that every organization would have to develop to become and
have the characteristics of a learning organization.
Core Competence is the next concept that will be partially presented
and it belongs to the new concepts too. The concept called the core competence of the organization is one of the concepts that have the primary
task of providing a competitive advantage for an organization. This concept focuses on what one organization does best.
Knowledge Management is a business concept that focuses on organizational learning. Its development has begun in the last decade of the last
century and from then until today, through continuous development,
it has become one of the most important programs for radical changes
in an organization. It is a process in which knowledge is created, conquered, preserved, shared, and applied.
Customer Relationship Management is based on a marketing
approach to sales where proponents of this concept focus on the customer and a lasting relationship with him/her. Namely, the most successful organization of the day focuses on customers and directs most of the
attention toward them.
Total Quality Management is an approach in which managers must
be constantly more innovative, flexible, resourceful, proactive, and yet
focused on quality. This concept is based on a common approach of all
employees in one organization, all of which are oriented towards longterm success by meeting customer needs.
“Strategy as a revolution” represents a new management paradigm and
marks the beginning of the creation of a revolutionary and strategic change
model. Therefore, the top management must understand the need for continuous benchmarking, activities to compare the results of an organization
with the best practices to continuously create incentives and improvements.
63
54
Mašić, B. (2021): Ibidem, 419-582.
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
Strategic management techniques
Different techniques for enhancing the strategic management process
must be used to ensure its efficiency of the strategic management process. Each organization needs to secure itself from certain negative circumstances that can affect the realization of its goals through the application of the concept of strategic management. The application of the
strategic management model highlights business trends to predict market orientations to notice discontinuities on time. Today, the most significant methods and techniques applied in the strategic management
process include:64
1. Portfolio concept
2. PIMS program
3. SWOT analysis
4. Scenario method
5. Value chain
6. Five forces
7. Gap analysis
8. Experience curve
9. Creative techniques
10. Digital tools
Mašić65 offers the following overview of the most significant methods
and their features.
The portfolio concept is, in the simplest terms, “in charge” of taking
care of and preserving the profit potential of an organization. The creation of a certain strategic position is impossible without the use of some
of the portfolio matrices (market growth/market share or BCG), market portfolio development based on a matrix of nine blocks, technology
portfolio development) which is today the most common method due to
its simplicity, clarity, and efficiency in use.
PIMS program is used by organizations in an attempt to overcome certain barriers faced by the concept of portfolio management. The main goal
of this model is to achieve more successful strategic planning and management of an organization together with its joint strategic business units.
64
65
Mašić, B. (2021): Ibidem, 93-189.
Mašić, B. (2021): Ibidem, 93-189.
55
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
SWOT matrix is named after the initials of four key factors that it identifies: strengths, weakness, opportunities, and threats. Today, the matrix of
opportunities is largely represented when it comes to strategic planning
because it is aimed at determining the position of an organization within
its environment while taking into account the intensity of opportunities
and threats.
The scenario method is one of the methods that is most often used
today in the analysis and prediction of the macro environment. Namely,
when predicting trends, we often neglect certain phenomena that over
time prove to be crucial for the development of planned activities. Using
the scenario method has an advantage in turbulent conditions where the
future is uncertain and where there is a need for an organization to react
quickly and flexibly to changes in the environment.
The value chain breaks down an organization into its strategic parts
to more accurately identify the costs that the organization creates.
Using the value chain, the activity (business) of an organization can be
divided into two parts: (1) primary activities and (2) support activities.
The organization performs many independent activities within each of
these categories of activities that are essentially the key weaknesses and
strengths of an organization.
Five forces focus on the five competing forces to analyze the nature
and intensity of competition in the industry. This model emphasizes
competition and presents its starting point. In addition to the competition, the analysis includes: (1) the threats of substitutes, (2) the industry rivalry, (3) the bargaining power of suppliers, and (4) the bargaining power of buyers.
Gap analysis is one of the strategic management techniques for determining the growth and development opportunities of an organization.
The task of this technique is to explore and create strategies to fill the
gap by determining future techniques and current opportunities in this
context.
Delphi method and Brainstorming method are today the most popular techniques to increase creativity and were developed in the second
half of the last century. The Delphi method is a way of systematically
collecting and combining individual assessments of the outcome of phe56
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
nomena on the economic horizon until an acceptable solution is reached
for all parties. The brainstorming method works by forming meetings
where a group of carefully selected experts “fantasize” about how to solve
the problem.
Digital tools are the result of the fourth industrial revolution, which
gained its affirmation after the Hanover fair in 2011 fair. Industry 4.0
encompasses the technological transformation of an organization
towards the use of a range of new technologies that create fusion by
making existing boundaries between the physical, digital, and biological worlds less pronounced. Industry 4.0 affects the entire organizational
value chain, enabling a whole new approach to its design.
STRATEGY-ORIENTED VS. STRATEGICALLY-ORIENTED
HUMAN RESOURCE MANAGEMENT
The goal of strategic management is to use its proactive nature and utilize
an entire arsenal of instruments, methods, and techniques in an interactive and iterative process to foresee the possible threats as well as potential
opportunities and to define mechanisms and strategies to minimize the
potential threats and drawbacks while maximizing the internal potential
and recognized opportunities on the market. In addition, strategic management is defined as a manner of thinking about the future, too. That is
a concept of management of the future through a process-oriented toward
the determination and application of a productive (effective and efficient)
strategy in the context of an association between an organization and its
relevant environment to realize its strategic goals and business continuity.
In doing so, the determination and the dimensioning of aims are conditioned by the status and the planned premises concerning the internal factors of the internal environment (strengths and weaknesses) on one side,
and the status and premises concerning its external environment (opportunities and threats), on the other. The further process of this unique and
interactive and iterative process is the strategy formulation phase encompassing several different paths (manners), i.e. different strategic options. In
other words, the direction and the manner of achieving the fundamental
development orientation of an organization are developed alongside strategy. The result of that process is unique strategies and the best strategies are
a result of creative strategic contemplating and an individualized design.
57
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
According to Rahimić66, strategic management includes a principally
long-term and multiple oriented gradual management and profit potential formation and development using strategy formulation and implementation.
To better understand human resource management orientation, literature provides different interpretations and definitions of its role. That
often leads to different interpretations, which causes confusion among
the readers. According to Schuler67 there really shouldn’t be any mystery about the word strategic in the phrase strategic human resource
management. Given the fact that the human resource management
concept directed special attention at adjusting the human factor to strategic development and organizational strategy, the attribute strategic
was added further in its development, creating its original name strategic human resource management. DeNisi and Griffin68 point out that
the growing awareness of the strategic importance of human resource
management has led to new terminology that reflects the obligation and
commitment of the organization toward its employees and the commitment of people to the organization, its mission, goals, and tasks. Strategic human resource management which is shaped in this way includes
several groups of activities from the domain of human resource management, such as employee influence, human resource flow, reward system,
and works system.69
At first, in its focus were hard variables (strategy, structure, systems), and
soft variables (staff, skills, style, shared values) were neglected. In addition, according to Kane, Crawford, and Grant70, it is possible to identify two broad approaches to human resource management: “hard” and
“soft” approaches. Hard and soft variables are only generally separated,
and the areas they cover strongly interfere in practice.
As Price71 states, under the “hard” approach, employees are considered
as one of the organization’s resources and thus be managed in the same
way as any other resource in the organization. According to Schuler and
Jackson72, this approach measures the human resource management
66
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 95.
Schuller, R. S. (1992): Strategic Human Resources Management: Linking the People with the Strategic Needs
of the Business, Organizational Dynamics, 21, 18-32.
68
DeNisi, A. S., and Griffin, R. W. (2008): Human Resource Management, 3rd Ed., Houghton Mifflin Company,
Boston, 13.
69
Sherman, W. A., Bohlander, W. G., and Chruden, J. H. (1998): Managing Human Resources, 8th Ed., South-Western Publishing Co., Cincinnati, 101.
70
Kane, B., Crawford, J., and Grant, D. (1999). Barriers to Effective HRM, International Journal of Manpower, 20,
494-515.
71
Price, A. (2007): Human Resource Management in a Business Context, 3rd Ed, Thomson Learning, London, 648.
72
Schuler, R. S., and Jackson, S. E. (2005): A Quarter – Century Review of Human Resource Management in the
U. S.: The Growth in Importance of the International Perspective, Management Review, 16, 1-25.
67
58
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
effectiveness by monetary criteria: cost accounting, utility analysis, economic value-added, and return on investment of HR activities, etc. Some
companies develop a sophisticated model of how HR practices affect the
satisfaction of customers, or identify investors as the most important
stakeholders, without whose capital would be impossible to continue
business and reach satisfaction. As Torrington, Hall, Taylor, and Atkinson73 state hard variables emphasize the need to manage humans in a
way that will ensure added value from them and thus enable the organization to achieve competitive advantage.
As Price74 states, the “soft” approach includes that employees are an
important group of stakeholders and a distinct resource that cannot be
managed like any other resource and whose interests and needs have to
be taken into consideration. According to Schuler and Jackson75 states,
this approach measures the human resource management effectiveness
by nonmonetary criteria: commitment, satisfaction, engagement, knowledge development, etc. As Torrington, Hall, Taylor, and Atkinson176 state,
soft variables are based on the human relations school and include testing of humans as appreciated and the most valuable asset, as a source of
competitive advantage.
Another part of the human resource management debate has focused on
the direction of shaping its complex content by applying the approach of
integral coverage of all influential (“hard” and “soft”) variables. The soft
model emphasizes individuals and their self-direction and places commitment, trust, and self-regulated behavior at the center of any strategic
approach to people. In contrast, the hard model stresses the rationalism
of strategic fit and places emphasis on performance management and an
instrumental approach to the management of individuals. Today, the focus
of strategic human resource management is shifted to soft variables. In
recent literature, there are two different interpretations, i.e., variants of the
notions of management on one side and human resource management on
the other side. The authors espoused the need to establish a close two-way
human resource management orientation. Those are:77
(a) Strategy-oriented human resource management
(b) Strategically-oriented human resource management
73
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed., Pearson,
Harlow.
74
Price, A. (2007): Human Resource Management in a Business Context, 3rd Ed., Thomson Learning, London, 648.
75
Schuler, R. S., and Jackson, S. E. (2005): A Quarter – Century Review of Human Resource Management in the
U.S.: The Growth in Importance of the International Perspective, Management Review, 16, 1-25.
76
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed., Pearson,
Harlow.
77
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 93.
59
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
Strategy-oriented human resource management, according
to Rahimić78, only refers to the measures for strategy implementation
because human resource is deeply connected with strategy formulation and implementation. That limits this notion to the strategic management part only. Strategy-oriented human resource management
interactively connects the organizational strategy, organizational structure, and human resource management. As it is already known, organizational structure plays an inevitable role in strategy implementation
thanks to the renowned American scholar Chandler whose research on
the relationship between the two variables conducted during the 1960s
undoubtedly alters the approach to strategy implementation.
As Šunje79 states referring to Chandler’s thesis, with the explanation of
the mutual connection between strategy and structure (structure follows
strategy). This means that the organization first (re)shapes the strategy
and action programs and on this basis, it sets an appropriate organizational structure. Should an organization try to successfully implement an
existing strategy, it needs to choose a corresponding structural configuration to complete the process. Should an organization choose an unfitting
structural configuration, it will certainly face obstacles during strategy
implementation. Such obstacles often lead to weak performances, making the organization uncompetitive. Implementation of the new structure
often occurs only after several causes. Considering that people within an
organization are those who perform work related to the implementation
of other strategies, the human resource strategy is closely adapted to the
other strategies to enable the right number of people with adequate competencies and to use them efficiently and effectively.
According to Rahimić80, the Harvard model can be interpreted as a
model for strategy-oriented human resource management. Although
human resource management in the Harvard model has strongly determined tasks in comparison with the Michigan model, it is still more a
consequence than the starting point of strategic thoughts. The starting
point is that in addition to organizational strategy there are additional
interest groups and situational factors that determine human resource
management.
78
Rahimić, Z. (2010): Ibidem, 93.
Šunje, A. (2002) according to Chandler, A. (1969): Strategy and Structure: Chapters in the History of the American Industrial Enterprise, The MIT Press, Massachusetts.
80
Rahimić, Z. (2010): Ibidem, 94.
79
60
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
BOX 2.1.
In Chandler’s work Strategy and Structure - chapters from the history of American industrial organization based on an intense study of the history of DuPont,
General Motors, Standard Oil of New Jersey, and Sears, Roebuck, and Co., Chandler set and proved the claim that the strategy of an organization determines the
structure of the organization and that joint name for this is the use of organizational resources (humans, funds and production means) to cover demand on the
market. The structure is thereby a means for integrated application of existing
organizational resources, while strategy is a plan for the allocation of resources for future market demands. Chandler formulated his famous thesis structure following a strategy. This thesis says that changes in the environment and
market possibilities and dangers that derive from that tell the leadership how to
adjust the organizational strategy to the changed circumstances (geographical
expansion, vertical integration, i.e. diversification of products). Simultaneously
with the implementation of these strategies, changes in the organizational structure become mandatory after a certain time. Chandler studied large US organizations in the detail and reached satisfying results that enable generalization.
Source: From Chandler, A. (1969): Strategy and Structure: Chapters in the History of the
American Industrial Enterprise, The MIT Press, Massachusetts.
Strategically-oriented human resource management, according to
Rahimić81, is an explicit interactive inclusion of human resource into the
strategic management process. The label strategically-oriented exceeds the
label strategy-oriented in several ways. From this perspective, strategically-oriented human resource management is considered a tool for strategy
formulation and implementation. The main interest of an organization
in the strategy selection process is to achieve a sustainable competitive
advantage. Whenever an organization adopts a new strategy or a program,
its implementation must be conducted through humans. All of it requires
complete external orientation of the management that enables the identification of very low signals of changes, their anticipation, and rapid, immediate reactions and proactive responses. The foundation for such interpretation can be found in the so-called Warwick models and it is favored
by many authors. Strategically-oriented human resource management can
make a connection between the outer environment, inner environment,
strategy context, HRM context, and HRM content. As previously stated,
HRM content has a significant role in shaping the strategic and HRM context thanks to German professors Berthel and Becker, who published their
work which highlights the relationship among the three variables altering
the strategy implementation approach in the early 2000s.
81
Rahimić, Z. (2010): Ibidem, 94.
61
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
As Rahimić82 states referring to Berthel and Becker, when the organization is formulating the strategy, the starting points are limited, existing,
available qualifications (strategy follows qualification). This means that is
necessary to explain to which extent the human resource management
gives initiative and support to the formulation and implementation
strategy processes. The authors emphasize the analysis of the linkages
between human resource and organizational strategy and how strategy
provides goals and constraints for the other in its competitive environment and with the immediate business conditions that it faces.
According to Evans83, the Warwick model can be interpreted as a model
for strategically-oriented human resource management. Although
human resource management in the Warwick model has strongly determined tasks in comparison with the Michigan model, it is still the process
of linking the human resource with the strategic objectives to improve
performance.
The human resource management position within the strategic management process is presented in Table 2.1.
TABLE 2.1. Human resource involvement in the strategic management process
Strategic
management
process
Way of including
human resource in
the strategic management process
Conceptualization
of strategic
Direct participation in the process
decisions
The formal
strategic
management
process
The informal
strategic
decision-making
process
Human resource Involvement in the
formal strategic management process
Strategy
formulation
Strategy
implementation
Human resource managers Inclusion
in informal strategic decision-making
processes
Human resource management as the
strategic actions launcher
Indirect participation in
the process
Targeted impact on
holders of the strategic
decision-making process
The indirect effect of
measures for human
resource management
designing activities
Source: From Rahimić, 2010 according to Berthel, and Becker, 2003, 546.
82
Rahimić, Z. (2010) according to Berthel, J., and Becker, G. F. (2003): Personal-Management: Grundzüge für
Konzeptionen betrieblicher Personal arbeit. 7. Aufl., Schäffer-Poeschel, Stuttgart, 546.
83
Evans, P. A. L. (1986): The Strategic Outcomes of Human Resource Management, Human Resource Management, 25, 149-167.
62
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
The human resource management position within the strategic management is presented in Table 2.1, which shows that there are two levels, i.e.,
direct and indirect participation in the strategic management process.
According to Noe, Hollenbeck, Wright, and Eligh84 as the preceding table
illustrate, often the “with what will compete” question presents ideal avenues for human resource management to influence the strategic management process. As Rahimić85 states, the task of strategic management
lies in the building, preservation, and further development of specific
resources and the development of abilities, that these resources are used
for organizational capabilities. Quality utilization of human resource can
be used as a source of competitive advantage for a modern organization. Hence, many modern organizations give particular attention to the
development of special talent management programs which are used as
an instrument for ensuring quality resources of competitive advantage.
As the Author states it is necessary to analyze which odds and problems
human resource and human resource management can strategically offer
and expect, as well as to determine which human factors of success are
more critical than others and how they can be developed (employees as
potential). According to Noe, Hollenbeck, Wright, and Eligh86, this might
among the executive team regarding how the organization might develop
the human resource necessary for such a strategy to be successful.
RELATIONSHIP BETWEEN TWO PROCESSES
According to Bahtijarević-Šiber87, the policy, content, and importance of
human resource management are not only determined by what organizations are, but also by what organizations want to become, i.e., their strategy
for future development and goals that they wish to accomplish. The core of
successful human resource management in that organization is good and
successful support of organizational strategies and achievement of overall
business and strategic goals. Nowadays, there are numerous tools for measuring the level of business strategy implementation. Undoubtely, human
resources provide a significant contribution to the long term results of an
organization through the implementation of its know how.
84
Noe, R. A., Hollenbeck, J. R., Wright, P. M., and Eligh, L. (2016): Strategic Human Resource Management:
Gaining a Competitive Advantage, McGraw-Hill, Toronto, 53.
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 93.
86
Noe, R. A., Hollenbeck, J. R., Wright, P. M., and Eligh, L. (2016): Strategic Human Resource Management:
gaining a competitive advantage, McGraw-Hill, Ottawa, 53.
87
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 138.
85
63
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
According to Rahimić88 strategic management and human resource management represent two of the most important preoccupations of modern
management. Strategic management aims to create a strategy based on
the organization’s opportunity to build and preserve sustainable competitive advantage. According to Leopold and Harris89, when the possibility
of faster imitation by the competitors is more expressed, precisely the
generic and specific competencies of people satisfy with greater certainty
the mentioned criteria in comparison with other resources. In addition,
they also represent the foundation of all organizational changes that are
necessary for adaption to the changeability and uncertainty of the organizational environment.
According to Bahtijarević-Šiber90 strategic management and human
resource management are highly interdependent because of several
reasons:
(1) In this turbulent business environment, people are the key factor and
the lever of a strategy. They are the key strategic advantage, but also the
main factor of limitations to organizational strategies. Every corporate
and business strategy has an important human dimension, therefore it
is necessary to include human resource managers in the entire process
of strategy formulation, as equal members and partners in the strategic
team of top management. This applies to the entire organization, as well
as for every strategic business unit in whose team the human resource
managers must be included as well.
(2) In situational analysis, i.e., the analysis of opportunities and threats in
the environment and strengths and weaknesses in an organization, the
SWOT analysis that is an inevitable part of the strategy formulation process, and the analysis of human resource and trends pertinent to them
are an extremely important segment. This analysis has two important
parts: strategic analysis of the environment and strategic analysis of
organizational capabilities. This analysis helps the organization by choosing a strategy.
(3) Corporate strategy and business strategy significantly determine the
manner of treating human resource and strategic choices of human
resource. Different organizational strategies require different people
and behaviors and different ways of their selection, rewarding, training,
88
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 96.
Leopold, J., and Harris, L. (2009): The Strategic Management of Human Resources, Prentice Hall, Harlow, 234-256.
90
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 139-140.
89
64
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
i.e., the human resource strategy that can adequately respond to the
needs of organizational and business strategies and enable their successful implementation. The possibility of application and success of corporate strategy and business strategies implementation largely depends
on the degree of compliance with the human resource strategy.
(4) Determining functional strategies, including the human resource strategy, is an integral part of organizational strategy. The design of a functional strategy is an integral part of the company’s strategy design and
therefore it must be designed following the corporate and business strategies. Since human resource management cannot be limited to a single function and a special organizational unit that performs it, human
resource strategy must be defined for the entire organization and each
strategic business unit.
(5) Successful strategy implementation largely depends on people and the
success of the human resource function which ensured the necessary
changes in humans, their competencies, and motivation. In addition to
competencies and motivation, successful strategy implementation also
depends on connectivity with a series of other elements in the organization. Few important variables determine success in the implementation of the strategy: organizational structure, organizational culture,
leadership, and other important facts as well.
So far, according to Šušnjar-Štangl and Zimanji91, the strategic management process was presented in terms of a step-by-step procedure,
through five identified steps which initiate different issues of human
resource function, before the decisions on strategy are reached. After
that, a plan of human resource activities necessary for the implementation of that strategy is created.
THE FUNDAMENTAL MODEL OF
STRATEGIC HUMAN RESOURCE MANAGEMENT
Interdependence of strategic management and human resource management can be shown in the basic connection model which takes into
consideration the fundamental issues of human resource management.
Research conducted worldwide has imposed several key issues from this
91
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 77.
65
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
interconnected field, issues that can be answered only with a mutual connection. Fundamental issues of strategic management and fundamental
issues of human resource management can be connected with stages of
the strategic management process, i.e., through the process of shaping
organizational strategies and the role of human resource in them. Therefore, according to Šunje92, factors that influence the human resource policy are:
(1) Situational factors in the external environment or within an organi-
zation are laws and social values, labor market, unions, the marks of
the workforce, business strategies, management philosophy, tasks, and
technology. According to Beer et al.93, these factors can limit the definition of human resource policy, but (to a different degree) they can also
be under the influence of human resource policy.
(2) Interests of stakeholders, including shareholders, managers,
employees, unions, community, and government. Beer et al.94 claims
that the human resource management policy should be influenced
by all stakeholders, or else the organization will not manage to meet
the needs of those stakeholders in a long run and will collapse as an
institution.
According to Leopold and Harris95 stages of the strategic management
process necessarily require an emphasized role of human resource. It is
very important to involve human resource in all stages of the strategic
management process that will result in the crafting of the strategy. That
creates a basis for human resource policy.
All issues that arise regarding the human resource functions should be
addressed through special research and analyses. The role of human
resource function in every stage, according to Bahtijarević-Šiber96, shows
why the immediate inclusion of human resource managers is necessary
for the strategic management team and why the partnership between
them and human resource managers is needed. This is clearly shown in
Figure 2.1.
92
Šunje, A. (2002): Top-menadžer: vizionar i strateg, Tirada, Sarajevo, 215-218.
Beer, M. (Ed.) (1984): Managing Human Assets, The Free Press, London, 13.
Beer, M. (Ed.) (1984): Ibidem, 13.
95
Leopold, J., and Harris, L. (2009): The Strategic Management of Human Resources, Prentice Hall, Harlow, 265.
96
Bahtijarević-Šiber, F. (1999): Strateški menadžment ljudskih potencijala: Suvremeni trendovi i izazovi, Školska
knjiga, Zagreb, 69.
93
94
66
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
FIGURE 2.1. Strategic management process stages and human resource
management roles
Source: From Bahtijarević-Šiber, 2014, 70.
As shown in Figure 2.1., there is a high degree of interaction between
the process of strategy formulation and strategy implementation, i.e.,
between strategic management and human resource management. That
fact conditions and requires constant involvement of:97
(a) The human resource function has in its scope of work all activities, pro-
cesses, policies, and practices pertinent to employees in the organization
and which influence the behaviors, attitudes, and success of employees,
where the most important groups of operations are (1) recruitment and
selection, (2) training, (3) compensation, (4) benefits,(5) employees’
services, (6) relations with employees and social community, (7) personal files, health and safety, and (8) strategic planning,
97
Bogićević-Milikić, B. (2008): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Beogradu, Beograd, 13.
67
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
(b) Human resource manager who possesses general knowledge and
perennial experience in operations of human resource management.
Human resource managers have three important roles in the organization: (1) line function - in leading employees in human resource function, (2) coordination function - coordination of activities
of human resource management in the entire organization, and (3)
counseling function - counseling of line managers in an organization about how to perform activities of human resource management
under their jurisdiction,
(c) Human resource manager who possesses specialized knowledge from
certain fields and is usually the first or the entering job in the career of
human resource managers. Specialization within the human resource
function is usually conducted according to the basic functional areas, in
the entire process of shaping and developing organizational strategies,
not only in the design of functional strategies. This type of work is conducted at the following workplaces: (1) associate for candidate interviewing,
(2) earnings analyst, (3) job analyst, and (4) training associate.
This is formally reflected in the need to have human resource managers
as members of strategic management teams across all levels of an organization: corporate, business, and functional. Human resource managers,
i.e., the organizational unit which holds it, must be members of the team
for the design and development of strategy in all strategic business units.
They are an important source of the necessary information for quality
decision-making on strategic options and the best strategic choice.
Schuler’s 5-P model of
strategic human resource management
Schuler’s 5-P model of strategic human resource management (Philosophy, Policies, Programmes, Practices, Processes)38 represents a comprehensive approach that includes a different philosophy, policy, and practice of human resource. Viewed this way, many activities within the five
“Ps” (HR Philosophy, HR Policies, HR Programs, HR Practices, and HR
Processes) can be strategic. Thus, categorizing these activities as strategic
or not depends upon whether they are systematically linked to the strategic needs of the business, not on whether they are done in long term
rather than the short term or whether they focus on top management
rather than nonmanagerial employees.
68
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
The model is presented in the figure below.
FIGURE 2.2. 5-P model of strategic human resource management
Source: From Schuler, 1992, 20. Reproduced with permission of the Author.
As the Figure 2.2. shows, that this model is permeated by permanent questioning and redefining or shaping of the organizational strategy, internal
and external analysis, and the determining of strategic operational needs
that are a result of operationalization of the mission and vision. Among
key elements of internal analysis is the analysis of the nature of business,
structure, culture, knowledge, skills, etc., while some of the key factors of
external analysis are the situation in the economy and critical factors of
69
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
success in the operation. Their main role is to comprehensively consider
the overall top management plans regarding further operations, their
growth, adjusting to the demands of the environment, and organizational
strategies with which they intend to improve their position in comparison with the competition. One benefit of the 5-P Model is that it shows
the interrelatedness of activities that are often treated separately in the
literature. Another benefit of the 5-P Model is that it highlights just how
significant the strategy-activity link can be. This separate focus, perhaps
necessary for research purposes, tends to understate the complexity of
how human resource activities influence individual and group behavior.
Thus, according to Schuler98, we may gain a greater understanding of this
complex interaction by using the 5-P Model:
Human resources philosophy, the first P in the model, is largely
determined by strategic goals and ways of achieving them, i.e., strategies.
This is a statement of how the organization regards its human resource,
what role the resource play in the overall success of the business, and
how they are to be treated and managed.
Human resources policy, the second P in the model, provides guidelines for action on people-related business issues for actions of solving
business issues and problems related to people who are crucial for business and operational success. The term human resource policy does not
mean human resource policy manual because policy manual may contain statements of general guidelines which employees often perceive as
the manual as a “rule book” prescribing very specific actions permitted
in very specific situations.
Human resources programs or strategies, the third P in the model,
represent coordinated human resource efforts specifically intended to
initiate, disseminate, and sustain strategic organizational change efforts
necessitated by the strategic business needs. These efforts may begin at
the top of the organization and filter down, or they may begin elsewhere.
Human resources practices, the fourth P in the model, represents
and strengthens the models of anticipated behavior, i.e., the leading,
managerial and operational role. The analysis of roles and responsibilities can serve for their better and more efficient defining and organizing, or redirecting or delegating some operations, tasks, and decisions to
lower levels, teams, and the like.
98
70
Schuller, R. S. (1992): Ibidem, 18-32.
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
Human resources processes, the fifth P in the model, refer to the
deals with “how” all the other human resource activities are identified,
formulated, and implemented. Human resource processes seem to vary
along a continuum of extensive participation by all employees to no
participation by any employees in the formulation and implementation
stages e.g., high participation or involvement during formulation, but
low involvement at implementation.
The concept presented here proposes that the framework of strategic
human resource management is made up of all activities affecting the
behavior of individuals in their efforts to formulate and implement the
strategic needs of the business. According to Schuler99, this rather broad
concept carries several significant implications:
First, successful efforts at strategic human resource management begin
with the identification of strategic business needs. There is no doubt that
strategic human resource management can be instrumental in meeting
these needs, then these needs should be systematically analyzed for their
impact on all activity’s human resource management.
Another implication is that, because all employees are affected by strategic human resource management, participatory processes may help
cement the link between strategy formulation and implementation with
human resource practices. While a participatory process may not always
be necessary, there is mounting evidence that employees respond favorably to it when it is an option.
A third implication is that strategic human resource management depends
upon a systematic and analytical mindset. While the effectiveness of this
approach has yet to be formally measured, indicators such as market share,
profitability, and productivity suggest a fair amount of success.
A fourth implication is that the human resource function shares a significant opportunity to impact their organizations’ effort to successfully
launch strategic initiatives. This argues strongly for human resource participation in strategy formulation - if for no other reason than to get a
head start on the systematic analysis of what the strategic needs of the
business are vis-a-vis human resource.
A final implication relates to the formal study of strategic human resource
management. As practitioners do their work, human resource academics
have a significant opportunity to observe organizations in transition, a
real-life laboratory for learning.
99
Schuller, R. S. (1992): Ibidem, 18-32.
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PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
Presented 5-P model of strategic human resource management strives to
highlight the strategic aspects of managing human resource.
Pierce’s 10-C model of
strategic human resource management
Pierce’s 10-C model of strategic human resource management (Comprehensiveness, Coherence, Control, Communication, Credibility, Commitment, Change, Competence, Creativity, and Cost-effectiveness)100
represents a kind of upgrade of the Harvard model that includes four
components commitment, congruence, competence, and cost-effectiveness. Among this new genre of models, these principles of human
resource management are particularly useful for practitioners to determine how strategic human resource management affects three separate
stakeholders. Viewed this way, many activities within the ten “Cs” can be
viewed Outer ring (Comprehensiveness, Cost-effectiveness, Coherence,
and Control), Inner Ring (Credibility, Communication, Creativity, and
Competence), and all leading to the central ring (Change and Commitment). Thus, the model is measurable at the organizational level and the
success of the model lies in the tension and balance between the ten Cs.
The model is presented in the figure below.
FIGURE 2.3. 10-C model of strategic human resource management
Source: From Price, 2007, 648. Reproduced with permission of the Author.
100
72
Price, A. (2007): Human Resource Management in a Business Context, 3rd Ed., Thomson Learning, London, 74.
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
As the Figure 2.3. shows, that this framework incorporates ten dimensions, each conveniently beginning with “C” - in the best management-guru style. Terms beginning with “C” have a considerable track
record in human resource management. These ten dimensions have been
chosen because they are all measurable in some way and the essence of
human resource management lies in the tension and balance between
them. Thus, by using the 10-C Model, this balance between ten dimensions might receive better comprehension:101
Comprehensiveness, the first C in the model, includes all aspects of
people management. The human resource strategy of an organization
must include all the aspects of people management, typically starting
from recruitment to post-separation programs.
Coherence, the second C in the model, implies that human resource
management activities and initiatives must be from a meaningful whole.
Coherence addresses the internal balance and integration of the people
management system.
Control, the third C in the model, ensure performance is consistent with
business objectives. Human resource management policies and practices
must ensure that human resource performance is consistent with business objectives.
Communication, the fourth C in the model, implies that the objectives
of the organization and that of human resource management must be
understood and accepted by all employees. Serious attention must be
given to communicating the organization’s strategic objectives within
which they can be achieved.
Credibility, the fifth C in the model, implies that the staff trusts top
management and believes in their strategies. The human resource practices must build trust between staff and top management and encourage
employees’ belief in human resource strategies.
Commitment, the sixth C in the model, the last C stresses that employees are to be motivated to achieve strategic goals. That is employees’
identification with the organization, integrity, and personal motivation
in their work.
101
Price, A. (2007): Ibidem, 74-77.
73
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
Change, the seventh C in the model, implies continuous improvement
and development essential for survival. The basic premise of human
resource strategy must be that continuous improvement and development are essential for survival.
Competence, the eight C in the model, implies that the human resource
strategy will be crafted in such a way that the organization becomes competent to achieve its objectives with the support of individual competencies. That is employee’s knowledge, skill, and abilities (KSA’s), training,
and development can foster the employee to perform well.
Creativity, the ninth C in the model, implies that the competitive advantage can also come from the ingenuity of staff. Creativity is under-emphasized in management training but it can lead to a new product, novel
applications, and cost savings.
Cost-effectiveness, the tenth C in the model, refers to the reward and
promotion system must be fair. This aspect has attracted considerable
criticism primarily because of the obsessive way in which much of the
top management has pursued “downsizing” at the expense of commitment to their staff.
10-C checklist of HRM is presented in the table below.
TABLE 2.2. 10-C checklist of human resource management
74
Principle
Purpose
Action
1 Comprehensiveness
Includes all management
aspects
People management must
be organized, rather than left
to ad-hoc decisions at local
level
2 Coherence
Human resource
management activities and
initiatives from a meaningful
whole
Clear link between individual
performance/reward and
business needs
3 Control
Ensures performance is
consistent with business
objectives
Participative delegation of
achieved management, with
how an objective is
4 Communication
Objectives understood and
accepted by all employees;
open culture with no barriers
Clear, simple, and justified
strategies; cascading process
of communication with
feedback to the top
5 Credibility
Staff trust top management
and believe in their strategies
Top management is sincere,
honest, and consistent
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
Principle
Purpose
Action
6 Commitment
Employees motivated to
achieve strategic goals
Top management is
committed to their staff
7 Change
Continuous improvement
and evelopment essential for
survival
Flexible people and
working systems; culture of
innovation, skills training
8 Competence
Organization competent
to achieve its objectives dependent on individual
competencies
Resourcing strategies,
selection techniques and
human resource system in
place
9 Creativity
Competitive advantage
comes from unique
strategies
System for encouraging and
tapping employee ideas
10 Cost-effectiveness
Competitive, fair reward and
promotion system
Top management pays
themselves equivalent to staff
Source: From Price, 2007, 74. Reproduced with permission of the Author.
The concept presented here proposes that the framework of strategic
human resource management is made up of all activities affecting the
Harvard model central four Cs where three (commitment, competence,
and cost-effectiveness) are incorporated into ten principles. This rather
broad concept carries several significant implications:102
First, is the attempt to highlight the strategic aspect of human resource
management. A significant lack of the 10-C model is the fact that they
strive to highlight a systematic framework for the arrangement and analysis of the strategic aspects of managing human resource.
Another implication is the advantage of its pragmatic application. 10-C
model of strategic human resource management is regarded as an all-encompassing and pragmatic model.
The final implication is associated with key groups of interest. These
principles are useful to human resource practitioners to determine how
strategic human resource management affects three separate stakeholders: employee, organization, and society.
Presented 10-C Model of strategic human resource management strives
to highlight the strategic aspects of managing human resource.
102
Price, A. (2007): Ibidem, 75.
75
PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
Summary
There is a strong connection between strategic management
and human resource management. At the beginning of the creation of strategic human resource management, there were hard
variables (strategy, structure, system), while soft variables were
neglected (staff, style, skills, shared values). To better understand the connection between strategic management and human
resource management, it is necessary to understand two crucial
terms – strategy-oriented human resource management and
strategically-oriented human resource management. There are
numerous reasons for connecting strategic management and
human resource management. Based on those reasons, the general model of the connection between strategic management and
human resource management is derived, which conditions and
demands permanent involvement of: (a) the function which has
in its scope of work all activities, processes, policies, and practices that are pertinent to the employees in an organization and
which influence the behavior, attitudes, and performances of the
employees, (b) human resource managers who possess general
knowledge and perennial experience in human resource management, and (c) experts for human resource that possess specialized knowledge from certain fields and which is usually the
first job in the career of human resource management. Accordingly, two key models of human resource strategic management
are formed: Schuler’s 5-P model and Price’s 10-C model which
highlight the strategic aspects of human resource management.
76
Relationship between strategic management and human resource management CHAPTER TWO I PART TWO
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PART TWO I CHAPTER TWO Relationship between strategic management and human resource management
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78
Chapter
three
ROLE OF HUMAN RESOURCE IN
STRATEGY FORMULATION
CHAPTER OUTLINE
• Importance of human resource in strategy formulation
• Integration of human resource in strategy formulation
• Organizational mission
• Strategic goals
• Environmental analysis
• Strategic choice
IMPORTANCE OF HUMAN RESOURCE IN
STRATEGY FORMULATION
R
ealizing a strategic change requires continuous implementation of
different activities. Such activities are mostly labeled in literature
as the strategic management process. As Noe, Hollenback, Gerhart,
Wright, and Eligh103 state, the strategic management process is formed
by two different, but mutually associated phases: the strategy formulation phase and the strategy implementation phase. Strategy groups
with a task of strategic planning determine, as part of the strategy
formulation phase, the strategic orientation through the mission, the
goals, external opportunities and threats as well as internal strengths
and weaknesses. Then, they create a set of different strategic options
aimed at achieving the designated strategic orientation.
The organization seeks to implement the selected strategy consistently
during the strategy implementation phase through resource allocation, employment, and the development of a system to coordinate the
behavior of people with the strategic goals. Many organizations believe
that the strategic management process success depends on the level of
involvement of the human resource function.
The human resource function includes several complex steps that must
be coordinated since each step, due to its specific manner, has different
strategic possibilities associated with the organizational strategy. That
means that organization has different strategic options of specific tasks
and activities at its disposal for certain complex activities (steps) in the
process of the shaping human resource management system. In that
sense, according to Noe, Hollenback, Gerhart, Wright, and Eligh104,
based on the activities (steps) in the human resource management
process, the following table gives a sample of strategic options. Each of
these menus refers to a particular functional area of human resource
management.
These menus are presented in Table 3.1.
103
Noe, R. A., Hollenback, J. R., Gerhart, B., Wright, P. M., and Eligh, L. (2016): Strategic Human Resource Management: Gaining a Competitive Advantage, 2nd Ed., McGraw-Hill, Toronto, 50-51.
104
Noe, R. A., Hollenback, J. R., Gerhart, B., Wright, P. M., and Eligh, L. (2016): Ibidem, 58-59.
83
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
TABLE 3.1. Menu of human resource practice options
PLANNING
EFFICIENCY – INNOVATIVENESS
CONTROL – FLEXIBILITY
SOME TASKS – MANY TASKS
FEW TASKS – MANY TASKS
SOME SKILLS – MANY SKILLS
SPECIAL JOB DESCRIPTION – GENERAL JOB DESCRIPTION
STAFFING
EXTERNAL SOURCES – INTERNAL SOURCES
LIMITED SOCIALIZATION – EXTENSIVE SOCIALIZATION
ASSESSMENT OF SPECIFIC SKILLS – ASSESSMENT OF GENERAL SKILLS
EMPHASIS ON TECHNICAL KNOWLEDGE – EMPHASIS ON CONCEPTUAL KNOWLEDGE
TRAINING
FOCUS ON CURRENT JOB SKILLS – FOCUS ON FUTURE JOB SKILLS
INDIVIDUAL ORIENTATION – TEAM ORIENTATION
TRAINING AT WORK – TRAINING OUT OF WORK
SPECIFIC TRAINING FOR THE JOB – GENERAL TRAINING FOR THE JOB
PURCHASE OF SKILLS – CREATION OF SKILLS
TRAIN FEW EMPLOYEES – TRAIN ALL EMPLOYEES
SPONTANEOUS, UNPLANNED – SYSTEMATIC, PLANNED
PERFORMANCE APPRAISAL AND COMPENSATION SYSTEM
UNIFORM ASSESSMENT PROCEDURE – ADJUSTED ASSESSMENT PROCEDURE
BEHAVIOR CRITERIA – RESULTS CRITERIA
ADMINISTRATIVE ORIENTATION – DEVELOPMENTAL ORIENTATION
SHORT-TERM CRITERIA – LONG-TERM CRITERIA
INDIVIDUAL ORIENTATION – TEAM ORIENTATION
SUPERIORS PROVIDE ASSESSMENT – EVERYONE PROVIDES ASSESSMENT
FIXED WAGE AND BENEFITS – VARIED WAGE AND BENEFITS
SHORT-TERM INCENTIVES – LONG-TERM INCENTIVES
EMPHASIS ON INTERNAL EQUALITY – EMPHASIS ON EXTERNAL EQUALITY
WAGE FOR SENIOR JOB – WAGE FOR BEGINNER JOB
INDIVIDUAL INCENTIVES – GROUP INCENTIVES
CENTRALIZED DECISION-MAKING – DECENTRALIZED DECISION-MAKING
CAREER MANAGEMENT
NARROW PATHS OF CAREER – BROAD PATHS OF CAREER
LINEAR PROGRESS – FLEXIBLE PROGRESS
NO PARTNERSHIP WITH ORGANIZATION – PARTNERSHIP WITH ORGANIZATION
Source: Adapted from Noe, Hollenback, Gerhart, Wright, and Eligh, 2017, 58-59.
As shown in Table 5.1. that there is a wide range of human resource management choices available to top management. The organization must
consider them well, consider them in terms of strategic goals, and based
on that choose the ones that fit the strategic goals best. Moreover, as it is
evident, these are implications that are not comprehensive and detailed
in terms of activities of human resource management and, in this regard,
in terms of strategic options.
84
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
According to Bahtijarević-Šiber105, therefore, to achieve harmony
between human resource management and organizational goals, strategic orientations on the market and fundamental concepts related to
human resource management must be determined.
INTEGRATION OF HUMAN RESOURCE
IN STRATEGY FORMULATION
Strategy formulation and human resource management are highly interdependent and interactive processes that significantly influence one
another. Organizational strategy is a framework within which a human
resource management practice must be developed, a practice that will be
highly compatible with chosen strategies across all organizational levels, and which should enable the development of human resource representing a source of organizational competitive advantage. According to
Bahtijarević-Šiber106, human resource is connected in two ways:
Firstly, external orientation includes an analysis of everything taking
place outside the organization. Different treatment and influence are
associated with different types of organizations. Observed from the
human resource perspective, an important segment of external analysis
is the environment analysis of the human dimension and everything taking place or bound to take place in its future. Human resource practice
and programs are notably developed and enhanced based on the environment analysis.
Secondly, the future orientation includes the analysis of everything
bound to take place in the future. Human resource needs to take charge
during the prediction of future implications concerning the organizational business. Observed from the human resource perspective, an
important segment of the future is the prediction of human resource
needs and everything it provides or will provide for the organization
in the future. Human resource practice and programs will be notably
changed and modified based on the future business orientation.
In that sense, strategy formulation set a request before the human
resource function in every organization for the reconsideration of existing programs and activities, i.e., the current practice, and the creation of
105
Bahtijarević-Šiber, F. (1999): Strateški menadžment ljudskih potencijala: Suvremeni trendovi i izazovi, Školska
knjiga, Zagreb, 73.
106
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 142.
85
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
programs that will ensure competencies needed for successful strategy
implementation. Since it is necessary to ensure both internal consistency
and mutual support for programs in different sub-functions, it is necessary to pay great attention to every program, its potential and expected
effects, as well as its relation with programs in other fields, to prevent
conflicting effects. Therefore, in the case of the shaping of jobs and workplaces and organizational culture, teamwork and climate can be encouraged and a rewarding system directed at individual performance and
success brings this into question and cancels out the expected effects.
During the strategy implementation, it is important to know that there
is a high correlation and mutual conditionality between human resource
and strategy formulation. Furthermore, according to Bahtjarević-Šiber5,
it is necessary to determine which human resource practices (planning,
staffing, training, performance appraisal, and compensation system as
well as career management) best fit with the mission, goals, internal
analysis, external analysis, and strategic choice.
Figure 3.1. provides the answer to that question by creating a model that
starts from the organizational mission, strategic goals, internal analysis,
and external analysis, bringing them into direct connection with strategic choice.
FIGURE 3.1. Role of human resource in strategy formulation
Source: Adapted from Noe, Hollenback, Gerhart, Wright, and Eligh, 2020, 51.
86
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
Thereby, every organization will choose, following their orientation, the
strategy that will give the best result in a given moment. To which extent
the organization was effective (indicator that the organization is “doing
the right things”) and efficient (indicator that the organization is “doing
things right”) will best be shown by the result that the organization
achieves in terms of success. Therefore, how capable the organizations
are to follow choosing strategies depend exclusively on the potential of
the organization to respond to the requests of the competition.
ORGANIZATIONAL MISSION
Organizational mission, in its shortest form, is defined as the purpose for
which the organization exists. It should be said that it is difficult to find an
agreed framework on which the organization defines its mission. Accordingly, the mission that the organization has written on paper should be a
linguistic expression of a vision that expresses the purpose of the company’s existence based on strategic challenges limited by a key ideology. A
very useful tool for mission development is based on a concept known
as the “Five Why”. According to Collins and Porras107, the essence of this
tool, which the authors developed more than three decades ago, is the
constant questioning of the originally written mission. It is necessary to
start with a descriptive statement that could read: “We produce products
x or provide services y”. Then it is necessary to ask the question “why is
it necessary?” five times. After a few “whys” it is possible to see how the
real organizational mission comes to the surface. This process works for
any organization that manufactures products or provides services anywhere in the world. The process of defining a mission for a specific job
can perhaps best be understood as thinking about the organization and
its beginning (initial phase). Typical organizations begin with the beliefs,
desires, and aspirations of an entrepreneur (owner). When defining or
redefining an organization’s mission, top management must identify and
accept the legitimate demands of the organization’s other stakeholders.
Each of these stakeholders has good reason to expect, and often demand,
that the organization acts responsibly when it comes to responding to
their requests. Otherwise, the organization will be forced to often redefine
the mission because it necessarily incorporates its interests. Legitimate
demands of organizations must necessarily be recognized in the form of
demands and ­incorporated when ­formulating or redefining the mission.
107
Collins, J., and Porras, J. I. (1996): Building Your Company’s Vision, Harvard Business Review, 8, 65-77.
87
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
According to Belak, Kulović, and Mekić108, when a mission report is prepared based on the above, then it provides managers with unique guidelines that go beyond individual or temporary needs. It enhances the sense
that it is something that represents the common expectations of all levels
in the organization and all employees’ generations.
STRATEGIC GOALS
Organizations like to say they have a mission, but it will not have much
of an impact on its own if every employee fails to understand it. Unfortunately, most employees do not know what exactly is expected of them,
i.e., what are their goals if there is no systematic way to monitor them.
The goals can be defined as values that you need to achieve with certain
resources within a clearly defined time frame. When setting goals, the
human resource should make an active contribution to formulating the
goals that the organization intends to achieve.
A very popular tool that organizations use when formulating goals is
called Management by objectives which ensure the interaction of all
employees when formulating goals. It is considered a very useful technique in formulating strategic goals due to the participation of both
superiors and subordinates, and it is known that such joint goal setting
results in higher quality goals and greater commitment to their operationalization. According to Bahtijarević-Šiber109, after joint planning,
individual action follows, which means performing tasks for the subordinate and providing support for the superior. Once the tasks are
done, the work is controlled together, which includes not only comparing what has been achieved with what is desired but also establishing
the next cycle of management by using goals. Managing by objectives
not only plans work but also results, and every employee knows how
his/her work helps to achieve the strategic goals. When setting goals,
organizations need to follow the popular SMART approach, which is an
abbreviation of the words Specific, Measurable, Action-oriented, Realistic, and Time-limited and the process itself should be systematic and
consistent. According to Doran110, the advantage of this method is that
individual goals are set to support the strategy and the desired direction
108
Belak, V., Kulović, Dž., and Mekić, E. (2022): Balanced Scorecard s primjerima u Excelu, Perfecta, Sarajevo, 68.
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 165-167.
110
Doran, G. T. (1981): There’s a S.M.A.R.T. Way to Write Management’s Goal and Objectives, Journal of Management Review, 70, 35-36.
109
88
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
of the business, and should take into account the work that the employee
does, his knowledge, skills, and abilities. To manage goals successfully, it
is necessary to give the employee basic instructions and guidelines that
the organization follows, present the organizational strategy and present
its contribution to its implementation, propose goals to the employee,
and comment on how to achieve goals. When the employee accepts the
presented goals, the organization develops a system for monitoring their
implementation during pre-set deadlines.
ENVIRONMENTAL ANALYSIS
The environmental analysis is expressed in the form of:
1.
2.
External analysis
Internal analysis
External analysis
An organization examines its environment through external analysis to
determine its position. With this analysis, the organization seeks to consider all relevant factors of the external environment that can determine
the strategic choice. In other words, the object of external analysis is the
analysis of the relevant organizational environment to identify:111
(1) Opportunities. Opportunities represent current or future conditions
and changes within the organizational environment that it uses or can
take advantage of when it wants to improve its competitive position.
Opportunities can be technological changes, increasing standards,
market growth, changing habits, etc.
(2) Threats. Threats represent current or future conditions and changes
in the environment that have or may harm a company’s competitive
position. Threats can be competitive pressure, new competitors, the
emergence of substitutes, etc.
111
Bahtijarević-Šiber, F. (2014): Strateški menadžment ljudskih potencijala: Suvremeni trendovi i izazovi, Školska
knjiga, Zagreb, 86.
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PART TWO I CHAPTER THREE Role of human resource in strategy formulation
According to Bahtijarević-Šiber112, the analysis of the organizational environment, i.e., the analysis of opportunities and threats, leads to an understanding of the factors that significantly determine the provision of ­competitive
advantages. This activity requires a thorough analysis of the organization
that wants to objectively consider the relevant environmental factors. The
political situation, economic aspects, social characteristics, and technological readiness as well as all other factors that may generate opportunities and
threats to the environment should be analyzed.
Internal analysis
An internal analysis of an organization examines the ability of the organization to determine its competitive position. With this analysis, the
organization seeks to consider all relevant factors of the internal environment that can determine the strategic choice. In other words, the object
of internal analysis is the analysis of organizational skills to identify:113
(1) Strength. Strengths are positive or internal circumstances and a
distinctive feature of an organization that provides or can provide it
with a competitive advantage. Strengths can be quality management,
motivated staff, technological know-how, exclusive ownership, strong
image, special marketing, etc.
(2) Weaknesses. Weaknesses are the negative or internal circumstances
and business factors of an organization that reduces or may reduce
its competitive performance. Weaknesses can be bureaucratic culture,
lack of knowledge, low-quality people, outdated technology, poor
image, etc.
According to Bahtijarević-Šiber114, the analysis of organizational abilities,
i.e. the analysis of strengths and weaknesses, leads to an understanding
of organizational distinctive features that provide concrete advantages.
This activity requires a thorough analysis of all organizational processes
such as production sector, marketing sector, finance sector, information
system, management functions, organizational culture, human resource,
and all other factors that can generate opportunities and threats to the
environment should be analyzed.
112
Bahtijarević-Šiber, F. (2014): Ibidem, 87.
Bahtijarević-Šiber, F. (2014): Ibidem, 86.
114
Bahtijarević-Šiber, F. (2014): Ibidem, 87.
113
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Role of human resource in strategy formulation CHAPTER THREE I PART TWO
BOX 3.1. Turnaround strategy artist
When Chrysler received a blow, it was on me to dismiss a large number of people
from the management. I was a regular manager all my life, which enabled me to
perform this task with ease. However, the flow of my thoughts was simple: I need
someone who will make and sell cars. I could not allow myself keeping the young
man who says: If we worked like this we would make a slightly better car. Even if
he was right, we could not allow ourselves the privilege to consider that question.
When bullets start flying over an organization, the management is first to go down.
In the process of all those dismissals, we reached the liquidation of several levels
of management. We defined a number of people who were necessary for participation in the reaching of major decisions. In the beginning, this was done in order
to survive. However, over time, we noticed that when less people manage a major
organization it practically facilitates the work. Eventually it became clear that Chrysler is overcrowded on the level of higher management. That is a lection that our
competitors are yet to learn, but we hope they never will!
Source: From Iacocca, L. and Novak, W. (2011): Iacocca: An Autobiography, Bantam, New York.
STRATEGIC CHOICE
Strategic choice is expressed in the following forms:
(1) Corporate strategy
(2) Business strategy
(3) Human resource strategy
Corporate strategy
Corporate strategy can be defined as a comprehensive general plan of
activities through which a certain organization intends to achieve its strategic objectives in a dynamic environment. In general, a certain business
can try to achieve a greater share of the market by increasing the current
rate of their product use by the consumers, by attracting the buyers of their
competitors, or by evoking the interest of the non-users in their products
or services. That is why it is very important to distinguish between the specificities of certain strategies and their focus because strategy represents
a perception of the existing factors and ways of achieving goals in given
circumstances, hence they should be differentiated:115
115
Šušnjar-Štangl G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 69.
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PART TWO I CHAPTER THREE Role of human resource in strategy formulation
(1) Concentration strategies. These strategies require an organization
to develop training programs that will maintain the given employees’
competencies and a compensation system must enable the stay of people who possess those competencies and capabilities. Assessments in
this strategy are more behavioral since the environment is more or less
safe and behaviors that are necessary for effective work tend to form
through extensive experience.
(2) Growth strategies. These strategies refer to internal growth strategies,
external growth strategies, and cooperation strategies. This strategy
attempts to expand the resources of an organization or strengthen its
market position through the acquisition or creation of a new business.
(a) Internal growth strategy. Growth requires an organization to
constantly recruit, distribute and promote people and expand to
different markets, which demands changes to necessary competencies that the potential employees must possess. Those changes
often consist of combinations of behavior and results. The needs
for training differ, depending on how an organization tends to
grow internally.
(b) External growth strategy. All options for external growth consist of the creation or development of new businesses, and these
businesses often have specific cultures. Hence, many human resource programs face problems of integration and standardization of
practice in different jobs.
(3) Downsizing strategies. Human resource consequences are very
much varied in the case of this strategy because these strategies are
applied by organizations that face serious economic difficulties and
those that want to reduce their costs. All these changes are hard to
implement because the situation is usually such that the best workers
easily find alternative jobs or even voluntarily leave the organization.
In short, according to Šušnjar-Štangl and Zimanji116, the effect of different strategic options on human resource is evident. The selection of any
strategy requires the adaptation of human resource, a step an organization must make to engage in successful strategy implementation. Implications of chosen organizational strategies on human resource are presented in Table 3.2.
116
92
Šušnjar-Štangl G., and Zimanji, V. (2006): Ibidem, 69.
Downsizing
Source: Adapted from Bogićević-Milikić, 2020, 46.
Reduce costs
Reduce working capital
Generate income Redefine goals
Sell the entire capital
Savings
Turnarounds
De-investing
Liquidation
External
growth
Efficiency
Attracting quality
employees
Defining employees’ capabilities
Human resource systems integration
New organizational procedure
Teamwork building
Training negotiating skills
Organizational acquisitions that produce the
same or similar products (new markets access)
Integration
Organizational acquisitions that can offer
Resistance
products (suppliers) or buy products (distributors)
Restructuring
Organizational acquisitions that have nothing
in common with business
Horizontal
integration
Vertical
integration
Concentric
integration
Internal
growth
Employees reduction
Social programs formulation
Motivation programs development
Training leadership skills
Training interpersonal skills
New job search assistance
Behavioral performance
Variable earnings Product value
promotion
Organizational culture
Technical competencies development
Training communications skills
Training negotiating skills
Jobs creation
Disruptive
innovations
Continuous
recruitment
Employees
transfers
Performance assessment
Wage system for keeping people
Teamwork building
Cross-training programs
Specialized programs
Training interpersonal skills
Workplace training
Competencies
availability
Keeping key
employees
Employees
development
Existing products sales
Distribution channels creation Global market
Expansion Existing products modification
New or different products creation
Expansion through joint ventures
Implications
Issues
Market
development
Product
development
Innovation
Joint ventures
Focus
Implementation
Increase market
share
Reduce
Product quality improvement
operational
Productivity or innovations improvement
Concentration
costs
Product and/or service advertising
Create or
maintain a
market niche
Strategy
TABLE 3.2. Implications of chosen organizational strategies on human resource
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
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PART TWO I CHAPTER THREE Role of human resource in strategy formulation
Business strategy
Each type of generic business strategy requires employees with different modes of behavior. The mode of behavior is the behavior that an
employee must exercise as a holder of operations in an organization.
These modes of behavior vary across different dimensions. According
to Šušnjar-Štangl and Zimanji117, there are three types of Porter’s generic
business strategies related to the human resource management:
1.
2.
3.
Cost leadership strategy. Organizations that follow the cost leadership strategy demand from their employees to pay attention to quantity,
have a short-term approach, be comfortable with stability and not be
prone to risk. Organizations that follow the cost leadership strategy tend
to closely define the requested capabilities and invest in the training and
development of the required skills, due to their focus on the efficiency
of production. These organizations develop consistent payment systems
with large differences in payment between superiors and inferiors.
Differentiation strategy. Organizations that follow the differentiation strategy should be creative and cooperative, have a weak interest in
quantity, they should have a long-term approach, tolerate the uncertainty of a situation and accept risks. Employees in such organizations are
expected to exercise the “role of behavior” that includes readiness for
cooperation with others, risk acceptance, new ideas development, and
a balanced approach to the relation work-results.
The focus strategy. The main characteristic of a focusing business strategy is that it is implemented on a focused market segment. Since the
focus strategy derives from the previous two strategies, two focus strategy
sub-types arise: (1) cost focus (cost leadership focus strategy), where the
focus is on low-cost products oriented towards the market segment, and
(2) differentiation focus (differentiation focus strategy), where the focus
is on differentiated products oriented towards a market segment.
In short, according to Šušnjar-Štangl and Zimanji118, every organization
will choose following their orientation the strategy that will give the best
result in a given moment. The choice of business strategies affects the
choice of adequate policies and human resource practices. Implications
of chosen Porter’s business strategies on human resource are presented
in Table 3.3.
117
118
94
Šušnjar-Štangl G., and Zimanji, V. (2006): Ibidem, 69.
Šušnjar-Štangl G., and Zimanji, V. (2006): Ibidem, 69.
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
TABLE 3.3. Implications of chosen Porter’s business strategies on human
resource
Cost leadership strategy
and key HR practices
The focus strategy
and key HR practices
Differentiation strategy
and key HR practices
Low inclusion of employees
in decision-making
Internal recruitment
The low share of variable
earnings in total earnings
Low investments in training
Classic relationship
between employers and
employees
High inclusion of
employees in decisionmaking
Partial external
recruitment
Medium share of variable
earnings in total earnings
Large investments in
training
Cooperation of employers
and employees
High inclusion of employees
in decision-making
External recruitment
A large share of variable
earnings in total earnings
Large investments in
training
Cooperation of employers
and employees
Source: From Bogićević-Milikić, 2019, 18.
In addition to Porter’s generic business strategies, it is important to
mention Schuler and Jackson’s119 business strategies that start from the
thesis that there is a high mutual connection between different business
strategies and human resource management. They distinguish between
three types of differentiating from Porter’s business strategy: differentiation through different products and differentiation through higher quality, neglecting the focusing differentiation on some specific distinctive
strategic characteristic in conditions in which no market is too small.
According to Bahtijarević-Šiber120, there are three types of Schuler and
Jackson’s business strategies related to human resource management:
(1) Innovation strategy. This strategy requires people who work diffe-
rently. Activities related to training focus on continuous development,
the compensation system is moving towards external equality, performance assessment based on results, and preconditions are created for
larger investments in the employee’s development thus encouraging the
development of innovative potential.
(2) Quality enhancement strategy. This strategy requires people who
work more skillfully. The strategy primarily relies on people, thus better
human resource management which ensures behavior modes needed
for its implementation.
(3) Cost reduction strategy. The strategy requires people who work
hard. The aim to achieve larger productivity with cost reduction results
in a significant reduction in the number of employees, wages, education and development, and the like.
119
120
Schuler, R. S., and Susan, E. J. (2007): Strategic Human Resource Management, 2nd Ed., Wiley, London, 47-54.
Bahtijarević-Šiber, F. (2014): Strateški menadžment ljudskih potencijala: Suvremeni trendovi i izazovi, Školska
knjiga, Zagreb, 80.
95
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
In short, according to Bahtijarević-Šiber121 how capable the organizations
are of simultaneously following all three strategies together depends
exclusively on the organizational potential to respond to the requests
of the competition. The choice of business strategies affects the choice
of adequate policies and practices of human resource. Implications of
chosen Schuler and Jackson’s business strategies on human resource are
presented in Table 3.4.
TABLE 3.4. Implications of chosen Schuler and Jackson’s business strategies on
human resource
Innovation strategy and key
HR practices
Quality enhancement
strategy and key HR practices
Cost reduction strategy
and key HR practices
High participation
High participation
Low participation
Unclear job analysis
Clear job analysis
Clear job analysis
External sources
Some external sources
Mostly external sources
Broad career paths
Narrow career paths
Narrow career paths
Criteria of process and results Mostly criteria of results
Criteria of results
Long-term criteria
Mostly short-term criteria
Short-term criteria
Same group criteria
Same group criteria
Mostly individual
criteria
Some certainties of
Some certainties of
Not many certainties of
employment
employment
employment
Many incentives
Some incentives
Only some incentives
Egalitarian wages
Egalitarian wages
Hierarchical wages
Extensive training
Extensive training
Low training
Cooperative working
relations
Cooperative working
relations
Traditional working
relations
Source: From Kramar, 1990, 172.
A comparison of similarities and differences between Porter’s generic
business strategies and Schuler and Jackson’s business strategies presented above allows the identification of several dilemmas that the
human resource face concerning these business strategies. According
to Schuler and Jackson122, some goal-oriented organizations want their
choice to be the innovation strategy and quality strengthening strategy,
or the strategy of quality strengthening and cost reduction, while some
organizations want their choice to be all three strategies together. By all
means, the option that should be selected is the one that best meets the
strategic aims and orientation of the organization.
121
122
96
Bahtijarević-Šiber, F. (2014). Ibidem, 82.
Schuler, R. S., and Jackson, S. J. (2007): Strategic Human Resource Management, 2nd Ed., Wiley, London, 47-54.
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
Human resource strategy
An important task of human resource is to formulate a human resource
strategy that is fully aligned with the organizational strategy. The human
resource strategy is closely aligned with the other strategies listed to
ensure that the right number of people with appropriate qualifications
are in the right place, at the right time and that the organization’s workforce is used effectively. The practice has shown that there are several
ways to link the organization’s strategy and the human resource strategy
that organizations prefer.
The relationship between organizational strategy and human resource
strategy is shown in Figure 3.2.
FIGURE 3.2. Relationship between organizational strategy and human resource
strategy
Source: From Torrington, Hall, Taylor, and Atkinson, 2014, 47. Reproduced with permission of Pearson Inc.
97
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
As it can be seen from the Figure 3.2., the connection between the organization strategy and human resource strategy can be made in one of the
following manners:123
Separation model (A). There is a mutual connection in this model
since the organizational strategy and human resource strategy exist in an
explicit form in the organization. This is a typical picture of thirty years
ago, but it still exists today, particularly in smaller organizations.
Fit model (B). This model represents a growing recognition of the
importance of people in organizational strategy achievement. Employees are recognized as the key to implementing the formulated organizational strategy, whereas the human resource strategy is designed to fit
into the strategy of the organization, which is best described by the three
types of Schuler and Jackson’s business strategies.
Business strategies, associated employee role behavior, and human
resource policies are summarized in Table 3.5.
TABLE 3.5. Business strategies, associated employee role behavior, and human
resource policies
Strategy
Employee role behavior
A high degree of creative
behavior
Longer-term focus
A relatively high
level of cooperative,
interdependent behavior
1 Innovation
A moderate degree of
concern for quality
A moderate concern for
quantity; an equal degree
of concern for process and
results
A greater degree of risktaking; a higher tolerance
of ambiguity and
unpredictability
123
98
Human resource policies
Jobs that require close interaction
and coordination among groups of
individuals
Performance appraisals that are more
likely to reflect longer-term and groupbased achievements
Jobs that allow employees to develop
skills that can be used in other positions
in the firm
Compensation systems that emphasize
internal equity rather than external or
market-based equity
Pay rates that tend to be low, but that
allow employees to be stockholders and
have more freedom to choose the mix
of components that make up their pay
package
Broad career paths to reinforce the
development of a broad range of skills
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed. Pearson,
Harlow, 45-49.
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
Strategy
2 Quality
enhancement
Employee role behavior
Human resource policies
Relatively repetitive and
predictable behaviors
Relatively fixed and explicit job
descriptions
A more long-term or
intermediate focus
High levels of employee participation in
decisions relevant to immediate work
conditions and the job itself
A moderate amount
of cooperative,
interdependent behavior
A mix of individual and group criteria for
performance appraisal that is mostly
short term and results orientated
High concern for quality
A relatively egalitarian treatment of
employees and some guarantees of
employment security
A modest concern for the
quantity of output
Extensive and continuous training and
development of employees
High concern for the
process: low risk-taking
activity; commitment to the
goals of the organization
3 Cost
reduction
Relatively repetitive and
predictable behavior
Relatively fixed and explicit job
descriptions that allow little room for
ambiguity
A rather short-term focus
Narrowly designed jobs and narrowly
defined career paths that encourage
specialization, expertise, and efficiency
Primarily autonomous or
individual activity
Short-term results-orientated
performance appraisals
Moderate concern for
quality
Close monitoring of market pay levels
for use in making compensation
decisions
High concern for the
quantity of output
Minimal levels of employee training and
development
Primary concern for
results; low risk-taking
activity; relatively high
degree
of comfort with stability
Source: From Schuler, and Jackson, 1987, 3. Reproduced with permission of the Authors.
As shown in Table 3.5. there is a high degree of fit between business
strategies and human resource strategies. Based on the above description
of competitive strategy and the employee role behavior, it is possible to
create different human resource policies which fit the strategic options
followed by the organization. This exemplifies the fact that each business
strategy heavily relies on human resource which represents the foundation of sustainable competitive advantage.
99
PART TWO I CHAPTER THREE Role of human resource in strategy formulation
Dialogue model (C). This model recognizes the need for two-way communication and some debates that significantly upgrade the demands of
both strategies. What is demanded in the organizational strategy may not
be viewed as feasible and alternative possibilities need to be reviewed.
The holistic model (D). This model represents the people of the organization being recognized as the key to competitive advantage rather than
just the way of implementing organizational strategy. Human resource
strategy is not just the means for achieving business since this model
suggests some form of integration rather than a slavish response to a
predetermined business strategy.
The HR-driven model (E). This model of human resource strategy is
seen as a primary model since the potential of employees undoubtedly
affects the achievement of any planned strategy implying the necessity
to consider this in the development of organizational strategic direction.
This is reinforced by the idea that if people are the key to competitive
advantage, then such advantage must be exclusively built by taking into
account the strengths of people.
According to Torrington, Hall, Taylor, and Atkinson124 a simple model
that is useful in visualizing different ways in which this relationship may
be played out and has relevance for the newer conceptions of strategy
based on the resource-based view of the firm, as well as earlier conceptions. It must be noted that the holistic model and the HR-driven model
(D and E) show a much closer involvement between organizational and
human resource strategy. Hence, many modern organizations often opt
to follow one of these models.
124
100
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Ibidem, 48-49.
Role of human resource in strategy formulation CHAPTER THREE I PART TWO
Summary
The human resource management process consists of several
complex steps. It is important to emphasize that, due to their specificity, each of them has different strategic possibilities related to
the organizational strategy. That means that an organization has
different strategic options for specific tasks and activities that are
at its disposal for certain complex activities (steps) in the creation process of the entire human resource management system.
A sample of strategic options is given based on activities (steps) in
the process of human resource management. There are different
strategic options for every activity in the human resource management process. The organization should consider them well,
bring them into connection with strategic goals, and based on
that choose those which match the set strategic goals the best.
Of course, organizational strategy and business strategies pose
a challenge to the human resource function in every organization for reconsideration of existing programs and activities, i.e.,
current practice and creation of a program that will best ensure
the competencies needed for successful strategy implementation. To achieve compliance between human resource management policy and organizational goals, strategic orientations on
the market and fundamental concepts related to human resource
management must be defined. Types of strategies are useful for
the classification of ways in which different organizations want
to be competitive in a certain field. However, it is also necessary
to understand the implications of different strategies on human
resource.
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PART TWO I CHAPTER THREE Role of human resource in strategy formulation
References
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing,
Zagreb.
Bahtijarević-Šiber, F. (2014): Strateški menadžment ljudskih potencijala: Suvremeni
trendovi i izazovi, Školska knjiga, Zagreb.
Belak, V., Kulović, Dž., and Mekić, E. (2022): Balanced Scorecard s primjerima u
Excelu, Perfecta, Sarajevo.
Collins, J., and Porras, I. J. (1996): Building Your Company’s Vision, Harvard Business Review, 8, 65-77.
Doran, G. T. (1981): There’s a S.M.A.R.T. Way to Write Management’s Goal and Objectives, Journal of Management Review, 70, 35-36.
Iacocca, L., and Novak, W. (2011): Iacocca: An Autobiography, Bantam, New York.
Kramar, R. (1992): Human resource management: strategy, people, performance,
McGraw-Hill, Sydney.
Noe, R. A., Hollenback, J. R., Gerhart, B., Wright, P. M., and Eligh, L. (2016): Strategic human resource management: Gaining a competitive advantage, 2nd Ed.,
McGraw-Hill, New York, 50-51.
Schuler, R. S., and Susan, E. J. (2007): Strategic Human Resource Management, 2nd
Ed., Wiley, London, 47-54.
Šušnjar-Štangl G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski
fakultet Univerziteta u Subotici, Subotica.
Torrington, D., Hall, L., Taylor, S., and Atkinson, C. (2014): Human Resource Management, 9th Ed. Pearson, Harlow, 45-49.
102
Chapter
four
ROLE OF HUMAN RESOURCE IN
STRATEGY IMPLEMENTATION
CHAPTER OUTLINE
• Importance of human resource in strategy implementation
• Integration of human resource in strategy implementation
• Strategic choice
• Human resource needs
• Human resource practices
• Human resource cabilities
• Human resource actions
• Organizational success
• Emergent strategies
IMPORTANCE OF HUMAN RESOURCE IN
STRATEGY IMPLEMENTATION
A
fter the completion of the strategy formulation and strategy selection phases, the next step is strategy implementation. Understanding the importance of this activity as well as human resource in general is evidenced by another fact. According to Kreitner125, if different
classification attempts of key factors and necessary changes in strategy
implementation are analyzed, it can be concluded that they differ, except
for one thing: all of them, without a difference, mention human resource
as an important precondition for successful strategy implementation. In
addition to competencies and human resource motivation, successful
strategy implementation also depends on connectivity with a series of
other elements in the organization.
The primary concern of human resource in the process of organizational
strategy implementation is the operationalization of strategy within the
entire organization. Namely, to be adequately implemented, the strategy
must be well described and translated into a language that everyone in
the organization understands. In that sense, according to Kaplan and
Norton126, the Balanced Scorecard (BSC) ensures organizations a comprehensive framework in which vision and strategy turn into a coherent system of strategic goals and efficiency measures. The Balanced
Scorecard is an operative system for strategic management. Namely, the
Balanced Scorecard serves for strategy implementation. The Balanced
Scorecard idea is emphasized through four key business perspectives:127
(1) learning and growth, (2) internal process, (3) customer, and (4)
finance. Objectives, measures, targets, and initiatives are defined for each
perspective. The Balanced Scorecard can be designed on the organizational level, on the strategic business unit level, on the lower functions
level, and individual level. Success in strategy implementation depends
on compliance established between Balanced Scorecard across different
levels. When expressing the cause-effect relationship between actions
and reactions, the Balanced Scorecard clearly and consistently conveys
the strategy to everyone inside an organization, thus creating insight for
125
Kreitner, R. (2012): Management, 12th Ed., Cengage Learning, Boston, 209.
Kaplan, N., and Norton, D. (1996): The Balanced Scorecard: Translating Strategy into Action, Harvard Business
School Press, Boston, 5.
127
Kaplan, N., and Norton, D. (1996): Ibidem, 5.
126
107
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
those organizational members who might not get it. Human resource
participation in strategic management process ensures their motivation
for the collective result of the strategy presented through the Strategic
Map. The Strategic Map created through the application of the Balanced
Scorecard is the most powerful way of strategy communication showing
how intangible benefits turn into tangible (often financial) ones. In the
Balanced Scorecard and Strategic Map, human resource is located in the
internal process perspective as well as the learning and growth perspective. Quantitative lead and lag measures allow the Balanced Scorecard
to describe, measure, and eventually adequately lead the value creation
process. This architecture of logical management also creates a common
and understandable reference point for all organizational members.128
According to Kaplan and Norton129, commitment to strategy implementation is the direct consequence of motivation.
BOX 4.1.
The Balanced Scorecard model is developed by Kaplan and Norton. It was first
presented to the broad public in Harvard Business Review in 1992 and thoroughly developed in three books: The Balanced Scorecard from 1992, The Strategy
Maps from 1996, and The Strategy Focused Organization from 2003. Nowadays,
more than half of S&P 500 organizations in the USA use this strategic management model. The popularity of the tool was significantly influenced by the fact
that consulting houses which offer ERP software in the business, such as SAP,
BAAN, ORACLE, and others, approach in this way. The practicality of the tool is
confirmed by the fact that the founders of this model, although they are university professors, established a consulting house Balanced Scorecard Collaborative, which deals with the introduction of this application to more than 50.000
online users. Books like Time-Driven Activity-Based Costing: A Simpler and More
Powerful Path to Higher Profits from 2007 and Cost & Effect: Using Integrated
Cost System to Drive Profitability and Performance from 1998 expanded the
concept to cost control by using the Balanced Scorecard. The book Alignment:
Using the Balanced Scorecard to Create Corporate Synergies from 2016 expands
the concept of BSC to synergy enhancement. Book Execution Premium from
2008 expands the concept of BSC to the compensation system. The authors
continued explaining the concept and published several additional papers
which describe it in more detail.
Source: Adapted from Kaplan, R. S., and Norton, D. P. (1996): The Balanced Scorecard:
Translating Strategy into Action, Harvard Business Review Press, Boston.
128
Kaplan, R. S., and Norton, D. P. (1996): The Balanced Scorecard: Translating Strategy into Action, Harvard
Business Review Press, Boston, 25-37.
129
Kaplan, R. S., and Norton, D. P. (2008): The Execution Premium: Linking Strategy to Operation for Competitive
Advantage, Harvard Business School Press, Boston, Massachusetts, 140-156.
108
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Strategy implementation is a complex process, comprised of many
mutually connected working processes. Strategy implementation is,
hence, the process that puts strategies and policies into action through
the development of programs, projects, budgets, procedures, and rules.
This is a process that marks the activation of a predefined strategic plan
and program. According to Higgins130, implementation requires the substitution of the old strategy with the new one. The new strategy, which is
created by redefining vision and mission, should make the organization
more successful than the competition in the same industry.
INTEGRATION OF HUMAN RESOURCE IN
STRATEGY IMPLEMENTATION
The implementing strategy determines human resource needs. Human
resource is the key factor in the strategy implementation process. According to Bahtijarević-Šiber131, human resource is connected in two ways:
Firstly, existing resource significantly determine the plausibility and
success of strategy implementation in terms of competencies. For strategy
implementation, an organization must have adequate human resource.
Therein, the quality of human resource managers and top management is
of high importance. Fundamental values, attitudes, perceptions, aspirations, and personalities of managers significantly influence concept and
strategy choice, as well as strategy implementation. Besides that, different strategies require different types and different behavior of managers.
Secondly, successful strategy implementation requires changes and
adjustments in human resource programs and systems, since they produce knowledge and other traits, as well as necessary behaviors for successful strategy implementation. Those programs and systems should
become initiators and forces of change. It is frequently pointed out how
reengineering omission of fundamental human resource systems dooms
mission to be rhetoric only. Thereby, opportunities for change and development of different systems are practically unlimited.
In that sense, the human resource should primarily conduct an objective
assessment to be aware of their capabilities regarding the achievement of
previously set goals, by allocating limited resources to critical activities.
Then the strategy turns into a series of guidelines that are used to acquire
130
131
Higgins, J. H. (1994): The Management Challenge, Macmillan College Publishing Company, New York, 173.
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 167-168.
109
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
continuous improvement in the execution of operational business activities and programs. This requires the establishment of different support
systems, aimed at achieving greater efficiency of management and evaluation and control systems, as well as introducing a transparent motivation system i.e., reimbursement of all participants for achieved results,
especially those who stand out with their achievements. Altogether, it
enables the creation of an appropriate organizational culture with full
involvement of human resource in the execution of accepted tasks.
During the strategy implementation, it is important to know about the
high correlation and mutual conditionality between human resource
and strategy implementation. Furthermore, according to Bahtijarević-Šiber132, it is necessary to determine which human resource practices
(planning, staffing, training, performance appraisal, and compensation
system as well as career management) best fit the strategic choice, human
resource needs, human resource capabilities, human resource action,
and organizational success.
Figure 4.1. provides the answer to that question by creating a model
which starts from:133 strategic choice, human resource needs, human
resource capabilities, and human resource action bringing them into
direct connection with organizational success.
FIGURE 4.1. Role of human resource in strategy implementation
Source: Adapted from Noe, Hollenback, Gerhart, Wright, and Eligh, 2020, 78.
132
133
110
Bahtijarević-Šiber, F. (2014): Strateški menadžment ljudskih potencijala: Suvremeni trendovi i izazovi, Školska
knjiga, Zagreb, 83.
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 77.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Thereby, it is necessary to pay attention to mutual compatibility and corroboration, i.e., internal consistency of various human resource (sub)
functions. That especially emphasizes the inclusion importance of top
management and human resource managers who become active participants (partners) in strategy implementation. Such relationship demands
important changes both in the field of top management and in the area
of human resource managers. Therefore, successful strategy implementation requires changes in a whole series of organizational variables or, in
other words, in the overall organizational behavior.
STRATEGIC CHOICE
Strategic choice is directed at finding necessary human resource with
competencies and motivation. The following step is the implementation
of human resource practices which lead to capabilities development
of human resource reflected in possession of competencies and motivation. Emergent strategies enable a change of strategic choice due to
certain changes in one and all mentioned activities. The number and
structure of human resource have always been in function of organizational strategy. According to Noe, Hollenbeck, Gerhart, and Wright134,
during the strategy formulation, management decides on strategic paths,
taking into consideration the mission and vision of the organization,
external opportunities and threats, as well as its internal strengths and
weaknesses. After that, a number of various strategic alternatives are
formed and their effectiveness in achieving the mission and vision of the
organization is compared. What is important is that the human resource
function is entirely connected with the strategic management process,
so that it could identify and react to business ventures that influence the
employees. Human resource function must pay attention to the diversity
of strategies when they choose among four categories within corporative
strategy: concentration, internal growth, external growth and downsizing. For instance, concentration requires preservation of the acquired
human resource competencies, internal growth intensifies activities of
staffing, while external growth points to the problems of integration and
standardization. Growth strategies require additional recruitment and
training. If an organization has the intention to significantly increase the
level of production by introducing new equipment, it should also plan
to hire and train employees who will be able to use it, in order to avoid
134
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Ibidem, 84.
111
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
or reduce technological discontinuity. Namely, after one option within a
growth strategy is chosen, the following step is rightsizing of capital, activities and the number of employees, which in case of employees usually
means downsizing. Downsizing strategy requires simultaneous release of
unnecessary and hiring of necessary human resource. Downsizing strategy
results in dismissing employees and is implemented by human resource
function by eliminating employees who do not contribute to achievement
of organizational goals. When strategic choice is being made, starting point
is always availability of resources and resources which are not sufficiently
used. If organizations have competitive tangible resources while intangible
resources are insufficiently used at the same time, it is most likely that in
choosing the corporate strategy they will tilt towards related diversification, as long as there is possibility for expansion on existing markets that
gravitate towards business core. Accordingly, each new strategic business
unit should shape its strategy. For example, following cost leadership strategy requires efficiency from the employees, while organizations following
differentiation strategy need creative and cooperative employees. After
choosing corporate strategy, the human resource strategy is being chosen.
Bamberger, Biron and Meshoulam135 build a model that characterizes the
two main dimensions of human resource strategy as involving internal
or external labor market and the quantity and quality of control on the
process of labor or the labor force product. These two main dimensions
of human resource strategy yield four different “ideal types” of dominant
human resource strategy: paternalistic strategy, commitment strategy, secondary strategy and ontractual strategy. Each human resource strategy
represents beliefs and values that guide managers toward achieving strategic goals. After the selection of a strategy, human resource function has
a crucial role in its implementation. It defines needs for human resource,
implements activities and defines human resource competencies which
result in outputs of human resource and in organizational success. Finally,
strategic control is getting increasingly important because organizations
demand an insight into the extent and ways in which the chosen principles and methods of human resource function have contributed to the
achievement of the organizational goals. The subject of strategic control,
in the context of human resource management, can be function, practices
and processes. Indicators of success of strategic human resource management can be obtained by evaluating activities of human resource management and by checking their influence on organizational strategy that
all must include the same strategic dimension and mutually complement
each other. This activity can be implemented by both experts within the
organization and external consultants based on different methods.
135
112
Bamberger, P., Biron, M., and Meshoulam, I. (2014): Human Resource Strategy: Formulation, Implementation,
and Impact, Routledge, London, 59-60.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
HUMAN RESOURCE NEEDS
Human resource needs are expressed in the form of necessary:
•
•
Readiness
Motivation
Readiness
For many years, efforts are being invested in theory and practice to find
the best model of human resource readiness development which would
raise the level of successful strategy implementation. That model should
be focused on requests for strategy implementation and enable its implementation. While planning competencies development, it is necessary
to know the importance, position, and role of human resource in the
strategic management process.
The model of competencies development is shown in Figure 4.2.
FIGURE 4.2. The human resource readiness model
Source: From Kaplan, and Norton, 2008, 226. Reproduced with permission of
Harvard Business School Press.
113
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
As it can be seen from the Figure 4.2., four stages can be identified:136
(1) Identify strategic job families. In step one, groups of related stra-
tegic operations are identified. The fundamental assumption is that
all operations and all workplaces are important in every organization
because otherwise, wouldn’t hire and pay to perform them. However,
while managers must develop the potential of everyone in the organization, they must also recognize that some jobs, more than others, have
a much greater impact on strategy.
(2) Define competency profile. In step two, the organization defines the
requirements of these jobs in considerable detail, a task often referred
to as job profiling or competency profiling. A competency profile describes knowledge, skills, and values necessary for operations performance at a certain workplace.
(3) Assessment of strategic readiness. In step three, the organization
assesses current employee capabilities and competencies in the strategic job families. Strategic readiness refers to the alignment of organizational human capital, information capital, and organizational capital
with its strategy.
(4) Human resource development program. In step four, the organization creates programs that should eliminate the competencies gap
created during the assessment process. Solving this issue has led to the
affirmation of two model types:137
(a) The strategic job family model has a primary focus on human resource programs on several key operations important for strategy
implementation. This approach implies that up to 90 percent of
the workforce is not strategic and there should be ignored their
legitimate development needs.
(b) The strategic values model is based on the premise that strategy
is everyone’s job because it involves a set of values and priorities
that should be the job of all organizational members. The strategic
values model provides the basis for revised performance management program objectives for the entire workforce.
136
Kaplan, R. S., and Norton, D. P. (2008): Strategy Maps: Converting Intangible Assets to Tangible Outcomes,
Harvard Business School Press, Boston, 224-243.
137
Kaplan, R. S., and Norton, D. P. (2008): Ibidem, 224-243.
114
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Two different operational approaches are summarized in Figure 4.3.
FIGURE 4.3. Human resource development models
Source: From Kaplan, and Norton, 2008, 235. Reproduced with permission of Harvard
Business School Press.
Figure 4.3. illustrated human resource management development program. Based on the strategic job family model, the organization wanted to
achieve human resource readiness above 90 percent in all eight strategic
job families. The human resource organization developed and managed
the initiatives required to achieve this objective.
According to Kaplan and Norton138, these processes determine a focused
set of strategic job families that enable critical internal processes to be
performed at an exceptional level. Human resource managers can then
develop competency profiles for the strategic job families and apply
standard assessment approaches to measure human resource readiness
and strategic competency gaps. Gaps set the agenda for human resource
development programs that will increase an organization’s strategic
human resource readiness.
Motivation
One of the important organizational tasks is the creation, design, and
implementation of an adequate motivation system which includes the
development and implementation of various strategies for motivating
employees to achieve individual, group, and organizational goals. For
motivation to be used in strategy implementation, management must
138
Kaplan, R. S. and Norton, D. P. (2008): Ibidem, 224-243.
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PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
develop adequate motivation strategies. In this regard, a large number
of strategies of high motivational potential are available and they can be
categorized into two groups:139
(1) Explicit reimbursement. The conceptual basis of an approach to
the reward system can be found in the strategy as a presumption
about causes and consequences (or presumption about the interconnection of goals across perspectives), which leads to the creation
of values. The role of employees in value creation is important and
those who participated in the process should be rewarded for value
creation. If a cost-leadership strategy is selected, the reward system
should stimulate influence on initiators of costs, which in the end
line leads to an increase in competitiveness based on lower costs.
Likewise, if a differentiation strategy is selected, a reward system should stimulate innovation of products and services which make them
different than competitors, provided that the element of differentiation is not lower price.
(2) Implicit reimbursement. Inevitable questions are the weights
whose foundation is determined by the relative importance of individual objectives. Thereby, if the primary goal is to create value in a
short period with small possibilities of rapid effect from investing in
employees’ competencies, financial ratios of efficacy are most likely to
have the biggest weight. Unlike them, organizations whose orientation is directed at the creation of long-term values through innovations and human resource development, give more importance to goals
from the learning and growth perspective as well as internal process
perspective.
According to Kaplan and Norton140, weights that are assigned to certain goals should be revised every year, following strategic priorities. If
product quality is a problem, then goals that refer to the improvement
of processes by introducing the Six Sigma or TQM concepts should be
pondered the most. The calculation of bonuses for higher managerial
levels in the organization, which is conceptually based on the Balanced
Scorecard, is shown in Table 4.1.
139
140
116
Kaplan, R. S., and Norton, D. P. (2008): Ibidem, 224-243.
Kaplan, R. S., and Norton, D. P. (2008): Ibidem, 224-243.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
TABLE 4.1. Incentive compensation based on the balanced scorecard
Perspectives
Financial (60%)
Customers (10%)
Internal (10%)
Learning and Growth (20%)
Measure
Weighting
Margin vs. Competition
ROCE vs. Competition
Cost reduction vs. plan
New Market Growth
Existing Market Growth
Market share
Customer Satisfaction Survey
Dealer Satisfaction Survey
Dealer profitability
Community/Environmental Index
Employee Climate Survey
Strategic Skills Rating
Strategic Information Availability
18.0%
18.0%
18.0%
3.0%
3.0%
2.5%
2.5%
2.5%
2.5%
10.0%
10.0%
7.0%
3.0%
Source: From Kaplan, and Norton, 2008, 218. Reproduced with permission of Harvard
Business School Press.
Table 4.1. shows that 60 percent of total bonuses are related to financial perspective. Thereby, there are five ratios: rate of gain in sales revenue compared to the competition, rate of return on engaged capital
compared to the competition, reduction of costs in relation to the plan,
growth in new markets, and growth in existing markets. The remaining 40 percent of the bonuses refer to ratios of efficacy related to client
perspective, internal process perspective as well as learning and growth
perspective. If organizational strategy requires rapid installation of new
informational technology or employee training, then these ratios should
be pondered the most, emphasizing the importance of target efficacy
achievement in the next year.
HUMAN RESOURCE PRACTICES
The primary concern of human resource in the strategy implementation
process is the strategy operationalization within the entire organization.
The role of human resource in strategy implementation can be observed
through six options of a human resource activity, and the organization can choose the one which best fits strategy implementation. Each
of these options is suitable for certain practices in the human resource
management process:141
141
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 91-95.
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PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
1.
2.
3.
4.
5.
Planning. Every plan of human resource is based on and must be compliant with the strategy directed at achieving and maintaining competitive advantage. In this regard, not only the number of employees
that organization needs is foreseen but also certain competencies that
employees need to possess to timely and adequately respond to set
business goals.
Staffing. Organizations choose different strategic options because
they need different types and different numbers of human resource.
Therefore, the applied strategy will have a direct influence on the type
of human resource who will be recruited and selected.
Training. It is about competencies that are conveyed to human resource through training. Change of strategy usually means the change of
type, level, and combination of competencies. Therefore, the acquisition of competencies that are following strategies is a key element in
strategy implementation.
Performance appraisal and compensations system. Performance
appraisal requires the specification of activities and results that will lead
to successful strategy implementation. The compensation system plays
an important role in strategy implementation. Firstly, a high level of
benefits is related to the fact that competitors will be certain that the
organization is interested in hiring high-quality human resource which
can, however, have a negative influence on overall labor costs. Secondly,
with such wage system, organizations can extract specific activities and
performance levels from human resource.
Career management. Organizations can choose whether to see their
employees as property that should be invested in or as a cost that should
be minimized. They should decide how many employees will participate
in decision making, which rights the employees will have, and which responsibilities will organizations have towards them. How an organization
approaches the reaching of these decisions can result either in the achievement of short-term and long-term goals or in a shutdown.
In short, according to Noe, Hollenbeck, Gerhart, and Wright142, defining
an adequate policy and human resource organizational practice, requires
human resource to assess the adequacy or efficiency of that policy. They
introduce and require constant changes as a foundation of the management philosophy as well as the way of an organization lives. In this way,
with constant and continuous human resource development, an organization contributes to the achieving and strengthening of its competitive
position in the market.
142
118
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Ibidem, 91-95.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
HUMAN RESOURCE CABILITIES
Human resource abilities are expressed in the form of necessary:
•
•
Competencies
Empowerment
Competencies
Active and partner role in the strategic management process also
sets demands in terms of human resource competencies. Competent
employees provide an organization with experience and increased sense
of personal value as well as increase overall organizational success and
contribute to the realization of both the strategic goals and competive
advantage. Human resource is considered competent when they practice
six competencies dimensions:143
1.
2.
3.
4.
143
Expert competency. It is the competency that requires possession of
knowledge, skills, and abilities needed for a task. They must possess
knowledge about human resource management, know theories, principles, methods, and techniques.
Methodical competency. It is the competency that requires possession of knowledge, skills, and abilities necessary for career management,
for teams, associates, or the organization as a whole (for instance, time
management, project management, and leading techniques). They must
possess knowledge in the field of planning, staffing training, performance
appraisal, and compensation system as well as career management.
Social competency. It is the competency that requires possession of
abilities to solve problems together or by standing up against other people (for example, the power of influence, motivational capabilities, and
negotiation techniques). They must be capable of shaping, integrating,
and applying programs as well as human resource systems that develop
organizational ability to create competitive advantage.
Systematic competency. It is the competency that requires understanding the way how social, organizational, and technical as well as
the ability to shape, direct and develop those systems. They must be
capable of creating ultimate programs and human resource practices
for achieving a competitive advantage.
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 36.
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PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
5.
6.
Organization-specific competency. It is the competency that
requires possession of knowledge about the way of work, processes
in the organization, contact person or knowledge base in the organization, as well as about competencies, for them to be used efficiently.
They must possess skills in integrating all human resource functions
and connecting them with the organizational strategy and overall
business activities.
Branch competency. It is the competency that requires possession
of knowledge about current and potential interest groups (stakeholders) which are important for business activity (for example, buyers,
suppliers, competitors, cooperation partners, public institutions), as
well as skills in dealing with those groups. They should possess a comprehensive overview of the human resource practices and their impact
on the achievement of competitive advantage.
According to Rahimić144, a sense of competencies results in personal and
organizational advantages. Negative consequences appear when employees experience the opposite of competencies, such as incompetence, inability, or antisocial behavior. Helping employees feel personal competency and capability helps them to be effective.
Empowerment
Empowerment is considered one of the best human resource management approaches to foster employees’ commitment, competency, creativity, performance, and other positive work-related behaviors. Employees
typically complete their tasks with little supervision and have confidence
to generate new ideas because they feel trusted by their manager. Human
resource is considered empowered when they practice five dimensions
of empowerment:145
1.
144
145
120
Self-efficiency. When employees are empowered, they have a sense
of efficiency or sense they possess the ability and competency for the
successful execution of tasks. In other words, people feel empowered
when they develop a feeling of self-efficiency, having at the same time
a basic level of competency, the will to invest efforts in the execution of
tasks, and the absence of external disturbances to success.
Rahimić, Z. (2010): Ibidem, 36.
Buble, M. (2011): Menadžerske vještine, Sinergija, Zagreb, 171-180.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
2.
3.
4.
5.
Self-determination. Empowered employees also have a sense of
self-determination, which means the feeling they can choose. In other
words, being self-determined means to sense a feeling of choice possibility in launching and regulating own actions.
Personal control. Empowered employees have a sense of personal
control over results and believe that they influence the environment
they work in or the results of their work. In other words, they feel like
they control the consequences of their behavior to connect those consequences with a sense of empowerment.
Meaning. Empowered employees have a sense of meaning. They evaluate the purpose or goal of activities they are involved in and their ideals and standards are considered consistent with what they are doing.
In other words, they bring physical or spiritual energy into the activities
and have the sense of the personal meaning of involvedness.
Trust. Finally, empowered employees have a sense of trust. They are sure
that, although they are in an inferior position, the final result of their activity will be justice and benefit, contrary to harm and hurt. In other words,
even in cases when their superiors do not show integrity and fairness,
empowered employees maintain a sense of personal security.
According to Buble146, a sense of empowerment results in personal and
organizational advantages. Negative consequences appear when employees experience the opposite of empowerment, such as powerlessness,
weakness, and alienation. Helping employees feel personal safety and
professional safety helps them to be more efficient.
HUMAN RESOURCE ACTIONS
Human resource actions are expressed in the form of necessary:
•
•
Behaviors
Results
Behaviors
The basis of every human behavior is individual behavior, which includes
the behavior of an individual as a person which determines their relationship with others in the organization and thus influencing the behav146
Buble, M. (2011): Ibidem, 91.
121
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
ior of the group. Individual behavior is the base of human resource
characteristics. Individual behavior is always defined by three primary
groups of variables:147
1.
2.
3.
Physiological variables. Physiological variables are a group of mental and physical abilities of employees through which business can be
designed and employees can be selected, trained, and developed. To
know the mental and physical abilities of employees, it is necessary to
study business content because business content refers to the description and specification of business, which defines certain mental and
physical abilities of employees.
Psychological variables. The most important psychological variables which have significant influence are motivation, perception (the
process through which an individual gains knowledge about the environment), attitudes (an acquired way of interpreting different events,
i.e. the manner of responding to different objective situations, people,
and ideas), personality (as a unique combination of personal characteristics which derives from how an individual behaves and starts
interactions with others), and learning (as a process through which an
individual masters knowledge, skills, and abilities through experience,
consideration, research, and instruction). Every individual strives to
maintain harmony between all these components, but that is not always
possible, and sometimes the result is an imbalance of emotions, cognition, and actions.
Environmental variables. Effective and efficient behavior requires
knowledge about relevant variables which refer to family, belonging to
religious like-minded people, belonging to a regional or national group,
cultural level, and social class of employees. However, in life and personal development, young people change their social belongingness due
to their competencies development and development of their mindset,
which often results in deviations such as the hiding of social affiliations,
national awareness, religious orientation, etc.
According to Kurtić and Kulović148, since all these variables differ with
different people, it is understandable that different people will behave
differently in the organization. Typically, professional behaviors generate
collaborative work products and elevate the status of an organization,
while poor or unprofessional behaviors have the potential to thwart productivity, decrease morale and create a poor public image. When any
147
148
122
Kurtić, A., and Kulović, Dž. (2011): Poslovno vođenje, Jordan studio i CLPU, Sarajevo, 53-55.
Kurtić, A., and Kulović, Dž. (2011): Ibidem, 53-55.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
member of the team exhibits unprofessional behavior, it has the potential
to create animosity and resentment among the ranks and derail progress
in carrying out strategic objectives.
Results
Efficacy of human resource is aimed to ensure efficient execution of the
entire engagement cycle and human development under the organizational strategy. Unfortunately, for organizations, progress in developing
full analytical capabilities is a slow, multi-year process.
Among many indicators of human resource efficacy, the most frequent
ones are:149
1.
2.
3.
Fluctuation rate. Fluctuation rate is the percentage of employees who
leave the organization during one year and should be made between
total fluctuation rate, voluntary fluctuation rate (those who left at their
request), avoidable fluctuation rate (total number of employees who
left minus unavoidable departures) and employee stability index. If this
index is monitored over several years, it can be determined in which
years of service employment becomes stable, i.e., in which years readiness for fluctuation is the largest.
Absenteeism rate. The absenteeism rate is an indicator of absence
from work during a certain period (usually one year). The term absenteeism itself includes all day long absence from work, as well as late
arrivals to work, leaving work for private reasons, and leaving work too
early despite organizational needs.
Workforce structure. Workforce structure is an indicator of the
employees’ structure in terms of different characteristics, such as qualifications, occupation, gender, age, social origin, etc. It is calculated as
the share of a chosen feature in the total number of employees.
Porter and Steer150 show that dissatisfaction with business content, autonomy absence, and responsibility at work, as well as the unclear working
role, are in positive correlation with fluctuation. As the authors state,
the fluctuation basis relies on unfulfilled employees’ expectations. Also,
the reason may be because they were initially too high and could not be
compensated with the fulfillment of other, less important expectations.
149
Porter, L. W., and Steer, R. M. (1973): Organizational, Work, and Personal Factors in Employee Turnover and
Absenteeism, Psychological Bulletin, 80, 151–176.
150
Porter, L. W., and Steer, R. M. (1973): Ibidem, 151–176.
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PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
ORGANIZATIONAL SUCCESS
Organizational success is expressed in the form of:
•
•
Business Scorecard
HR Scorecard
Business Scorecard
The Business Scorecard approach as a tool for measuring organizational
performance is based on the Balanced Scorecard approach developed
thirty years ago. The core of the scorecard is preserved, namely the
financial perspective, the customer perspective, and the internal process
perspective, while the learning and growth perspective is replaced with
the employee perspective. The authors also replaced terms such as “mission” and “vision” from the center of the scorecard with “strategic focus”
which includes:151
1.
2.
3.
151
124
Operational excellence. The term “operational excellence” describes
a specific strategic approach to the production and delivery of products
and services. The strategic objective following this strategy is to lead its
industry in price and convenience by focusing on delivering its products or services to customers at competitive prices and with minimal
inconvenience.
Product leadership. Organizations that pursue the third discipline,
product leadership, strive to produce a continuous stream of state-ofthe-art products and services. Organizations that push the boundaries
of one value discipline while meeting industry standards in the other
two gain such a lead that competitors find it hard to catch up.
Customer Intimacy. The term customer intimacy means offering
customers leading-edge products and services that consistently enhance
the customer’s use or application of the product, thereby making rivals’
goods obsolete. Organizations that excel in customer intimacy combine
detailed customer knowledge with operational flexibility so they can
respond quickly to almost any need, from customizing a product to
fulfilling special requests.
Treacy, M., and Wiersema, F. (1992): Customer Intimacy and Other Value Disciplines, Harvard Business Review,
71, 84-93.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
The Business Scorecard tool is shown in Figure 4.4.
FIGURE 4.4. Business Scorecard
Source: Adapted from Beatty, Huselid, and Scheiner, 2003, 108.
Strategic choice significantly impacts the definition of customer success,
and business process success and plays an important role in assessing
what the workforce must do to be successful.
This approach yields an HR Scorecard that enables the development of
HR dashboards that capture HR’s contribution.
HR Scorecard
This approach creates an HR Scorecard based on which it is possible to
measure the contribution of human resource to the strategic management process. To make the workforce successful in the context of the
scorecard system, major HR system or HR deliverables targets must be
specified: workforce mindset, competencies, and behavior. The authors
believe that producing these deliverables requires assessment of the following components:152
152
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Mertics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
125
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
1.
2.
153
Assessing HR competencies. Competency assessment refers to
workforce competencies. The authors analyze the assessment of competencies through Ulrich’s classification, which distinguishes four competencies based on their focus on people or processes as well as their
strategic or operational focus. Thus, these roles can be depicted as a
two-by-two matrix that includes:153
• Administrative expert. The administrative expert role envisages
the role of the human resource function as a process, focused on
administrative efficiency in the delivery of human resource transactions. Measures of administrative efficiency are relatively simple,
such as benefits cost per employee, processing cost per transaction,
response time for benefits information requested, etc.
• Employee advocacy. The employee advocacy (formerly “employee
relations”) role focuses on serving the workforce to retain the key
workforce. The measurement of employee advocacy is somewhat
more complex because it includes issues such as retention rates of
critical human capital, the growth rate of human capital core competence, the retention rate of critical human capital during organizational transitions or transformation, the retention rate of “A
players” in “A positions”, etc.
• Strategic role. It implies the position where the human resource
function allows an organization to implement its strategy by aligning HR practice with strategy. Measuring strategic role involves
obtaining information that includes the following: the extent to
which the workforce understands the organizational strategy, line
managers’ feedback on the HR system’s alignment with business
strategy, or the HR workforce’s level of understanding of the criticality of the human resource function’s integration.
• Change agent. The change agent role deals with changing the
organizational culture, which will, in turn, contribute to the change
of the workforce. Measures of a change agent imply, among other
things, the following: the success rate of external hires brought in
to “seed” firm change efforts, employee knowledge of the status of
change efforts, depth of bench strength in change efforts, measures
of employee mindset or mindset shift towards strategic goals and
objectives, and certainly, management’s satisfaction with human
resource contributions to organizational transformation efforts.
Assessing HR practices. The evaluation of HR practices can be assessed against the “best practices” that organizations most often implement through benchmarking tools. Thus, the following key practices
should be considered in the evaluation and assessment:154
Ulrich, D. (1997): Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,
Harvard Business Scholl, Boston, 24.
154
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 91-95.
126
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Planning. Assessing planning practice involves assessing the quality of human resource planning. Planning assessment includes
assessing the quality of anticipating needs for human resource that
the organization intends to use.
• Staffing. Assessing staffing practice involves assessing the quality of recruitment, selection, and orientation process which should ensure quality employees. Staffing assessment includes indicators that focus on the success degree of hiring a new workforce
process.
• Training. Assessment of training practice means assessing the
degree of readiness of the workforce to take a more active role in
the process of strategy formulation and implementation. Training
assessment includes indicators based on the assessment of the
implementation of planned training during one year.
• Performance appraisal and compensation system. Performance appraisal and compensation system practice evaluation
implies the establishment of a practice that involves basing the
compensation system on the achieved workforce performance.
Performance appraisal and compensation systems are the degrees
of achievement of goals that serve as a basis for determining
compensation.
• Career management. Assessing career management practice
involves assessing the progress of the workforce during the entire
duration of their career. Career management measures include
an indicator that monitors the extent to which workforce career
development matches the organizational plans for candidate
development.
Assessing HR system. HR systems should be perceived as fundamental human resource management elements representing a mutually
interconnected unit, for organizational strategy or value proposition.
There are three ways for HR systems assesment:155
• Alignment. Alignment component assessment relates to understanding that different business strategies require different cultures. Alignment measures include indicators that assess how
well the organizational culture is aligned with different strategies
- operational excellence, product leadership, and customer intimacy because there are significant cultural differences required
of the primary workforce that must deliver the organizational
value proposition.
•
3.
155
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Mertics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
127
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
•
•
Integration. Assessing the integration component involves assessing the level of integration of all human resource function activities, since many activities are often not sufficiently integrated,
which significantly reduces the results of the human resource function. Integration measures include indicators that measure the
level of integration of human resource functions with organizational strategy, communications about organizational strategy, and
the design of HR basic system components - measurement, selection, development, and motivation.
Differentiation. A major emerging issue is workforce differentiation which means leveraging the HR system to maximize the
contributions of the core workforce in delivering the organization’s
value proposition. Individual employees possess differing strategic values based on the knowledge, skills, and abilities acquired as
a result of the role they perform within the organization because
their “employment modes” segment cohorts of roles for differential treatment rather than individual employees who differentiate
themselves from others in their cohort based on a given attribute
(or set of attributes).
HR Scorecard tool is shown in Figure 4.5.
FIGURE 4.5. HR Scorecard
Source: Adapted from Beatty, Huselid, and Scheiner, 2003, 109.
128
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Authors believe that to produce workforce deliverables, components of
the HR system must be assessed on HR workforce competencies, the HR
practices used to produce HR’s deliverables, and the HR system’s integration and alignment with the organizational strategy. As the authors
state, HR Scorecard must be linked to the Business Scorecard moving
HR from focusing on doable deliverables. For the workforce to be successful in the context of the scorecard system, it is necessary to specify
major targets of the HR system or HR’s deliverables:156
• Mindset. Mindset component evaluation can be performed using
various surveys. Evaluating mindset includes various indicators such as
those developed by The Gallup Organization, capturing factors impacting productivity, retention, profitability, and customer satisfaction, as
well as explaining a significant amount of variance in firm performance.
• Competencies. Competencies assessment was performed using different approaches, with the key issue still being which competencies to
measure. Competencies assessment should be tied to business success
and pass the “So what?” or “Because of ” test using the following specific business deliverables: operational, customer, and financial success.
• Behavior. Behavior component assessment aims to drive those behaviors with a substantial impact on business process success that led to
customer success and ultimately results in financial success. Behavior
assessment includes a continuous feedback loop that enables the human
resource function to understand what needs to be done to build better
(or different) HR workforce competencies, enhance HR practices and
determine the necessary steps to improve the alignment, integration,
and differentiation of HR systems.
Linking the HR Scorecard tool to the Business Scorecard tool is shown
in Figure 4.6.
156
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Mertics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
129
130
Source: Adapted from Beatty, Huselid, and Scheiner, 2003, 108.
FIGURE 4.6. Linking HR Scorecard tool to Business Scorecard tool
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
According to Beatty, Huselid, and Scheiner157, if an organization wishes
to be successful in delivering on its business model (e.g., the Balanced
Scorecard), it must be held accountable for workforce metrics such as
workforce mindset, competency growth, and behavior in delivering the
unit´s value proposition. Therefore, the authors consider it essential for
human resource function to be assessed on its deliverables, using simple
outcome measures such as the improvement of the workforce mindset,
its competencies, and critical behaviors. Following such an example,
several organizations such as Boeing, General Electric, South-Corp,
United Distillers & Vintners, and Verizon have made significant business improvements.
EMERGENT STRATEGIES
Although a strategy represents a well-thought-out and planned action,
it should be noted that it is quite different in practice. Undoubtedly, one
always starts from the belief that an organization strives to achieve pre-set
strategic goals through a pre-designed strategy. For this reason, strategies
that result from rational decisions are called intended strategies. This is
in line with the definition of strategy as an integrated plan by which an
organization seeks to maintain a previously created competitive advantage. Hence, most of the strategies that organizations formulate when
achieving strategic goals are precisely intended strategies. However, during strategic implementation, certain changes may occur that imposes
the need to redefine the existing strategy so that the organization does
not lose the competitive game. In doing so, according to Mintzberg and
Waters158, it is necessary to keep in mind that, given the turbulence of the
environment, the originally conceived and established intended strategy
will be redefined over time, as both non-realized and emergent strategies appear to lead towards the realized strategy. Emergent strategies
most often represent what organizations are doing as opposed to what
they intend to do. The differences between these strategies have strong
implications for human resource management. The practice so far shows
that the human resource function has mainly dealt with the intended
strategies. Its role was to support top management on issues relevant to
strategy formulation and then take a series of actions to help strategy
implementation. However, since the initiative to redefine, the strategy
157
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Metrics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
158
Mintzberg, H., and Waters, J. (1985): Of strategies, Deliberate, and Emergent, Strategic Management Journal,
3, 257-272.
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PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
usually originates from people at lower organizational levels and who
are a source of creative solutions due to constant communication with
customers, human resource functions are beginning to play a significant
role in encouraging people to give ideas. According to Noe, Hollenbeck,
Gerhart, Wright, and Eligh159, it is often the rank-and-file employees
who provide ideas for new markets, new products, and new strategies.
Human resource management plays an important role in facilitating
communication throughout the organization, and it is this communication that allows for effective emergent strategies to make their way
up to top management. With such communication, emergent strategies
become visible by top management who are increasingly beginning to
appreciate ideas coming from lower organizational levels.
159
132
Noe, R. A, Hollenbeck, J. R., Gerhart, B., Wright, P. M., and Eligh, L. (2016): Strategic Human Resource Management: Gaining a Competitive Advantage, McGraww-Hill, Toronto, 79-80.
Role of human resource in strategy implementation CHAPTER FOUR I PART TWO
Summary
When an organization completes the formulation and strategic
choice steps, the following step is strategy implementation in
everyday work. Strategy implementation is a complex process,
comprised of multiple mutually connected working processes
that are conducted across different levels and areas. Strategy
implementation is, therefore, a process through which strategies and policies are put into action through the development of
programs, projects, budgets, procedures, and rules. That is the
process that marks the activation of the predefined strategic plan
and organizational program. The strategy which an organization
applies determines human resource needs. Human resource
are a key factor in strategy implementation and human resource
management is considered key leverage of management in successful strategy implementation. During strategy implementation, it is important to know that there is high interdependence
and mutual conditionality between human resource and strategy
implementation. Furthermore, it is necessary to define which
practice of human potentials (planning, staffing, training, performance appraisal, and compensation system as well as career
management) best fits the strategic choice, operationalize them,
and then develop them into concrete programs and activity systems. It is important to pay attention to mutual compatibility and
strengthening, or internal consistency of different (sub)functions of human potentials. That especially emphasizes the significance of the need for the inclusion of managers and human
resource managers function, who become important and active
participants (partners) in the stage of strategy implementation.
Such relationship requires important changes both in the field of
top management and in the area of human resource managers.
Therefore, successful strategy implementation requires changes
in a whole series of organizational variables or, in other words, in
the overall organizational behavior.
133
PART TWO I CHAPTER FOUR Role of human resource in strategy implementation
References
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing,
Zagreb.
Bahtijarević-Šiber, F. (2014): Strateški menadžment ljudskih potencijala: Suvremeni
trendovi i izazovi, Školska knjiga, Zagreb.
Bamberger, P., Biron, M., and Meshoulam, I. (2014): Human Resource Strategy: Formulation, Implementation, and Impact, Routledge, London.
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Mertics: Scoring on
the Business Scorecaed, Organizational Dynamics, 32, 107-121.
Buble, M. (2011): Menadžerske vještine, Sinergija, Zagreb.
Higgins, J. H. (1994): The Management Challenge, Macmillan College Publishing
Company, New York.
Kaplan, N., and Norton, D. (1996): The Balanced Scorecard: Translating Strategy
into Action, Harvard Business School Press, Boston.
Kaplan, R. S., and Norton, D. P. (2008): Strategy Maps: Converting Intangible Assets
to Tangible Outcomes, Harvard Business School Press, Boston.
Kaplan, R. S., and Norton, D. P. (2008): The Execution Premium: Linking Strategy to
Operation for Competitive Advantage, Harvard Business School Press, Boston,
Massachusetts.
Kreitner, R. (2012): Management, 12th Ed., Cengage Learning, Boston.
Kurtić, A., and Kulović, Dž. (2011): Poslovno vođenje, Jordan studio i CLPU, Sarajevo.
Minzberg, H. and Waters, J. (1985): Of Strategies, Deliberate and Emergent, Strategic Management Journal, 3, 257-272.
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource
Management: Gaining a Competitive Advantage, 12th Ed., McGraw-Hill, Toronto.
Porter, L. W., and Steer, R. M. (1973): Organizational, Work, and Personal Factors in
Employee Turnover and Absenteeism, Psychological Bulletin, 80, 151–176.
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta
u Sarajevu, Sarajevo.
Treacy, M., and Wiersema, F. (1992): Customer Intimacy and Other Value Disciplines,
Harvard Business Review, 71, 84-93.
Ulrich, D. (1997): Human Reosurce Champions: The Next Agenda for Adding Value
and Delivering Results, Harvard Business Scholl, Boston.
134
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CHAPTER FIVE
STRATEGIC ROLE OF
HUMAN RESOURCE FUNCTION
CHAPTER SIX
STRATEGIC ROLE OF
HUMAN RESOURCE MANAGERS
Chapter
five
STRATEGIC ROLE OF
HUMAN RESOURCE FUNCTION
CHAPTER OUTLINE
• The transformation process of human resource function
• New forms of human resource function
• New roles of human resource function
THE TRANSFORMATION PROCESS OF
HUMAN RESOURCE FUNCTION
T
he role of human resource function in the organization has changed
in parallel with the economic shift from agrarian to manufacturing and services to now. According to Beaty, Huselid, and Shineier160
in our transitioning economy, observers, both inside and outside of
organizations, have come to view an organizational workforce as far
more valuable. In the period when increased attention is paid to human
resource management by top management, the role of the human
resource becomes central to the organization. Three decades ago, traditional human resource function was facing numerous challenges which
demonstrated that many human resource processes can give a direct
contribution to organizational financial outcomes. Welch161, the former
CEO of General Electric and management guru, sums up the new role
of human resource function: “Get out of the parties and birthdays and
enrollment forms.… Remember, HR is important in good times, HR is
defined in hard times.” In the ongoing transformation to services and
information economy, according to Beaty, Huselid, and Shineier162, the
human resource function wanted to be seen as a strategic partner, hopefully, invited to the strategic planning party. But significant challenges
await human resource function once invited to the party because it must
have something to bring to the table. According to Šušnjar-Štangl and
Zimanji163, many people believe that this function has come to an end
and they see the solution in outsourcing, some believe that tasks of this
function should be entirely assumed by managers, and some even think
that the best solution is to keep everything as it is. Human resource function has never been as necessary as today.
In today’s business environment, according to Rahimić164, the human
resource function is not and must not be observed as a purely administrative function. Changes in the environment, as the Author states, have
led to the strengthening of the human resource function in organizational structure, as well as to the expansion of the task list.
160
Beaty, R. W., Huselid, M. A., and Shineier, C. E. (2003): Scoring on the Business Scorecard, Organizational
Dynamics, 32, 107–121.
Frasch, K. B., Shadovitz, D., and Shelly, J. (2010): There’s No Whining in HR, Human Resource Executive Online, 30.
162
Beaty, R. W., Huselid, M. A., and Shineier, C. E. (2003): Scoring on the Business Scorecard, Organizational
Dynamics, 32, 107–121.
163
Šušnjar-Štangl, G., and Zimanji, V. (2006), Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 419.
164
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 119.
161
141
PART THREE I CHAPTER FIVE Strategic role of human resource function
According to Noe, Hollenbeck, Gerhart, and Wright165 given different
roles and activities of the human resource function, it is apparent that
no function can (nor it should) successfully operate across all roles and
in all activities. Although this is a praise-worthy goal, limitations to
time and financial resources, as well as the number of people, require
a human resource manager to make strategic choices about where and
how to allocate those resources, to make them as valuable for the organization as possible. The human resource function must be observed as
a strategic partner which has input in strategy formulation and which
develops and adjusts human resource programs so they would support
strategy implementation.
Human resource function and its activities have long been exposed to
constant changes. Monitoring of human resource function has always
been related to cost centers and the contribution of employees to organizational success was not evident. Due to the overall changes, there are
ongoing discussions on the position of human resource function in an
organization and the ways of transforming it into a highly professional,
efficient, and cost-effective service function with a focus on administrative processes of human resource management or creative function
which contributes to the creation of values in the organization. The aim
of human resource function transformation, according to Rahimić166, is
to increase the effectiveness and efficiency of human resource management in the organization. This happens, as the Author states, by permanently moving from predominantly administrative activity towards
more strategically-oriented activities of human resource which create
value, as shown in Figure 5.1.
FIGURE 5.1. Human resource transformation: from an administrative role to
business partner
Source: From Rahimić according to Oertig, 2007, 22.
165
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 711.
166
Rahimić, Z. (2010): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Sarajevu, Sarajevo, 119.
142
Strategic role of human resource function CHAPTER FIVE I PART THREE
Human resource transformation: from an administrative role to a business partner is presented in Figure 5.1, according to Rahimić167 shows
that in administrative-oriented human resource functions, the majority of activities related to human resource management are still classic
operational processes (data management, data processing, wage calculations, and individual performance evaluation). Conceptual activities,
such as the design of a developmental program of human resource or
counseling in the recruitment and retention of key personnel, require
30 percent of the activity. As the Author states, for strategically-oriented
human resource activities only ten percent remains. In the first transformation step, administration-oriented activities must be reduced in favor
of the overall increase in efficiency and focus on planned and strategic
activities by 50 percent.
In the next step, when employees and line managers accept the automated operational processes of human resource and internalize them,
an additional increase in efficiency and expansion of strategic counseling and counseling for changes can be achieved. Positive cost effects
are achieved primarily thanks to IT harmonization and consolidation,
process standardization, as well as internal or regional effects of the
economy of volume. Also, the know-how transfer is improved and the
introduction of new technologies is facilitated. Today, almost 1.000 apps
for a human resource with an exceptionally wide range, several significant global publications which deal with human resource management
exclusively dedicate one issue per annum to the overview of software
apps. Even here, expert systems play an important role within integrated
human resource management information systems.
There are five main sub-systems of human resource management information systems, and those are:168 (a) sub-system of employees, which is
the basis of human resource information system and within this system
the predetermined data on employees in the organization is collected
and systematically processed, (2) sub-system of collective bargaining contains information about normative regulative and conclusion
of employee labor contract, work engagement, and promotion of each
individual executor, (3) sub-system of human resource cost is very sensitive, and it is important for policy of wages, reimbursements and other
components of employees’ motivation, (4) sub-system of innovation of
employees’ knowledge contains information about knowledge that is
necessary for performing tasks and information about knowledge and
167
168
Rahimić, Z. (2010): Ibidem, 119-120.
Ćamilović, S., and Vujić, V. (2007): Osnove menadžmenta ljudskih resursa, Tekon, Beograd, 308.
143
PART THREE I CHAPTER FIVE Strategic role of human resource function
experiences which employees possess, and (5) sub-system of all other
areas in human resource management consists of numerous groups that
encompass especially important features of all employees, including
information about working hours, accidents at work, health and pension
insurance, innovations and proposals of technical improvements.
Integrated human resource information systems become a mechanism of linking and coordination which ensures that all activities of
human resource are performed based on the same concepts and data
and which ensures that the development of all employees’ competencies important for growth and achievement of competitive advantage
is being monitored.
According to Noe, Hollenbeck, Gerhart, and Wright169, the possibility
of reducing problems of human resource activity and their influence on
organizational operations and human resource within the organization
largely depends on competencies, resourcefulness, and actions of strategic management, the will, capabilities and size of line managers, structure, size, and tolerability of influences from the external environment.
Therefore, issues in the human resource operating process can be reduced
and overcome more easily if managers are more skillful, employees are
more engaged and the external environment more stable.
However, according to Gomez-Meija, Balkin, and Carson170, the process
of human resource function transformation from traditional administrative and recreational function into an important strategic function
and a partner of strategic management is a long, evolutionary process
in which four stages can be identified. After setting the strategic direction and evaluating the human resource effectiveness, human resource
managers can explore how they can contribute to the better competitiveness of the organization. Improvements can be made in several different
ways, some of them being: restructuring, relocation, and information
technologies.
There are four different levels of relations between human resource function
and strategic planning:171 administrative linkage, one-way linkage, two-way
linkage, and integrative linkage, which is shown in Figure 5.2.
169
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 80-81.
170
Gomez-Meija, L. R., Balkin, D. B., and Carson, K. (2019): Managing Human Resource, 9th Ed., Pearson, Harlow,
43-45.
171
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 80-81.
144
Strategic role of human resource function CHAPTER FIVE I PART THREE
FIGURE 5.2. Connections between strategic management process and the human
resource function
1st stage
2nd stage
3 rd stage
4th stage
STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT
PROCESS
PROCESS
PROCESS
PROCESS
HUMAN RESOURCE
FUNCTION
HUMAN RESOURCE
FUNCTION
HUMAN RESOURCE
FUNCTION
HUMAN RESOURCE
FUNCTION
ADMINISTRATIVE
LINKAGE
ONE-WAY
LINKAGE
TWO-WAY
LINKAGE
INTEGRATIVE
LINKAGE
Source: Adapted from Noe, Hollenbeck, Gerhart, and Wright, 2020, 80.
As we can see in Figure 5.2., in the first stage, administrative linkage,
purely administrative role of human resource function has a negative
orientation. Its role is to prevent or reduce to the minimum the human
issues such as fluctuation, absenteeism, strikes, issues with unions, legal
regulations, etc. Administrative linkage is the lowest level of integration,
where the attention of the human resource function is directed at activities from today until tomorrow. The strategic management process is
conducted without any input from the human resource function. At this
level of integration, the human resource function is separated from both
components of the strategic management process - both strategy formulation and strategy implementation.
In the second stage, one-way linkage, based on the best practices, the
human resource function proposes what would be desirable during the
strategy formulation and implementation process. Strategic management process is outside of their interest and specialization. In the case
of a one-way linkage between strategic management and the human
resource function, the first thing to develop is a strategic management
process, and then the human resource function is informed about the
plan. In this simple linkage, it is evident that human resource needs to
be involved in the strategic management process, however, such a linkage does not enable the organization to implement this need or to build
the human resource principles in the strategic management process. This
level of integration usually results in a strategic management process that
the organization is not able to implement successfully.
145
PART THREE I CHAPTER FIVE Strategic role of human resource function
I the third stage, two-way linkage, human resource function is
appreciated and occasionally involved in the strategic management
process, but only as a source of information and eventual warnings
about strategic plans’ implications on human resource. A two-way
linkage allows the consideration of human resource principles during
the process of strategy formulation and implementation. This integration is conducted in three separate steps. First, the strategic management team forms the human resource function in different strategies.
Then human resource managers analyze the implications of human
resource on these strategies and return the results of this analysis to
the strategic management team. After the strategic management team
reaches strategic decisions, a strategic plan as a result of the strategic management process is delivered to human resource managers,
whose task is to develop an applicable program. Therefore, the strategic management process and human resource function are mutually
connected with a two-way linkage.
In the fourth stage, integrative linkage marks convincement of human
resource function can ensure significant strategic advantage. Human
resource function is equally and actively involved in the entire of strategic management process, and in some phases, they even have a crucial and leading role. Integrative linkage is the type of connection that is
based more on continuity than on sequential interaction. In many cases,
a human resource manager is a member of the strategic management
team. Given frequent exchanges of information, organizations with full
connections prefer the human resource function is directly built-in strategy formulation and strategy implementation.
This process of transforming an entirely administrative function into
a strategic one has taken over twenty years to complete and it is still
ongoing in many organizations. Many organizations avoid answering
the question of whether the human resource function creates value or
not. Even many employees within the human resource function do not
want to answer such questions. Practice shows that among respondents
only every sixth manager believes that human resource the function creates value. Although current trends are to see the human resource as the
greatest capital of an organization, many people still see their work with
people as a cost.
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Strategic role of human resource function CHAPTER FIVE I PART THREE
NEW FORMS OF HUMAN RESOURCE FUNCTION
Traditional human resource functions were structured around performing exclusively administrative tasks related to planning, staffing (recruitment, selection, and orientation), performance appraisal and compensation system as well as career management. Each of these areas had its
director who reported to a human resource manager who was often a
member of the top management team. Many activities related to registry,
data change in individual files, performance appraisal, and the like are
followed by a lot of paperwork, countless forms that have to be filled,
proposals and elaborates that have to be written and forwarded to top
management, etc. However, since today’s human resource function is
required to strategically contribute to the results achieved by the organization, it is necessary to reorganize the function itself according to a
more modern structure that can meet the strategic requirements of the
modern environment.
The transformation of human resource functions is based on the idea
that by using informational technologies, adequate programs, expert systems as well as do-it-yourself principles a lot of unnecessary things can
be eliminated, simplified, and accelerated. In simple terms, service users
can directly receive and insert data, direct mutual connections can be
established as well as expert systems which provide the necessary information, advice and answers can be used. New technological fit-out of the
human resource function includes current applications of knowledge,
procedures, and equipment that have never been used before. Artificial
Intelligence already playing an increasingly important role in providing
human resource and computer-aided interviewing, testing, training, etc.
is also being developed. According to Fischer, Schoenfeldt, and Shaw172
a key issue in designing a new the human resource function is to determine which activities should be centralized and which activities should
be outsourced or placed outside of the organization all those activities
which do not create value or which organization does not perform well
enough, rapidly and with low costs.
In the new, integrated and process-oriented function, the roles of human
resource managers change significantly. On one hand, they will increasingly become advisors to line managers, as well as on the other hand
172
Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton
Mifflin Company, Boston-New York, 50-51.
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PART THREE I CHAPTER FIVE Strategic role of human resource function
they will become engineers of knowledge and programmers who will
convey their knowledge into expert systems. It means that the structure
of necessary knowledge changes i.e. expands. In addition to specialized
knowledge about profession and computer literacy, they must be familiar
with all business processes, the entire business, and its entire technology.
This is, in fact, a necessary presupposition of strategic human resource
management.173 Human resource managers are expected to come up
with new solutions for preparing people for new, more demanding tasks
in the future, as well as to assist in solving the problem of a surplus of
employees, especially managers, created by reengineering. Those are
multi-educated professionals who must possess high interpersonal skills,
team-working skills, a strong motive for accomplishments, etc. Moreover, there should be an increase in the role and responsibility of managers for training and provision of support for employees in the process
of achieving goals, as well as in analysis and discussion with employees
about achieved results and ways to improve competencies.
If the human resource function truly contributes to the efficiency of the
organization, a human resource manager gets a new role. They must be
a part of the strategic management team and the human resource function itself should be arranged differently. The new generic structure for
human resource function is divided as follows:174
•
•
•
Centers of expertise. Centers of expertise play a crucial role in effective strategy formulation, with emphasis on highly specialized technical knowledge, and consisting of functional experts in areas such as
procurement, selection, training, and compensation. In an ideal case,
they act as advisors in the development of finished systems and processes for use in the organization.
Business partners teams. Business partner teams contribute to
more efficient and more effective strategy implementation and consist
of human resource generalists who are in charge of a strategic business
unit. They report to line managers and human resource managers.
Centers of administrative services. Centers of administrative services are tasked with efficiently implementing administrative transactions such as payments, responses to complaints and it consists of people
who take care of transactional activities delivery.
The basic function of these three human resource structures is listed in
Table 5.1.
173
174
148
Bahtijarević-Šiber, F. (1999): Management ljudskih potencijala, Golden marketing, Zagreb, 976.
Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton
Mifflin Company, Boston-New York, 50-51.
Incorporate human resource elements into
unit business plan
Support the development of business units
and capacities of individuals
Satisfy the expectations of clients within
activities of human resource
Develop people strategies for their operating
units with line managers
Tailor and implement new practices to fit
business unit needs
Ensure linkage between business units and
problem with people issue
Provide expert technical knowledge about
business partners within specific units
Ensure global and regional presence and
consistency where necessary
Look for new ways of thinking and the best
practices
Develop competencies in human resource and
other staff
Ensure consistency of the overall human
resource
system with the strategy
Conduct exchange of the best practice through
the organization
Source: Adapted from Fisher, Schoenfeldt, and Shaw, 2007, 60.
Work with line managers to
achieve business aims
Business partners teams
Work with ultimate management on policy and
problem-solving strategy
Centers of expertise
TABLE 5.1. The new organization of human resource function
Consulting in the design of systems and the
need for information
Apply information systems to
automatize all necessary services
Enable workforce access to all information
about human resource
Solve specific projects to eliminate unnecessary
work
Drive the consolidation of activities to increase
productivity
Manage all „transactional“ support processes in
the organization
Meet all current service obligation
Centers of administrative services
Strategic role of human resource function CHAPTER FIVE I PART THREE
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PART THREE I CHAPTER FIVE Strategic role of human resource function
As shown in Table 5.1., according to Fisher, Schoenfeldt, and Shaw175
regardless of which particular structure is used, the key element in successfully transforming traditional the human resource function into
modern the human resource function is to find a structure that meets
the pressing needs of the organizational strategy and allows the human
resource function to provide services designed to help the organization
to achieve strategic objectives. Centers of expertise are usually made
up of experts who perform traditional tasks such as recruitment, selection, and orientation. Due to their vast experience, the human resource
most often refers to these experts as advisors in developing almost all the
processes that the organization uses. Business partner teams comprise
human resource generalists who perform the human resource functions.
They usually respond directly to the human resource managers of the
entire organization while assisting line managers in resolving strategic
human resource issues. Finally, Centers for administrative services
consist of people who take care of and deliver transactional activities
throughout the organization. These centers make extensive use of modern IT tools to permanently communicate with their employees.
According to Noe, Hollenbeck, Gerhart, and Wright176, employees in
centers of expertise can develop current functional skills without being
hampered by transactional activities, and generalists can concentrate on
learning about the business environment without having to maintain
expertise in functional specializations. Finally, the centers of administrative services staff can concentrate on efficient delivery of basic services
through business units.
Centers usually use information technologies for delivering services to
employees. Depending on which specific structure has been used, the
key element in transforming traditional human resource management
into strategic human resource management is to find the structure
that complies with organizational strategy needs and to enable human
resource function to ensure services designed to aid the achievement of
strategic goals.
The newly-applied strategic focus of human resource does not mean
that the human resource function can afford administrative effectiveness
175
Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton
Mifflin Company, Boston-New York, 61.
176
Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource Management: Gaining a
Competitive Advantage, 12th Ed., McGraw-Hill, New York, 726.
150
Strategic role of human resource function CHAPTER FIVE I PART THREE
in the background. On the contrary, focusing on savings in the present
competitive environment increases the amount of pressure on human
resource to become as efficient as possible. It is easy to notice that this
new role of human resource management is radically different from the
previous, traditional status quo approach.
Nowadays, human resource management is seen as just another administrative function that is a necessary evil and which only creates costs
for the organization. A new role would mean that all activities of human
resource management should aid the organization in satisfying the needs
of its stakeholders concretely.
NEW ROLES OF HUMAN RESOURCE FUNCTION
In the economy, according to Šušnjar-Štangl and Zimanji177 future and
success of an organization depends on the speed of reaction, agility,
the capability of learning, and competencies of employees. Successful
organizations will be those which will be able to convey their strategy into action quickly, which will manage processes intelligently and
efficiently, which will be able to maximize the loyalty of employees,
and create conditions for the easiest possible adaptation to the changes.
Many authors have assigned different roles to the human resource
function.
However, Ulrich178 from the University of Michigan proposes two dimensions for investigating the role of human resource. The vertical dimension represents the focus of future strategic focus as opposed to day-today operational orientation. Activities are described as people contrary
to processes along the horizontal dimension. This classification indicates
that human resource function should play following roles (with assigned
metaphors): (1) anagement of strategic human resource (strategic partner), (2) management of organizational infrastructure
(administrative expert), (3) management of transformation and
change (change agent), and (4) management of employee contribution (employee champion), as shown in Figure 5.3.
177
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 420.
178
Ulrich, D. (Ed.) (2009): HR Transformation, McGraw-Hill, Boston, 103-105.
151
PART THREE I CHAPTER FIVE Strategic role of human resource function
FIGURE 5.3. Four new roles for the human resource function
Source: From Ulrich, 1997, 26. Reproduced with permission of Harvard Business School
Press.
As shown in Figure 5.3., the human resource function becomes management of strategic human resource (strategic partner) when aids
the top management by harmonizing strategy and practices of human
resource with organization strategy. This role focuses on strategy implementation as a result of matching organizational strategy with human
resource strategy. It is important to confirm once again that over the past
thirty years, the human resource profession has been dedicating increasingly more attention to the role of a strategic partner. The human resource
function gets the role of strategic partner when it participates in strategy formulation and implementation and when they make such human
resource practices that are in harmony with organizational strategy.
The human resource function becomes management of organizational infrastructure (administrative expert) when gives its contribution through the design and build efficient human resource processes
related to planning, staffing, training, performance appraisal, and compensation system as well as career management. Through performing
its role of administrative expert, the human resource function carefully
looks for unnecessary expenditures, enhances efficiency, and continuously seeks new ways of completing the job sooner. To achieve this,
many services of this function are being outsourced through the human
resource function reorganization process. One study suggests that 8 out
of 10 organizations have taken steps to standardize their human resource
processes to prepare for outsourcing at least one human resource activity.
Human resource function becomes management of employee contribution (employee champion) in ensuring high employees loyalty
and their commitment to the strategic goals. The human resource function contributes to the increase of the overall contribution of employees
152
Strategic role of human resource function CHAPTER FIVE I PART THREE
through increasing loyalty and employee champion role. The increasing contribution of employees is very important for every organization
because when employees are competent and loyal, human resource
become a significant resource for the organizational efficiency and effectiveness as well. The human resource function through this role helps in
maintaining a psychological contract between employees and the organization for the achievement of a higher level of satisfaction for employees.
The human resource function becomes management of transformation and change (change agent) when it helps the organization in the
transformation process and adaptation to changed business environment
conditions. Change refers to the ability of the organization to enhance
the design and implementation of initiatives and to the reduction of time
necessary for the implementation of changes. When the organization is
facing transformation, the human resource function helps employees to
abandon the old and adapt to the new organizational culture. The human
resource function which is a successful agent of change must identify
new behaviors which will enable the competitiveness of the organization
in the future in the exact way the management envisaged it.
According to Ulrich179 during the transformation of the human resource
function role, they start by redesigning the human resource department
and upgrading human resource experts. Human resource experts involve
human resource generalists and human resource specialists. A human
resource generalist is a person in charge of several activities related to
human resource management, and a human resource specialist is a person who is specialized in a narrow area of human resource management.
Furthermore, the author of this new view of human resource management gives a short description of the listed four roles of the human
resource function, in the following form.
TABLE 5.2. Four roles of the human resource function
Role description
Role title
Deliverable
Activities
Management of
strategic human
resource
Strategic
Partner
Execution
strategy
Aligning human resource
and business strategy:
“Organizational diagnosis”
Management of
organizational
infrastructure
Administrative
Expert
Building
an efficient
infrastructure
Reengineering organization
processes: “Shared
services”
179
Ulrich, D. (1997): Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,
Harvard Business School Press, Boston, 25.
153
PART THREE I CHAPTER FIVE Strategic role of human resource function
Role description
Role title
Deliverable
Activities
Management of­
employee
contribution
Employee
Champion
Increasing
employee
commitment
and capability
Listening and responding
to employees: “Providing
resources for employees”
Management of
transformation and
change
Change
Agent
Creating a
renewed
organization
Managing transformation
and change: “Ensuring
capacity for change”
Source: From Ulrich, 1997, 25. Reproduced with permission of Harvard Business School
Press.
According to Ulrich180 if the next agenda for creating value is to come,
the new roles for human resource function will have to be defined. In the
past few years, roles for the human resource function were often viewed
as a cost center in the organization. While this role has been downplayed
and even disclaimed with the shift to a strategic focus, its successful
accomplishment continues to add value to a business. Furthermore, as
the author states, to understand new roles of the human resource function more fully, one needs to be considered the deliverables that constitute the outcome of the role, the characteristic metaphor or visual image
that accompanies the role, and the activities the human resource professional must perform to fulfill the role.
The day-to-day application of these roles raises the following question:
Does translating organizational strategies into human resource practices help
business? The question prompted Ulrich181 to provide a three-part answer:
First, the business can adapt to change because the time from conception to strategy implementation is shortened. Thus, the strategy does not
need to be written on a piece of paper, but it is important to reflect the
way that top management sees the future of the organization.
Second, the business can better meet customer demands because its customer service strategies have been translated into specific policies and
practices. Organizations seeking to leverage customers must create processes and train people to connect quickly and easily with those customers’ needs.
Third, the business can achieve financial performance through its more
effective strategy execution. The human resource function plays a key
role in connecting the contribution of employees to the success of the
organization.
180
181
154
Ulrich, D. (1997): Ibidem, 38.
Ulrich, D. (Ed.) (2009): HR Transformation, McGraw-Hill, Boston, 103-105.
Strategic role of human resource function CHAPTER FIVE I PART THREE
After learning the concept of multiple roles of the human resource function, it is very important, according to Šušnjar-Štangl and Zimanji182
to face increasingly high expectations which have assumed the human
resource function must creatively work on finding and implementing
resources for employees, to express their needs, and work on making
employees feel like they are organization owners.
Since business conditions have significantly evolved in the past decade,
so have the human resource functions. This made the researchers Ulrich
and Brockbank183, modify the existing roles and harmonize them with
the demands of the changing organizational environment. Namely, the
authors have modified the existing four roles of strategic partner,
administrative expert, change agent, and employee champion
with new roles and harmonized them with the demands of the changing
organizational environment. Special importance is given to the organizational environment changeability, which has largely influenced existing roles and modification of human resource function. The following
table illustrates the evolution of human resource function roles.
TABLE 5.3. Evolution of human resource function roles
Mid-1990s
Late-2000s
Evolution of thinking
Employee
Champion
Employee
Advocate (EA)
Human Capital
(HC) Developer
Employees are increasingly critical to the
organization. EA focuses on today’s employees.
HC developer focuses on how employees prepare for
the future.
Human resource practices are central to human
resource value. Some human resource practices are
delivered through administrative efficiency (such as
technology), and others through policies, menus, and
interventions, expanding the functional expert role.
Being a strategic partner has multiple dimensions:
business expert, change agent, knowledge manager,
and consultant. Being a change agent represents
only part of the strategic partner role.
The view has expanded to encompass the
dimensions once attributed to either the strategic
partner or the change agent roles.
The sum of the first four roles equals leadership,
but being a human resource leader also has
implications for leading the human resource
function, integrating work of other functions,
ensuring corporate governance, and monitoring the
human resource community.
Administrative Functional
Expert
Expert
Change
Agent
Strategic
Partner
Strategic
Partner
Strategic
Partner
Leader
Source: From Ulrich, and Brockbank 2005, 201. Reproduced with permission of Harvard
Business School Press.
182
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 420.
183
Ulrich, D., and Brockbank, W. (2005): The HR Value Proposition, Harvard Business School Press, Boston, 201.
155
PART THREE I CHAPTER FIVE Strategic role of human resource function
Table 5.3. shows, that the human resource function in the role of
employee advocate must be sure that values in the relationship employees-employees will be based on reciprocity. In addition to the current
role of employee advocate, the human resource function also must
pay attention to the improvement of human capital in the future. The
human resource function as a functional expert is created to monitor
the implementation of human resource practices for them to increase
individual capabilities and organizational creative capacities. As a
strategic partner, the human resource function helps line managers
achieve goals across all levels. The human resource function is in charge
of operations, changes, consulting, and encouraging the know-how in
learning with their partners and line managers so that they could jointly
create values. And when it plays all roles simultaneously, the human
resource function must be a leader, worthy of its fundamental function within and outside of the organization, when the human resource
function plays all roles at the same time, it becomes more influential. The
human resource function produces value for the organization through
strategy implementation, administrative efficiency, employee loyalty,
and cultural changes.
BOX 5.1. The Birdcage
The metaphor of the birdcage vividly describes how just the change of organizational charts in solving organizational problems looks like shaking a cage full of birds.
As with organizational change, shaking cages leads to feathers flying all around but
all you get in the end is- the same number of birds in the cage which sing their own
songs are positioned differently-not upon their perches in the cage.
Source: Adapted from Janićijević, N. (1997): Organizaciona kultura: kolektivni um preduzeća, Ulixes, Novi Sad.
According to Šušnjar-Štangl and Zimanji25 highly changeable competitive environment, the organizations must change constantly and develop
the capacity for transformation. As the authors state, the transformation
refers to the ability of the organization to enhance the design and implementation of initiatives and to the reduction of time necessary for the
implementation of changes.
It is important to confirm once again that the human resource function
is responsible for the fulfillment of roles, the human resource function
carefully looks for unnecessary expenditures, enhances efficiency, and
continuously seeks new ways to complete the job sooner. The human
156
Strategic role of human resource function CHAPTER FIVE I PART THREE
resource function improves the overall efficiency of the organization
through hiring and motivating managers who will increase productivity
and reduce costs. According to Noe, Hollenbeck, Gerhart, and Wright26
human resource function can contribute to the increase of the described
value in several ways:
(a) Contributing to the company’s strategy through an understanding of its
existing and needed human resource and ways human resource practices can give the company a sustainable competitive advantage.
(b) Handling administrative tasks (hiring employees and answering questions about benefits) efficiently and with a commitment to quality
which requires expertise in the particular tasks.
(c) Developing effective human resource systems that help the organization meet its goals for attracting, keeping, and developing people with
the skills it needs which human resource must understand the business
so it can understand what the business needs.
In short, the human resource function helps satisfy the new competitive
conditions in a transforming organization. Traditional efficiency measures focused on economic added value must now be coupled with intellectual capital measures.
157
PART THREE I CHAPTER FIVE Strategic role of human resource function
Summary
In a time when an increasingly bigger deal of attention is paid
to human resource management by top management, traditional
human resource function faces numerous challenges. The need
for environmental analysis in the human resource function is ever
increasing. The main reason why it is necessary to perform environmental analysis in the human resource function is to implement its transformation. The human resource function and its
activities have been exposed to constant changes for a while now.
Observation of the human resource function has always been
related to cost centers and employees’ contribution to the organization’s success was not visible. The transformation process of
the human resource function into the important strategic function
and a partner of strategic management is a long, evolutionary
process consisting of four stages or levels. There are four integration levels of the human resource function and strategic management: administrative linkage, one-way linkage, two-way linkage,
and integrative linkage. In the first stage of the purely administrative role, the human resource function has a negative orientation.
In the second stage, experts in the field insist on their professionalism, expert methods and techniques, and, consequently, a narrow, specialist approach to problems. In the third stage, human
resource managers are appreciated and occasionally involved in
the top management team, but only as an information source and
possible warnings about different implications of strategic management process on human potential. The fourth stage is marked
by the management’s convincement that human resource must
ensure a significant strategic advantage. The transformation process is related to the roles and activities of the human resource
function. Four new roles are emphasized: management of strategic human resource, management of transformation and change,
management of organizational infrastructure, and management
of employee contribution.
158
Strategic role of human resource function CHAPTER FIVE I PART THREE
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Beaty, R. W., Huselid, M. A., and Shineier, C. E. (2003): Scoring on the Business
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Fisher, D. C., Schoenfeldt, F. L., and Shaw, J. B. (2006): Human Resource Management, 6th Ed., Houghton Mifflin Company, Boston-New York.
Frasch, K. B., Shadovitz, D., and Shelly, J. (2010): There’s No Whining in HR, Human
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Gomez-Meija, L. R., Balkin, D. B., and Carson, K. (2019): Managing Human Resource,
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Janićijević, N. (1997): Organizaciona kultura: kolektivni up preduzeća. Ulixes, Novi
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Noe, R. A., Hollenback, J. R., Gerhart, B., and Wright, P. M. (2020): Human Resource
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Ulrich, D., and Brockbank, W. (2005). The HR Value Propositon, Harvard Business
School Press, Boston.
159
Chapter
six
STRATEGIC ROLE OF
HUMAN RESOURCE MANAGERS
CHAPTER OUTLINE
• The transformation process of human resource function
• New roles of human resource managers
NEW RESPONSIBILITIES OF HUMAN RESOURCE MANAGERS
O
ver the past several decades, many authors have given their human
resource managers definitions. There is no generally accepted definition. Uyterhoven184 defines human resource managers as those responsible for a certain human resource department in the middle levels of the
organizational hierarchy. The statement that human resource managers
are “paperclips” of an organization has been given the greatest attention
in the past few decades.185 Although human resource managers used to
be considered exclusively as handlers who carry out the supervision of
lower hierarchical levels, today there is a significant fond of literature
that points out the great value of human resource managers in the strategic decision-making process.186
According to Eisenhardt, Kahwajy and Bourgeois187 top management
agreed that they are the leaders who collectively formulate and execute
strategic steps. On the other side, authors whose interest was attracted by
the human resource management stated that those are managers who act
under the top management team and above the first-level supervisors,
both in the formulation and implementation of strategies.188 The position of human resource managers enables them to launch an unlimited
number of strategic initiatives and implement strategic goals. Managers
on all levels are responsible for human resource management practices,
while human resource managers are responsible for ensuring that the job
is being performed well, not for performing the job themselves.
Based on the aforementioned, according to Šušnjar-Štangl and Zimanji189,
a question arises whether the human resource function is capable of performing these changes on its own. Primary responsibility for this important
transformation is in the hands of top management and human resource
managers individually, who must work on achieving organizational goals.
Top management is primarily responsible for organizational efficiency
and effectiveness. They are competent in achieving profit for owners of the
184
Uyterhoeven, H. (1972): General managers in the middle, Harvard Business Review, 50, 75-85.
Dutton, J. E., and Ashford, S. J. (1993): Selling Issues To Top Management, Academy of Management Review,
18, 397-428.
186
Chandler, A. (1977): The Visible Hand: The Managerial Revolution in American Business. Harvard University
Press.
187
Eisenhardt, K. M., Kahwajy, J. L., and Bourgeois, L. J. (1997): Conflict And Strategic Choice: How Top management Teams Disagree. California Management Review, 39, 42–62.
188
Wooldridge, B., Schmid, T., and Floyd, S. W. (2008). The Middle Manager Perspective on Strategy Process:
Contributions, Synthesis, and Future Research. Journal of Management, 34, 1190–1221.
189
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 420.
185
163
PART THREE I CHAPTER SIX Strategic role of human resource managers
organization, making quality products for consumers, and for creating a
good working atmosphere for employees. As the authors state, they must
integrate the principles of human resource management into the everyday
operations of the organization. To achieve this, they must become human
resource experts. Top management and human resource managers should
build partner relations so that they could build a new, complete function as
soon as possible, the one which would represent a shift of focus of human
resource management from activities to results.
According to Beatty, Huselid, and Scheiner190, human resource managers must have a significant partnership with top management to achieve
success. While it is only reasonable to hold the human resource function accountable for workforce success, top management should also be
held accountable for the same workforce success metrics. Certainly, top
management should be held accountable for financial success, customer
success, business process success, and workforce success.
If their roles are not demarcated, there will be a conflict between human
resource managers and top management. To avoid this, according to
Bogićević-Milikić191, it is necessary to make a clear division of work, as
shown in Table 6.1.
TABLE 6.1. Division of work between top management and human resource
managers
HRM activities
Top management
Human resource managers
Planning
Indicate the type of people
needed in the future
Make a list of employees who should
be promoted
Staffing
Help human resource
function in making job
descriptions in their
organizational unit
Define characteristics
necessary for a certain
job to choose adequate
selection tests
Interview candidates
recruited by the human
resource function and
select candidates
In written form, they make
descriptions and tasks specification for
each workplace based on the proposal
by the manager in charge
Active role in the recruitment process
for vacancies
Perform initial interviews with
candidates and refer good ones to the
manager in charge
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Mertics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
191
Bogićević-Milikić, B. (2020): Uvod u menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u Beogradu, 17.
190
164
Strategic role of human resource managers CHAPTER SIX I PART THREE
HRM activities
Top management
Human resource managers
Training
Perform employee
orientation, instruct and
train new employees
Assess needs and
recommend development
programs for the human
resource function
Pay attention to being
leaders in performing
activities and in developing
teamwork
Evaluate the subordinate’s
efficiency
Evaluate the subordinate’s
career progress
Establish a positive
organizational climate of
mutual respect and trust
Consistently apply legal
regulations
Control the legality of the
dismissal process and
make decisions about
dismissals
Together with the human
resource
the function they participate
in collective bargaining
Prepare materials for training and
orientation
Advise top management about
development programs and make
plans for their future vision
Serve as an information source in the
preparation of quality and teamwork
improvement programs
Create instruments for employee’s
efficiency evaluation and keep their
files
Identify the employee’s dissatisfaction
sources, taking into consideration
all reasons that might lead to union
dissatisfaction
Interpret the contract content to
managers and important laws point
Advise managers on how to dismiss
people without causing the employee’s
rage
Performance
appraisal and
compensation
system
Help the human resource
function by providing
information about the task
complexity
Make decisions on the
stimulation amount for all
subordinates
Create benefits programs
Organize analytic tasks assessment
with the relative complexity
Gather data from competitors about
the earnings
Advise the line managers about
stimulation types
Together with top management create
a general compensation system
Maintain open
communication with
employees
Provide a fair insight into
the security of discipline
and dismissals
Continuously direct
employees in consistent
protection rules
Promptly and objectively
prepare reports on
accidents
Recommend to the top management
some methods for stimulating twoway communication
Develop equal treatment employees’
procedures and instruct managers on
how to implement them
Define protection rules at work and
play an advisory role in instructions
creation for safe handling of
equipment
Promptly conduct accidents
work investigation and give
recommendations on how to report
relevant authorities.
Career
management
Source: Adapted from Bogićević-Milikić, 2020, 17-19.
165
PART THREE I CHAPTER SIX Strategic role of human resource managers
According to Beatty, Huselid, and Scheiner192, it is equally essential to
ensure that top management is held accountable for the same workforce
attributes or firms will not be able to deliver the workforce necessary to
make the business model a reality. Thus, a partnership between top management and human resource managers using the same attributes for the
measurement of workforce success is mandatory to deliver the success of
the business model as intended. Although many literature sources deal
with individual topics of human resource managers and top management, authors have rarely dealt with processes they use to achieve mutual
interaction. The place of interaction that connects top management and
human resource managers is defined as the relationship between those
who lead and those who follow. First and foremost, top management
and human resource managers must process a large amount of information that carry an enormous amount of uncertainty and evaluate what
influence they might have on the organization. According to Dutton and
Jackson193, human resource managers can combine strategic and operational information and present them to the top management in that
merged form. Merging information also includes interpretation and
evaluation of information that is most often presented in the form of
opportunities and threats, as well as the strengths and weaknesses of an
organization. Through the mentioned forms, human resource managers
have an impact on how the information will be interpreted. In that context, the mentioned uncertainty forces them to act jointly when it comes
to the interpretation of information.
Given that human resource managers are “paperclips” between top management and lower levels of the organization, their role is dual. Not only
they are partners with top management, but they are also the representatives of all organizational units.194 Lastly, the interaction between top
management and human resource managers is limited due to the difference in schedules and available time. In this regard, each chance for a
meeting must be used to the maximum to achieve compliance between
their processes.
Interaction between top management and human resource managers
is conducted through the periods of direct contact and periods when
there is no contact. Direct communication can be executed face-to192
Beatty, R. W., Huselid, M. A., and Scheiner, C. E. (2003): New HR Metrics: Scoring on the Business Scorecard,
Organizational Dynamics, 32, 107-121.
193
Dutton, J. E., and Jackson, S. E. (1987): Categorizing Strategic Issues: Links to Organizational Action, The
Academy of Management Review, 12, 76–90.
194
Sims, D. (2003): Between The Millstones: A Narrative Account of the Vulnerability of Middle Managers’ Storying,
Human Relations, 56, 1195–1211.
166
Strategic role of human resource managers CHAPTER SIX I PART THREE
face, over the phone, or by the means of writing, and it is sufficient that
the interaction occurs between one member of top management and a
human resource manager. Communication can be formal, in the form of
scheduled meetings, or informal, in the form of spontaneous encounters
before the meetings.195
Bower196 was one of the first authors to recognize and point out the
importance of human resource managers. He described them as the only
people in an organization that have the position to judge whether strategic issues are being considered in an adequate context. Briefly said,
human resource managers play a coordinating role in which they mediate, negotiate and interpret relationships between organizational, strategic, and operational levels. In other words,197 human resource managers
link vertically connected groups. Likert198 added that they are “paperclips” that connect instructions that come from top management with
the lower-level management that executes them.
When it comes to upward impact, human resource managers possess the
potential to change the strategic course of the organization by interpreting changes that happen in the environment and by proposing new initiatives for change. Merging of information is another upward impact that
is defined as the interpretation and evaluation of information that influences the perception of top management.199 When it comes to downward influences, human resource managers become change agents, they
encourage adaptability and implement strategies.
Many authors see strategy crafting as a process in which top management and human resource managers play an important role. Floyd and
Wooldridge200 noticed that top management, of course, has the strategy conception, but those in the human resource managers and operational level have it as well. The reason behind the importance of human
resource managers in the strategic decision-making process lies in their
position in the organization which enables them an insight into the
events of all interest-influential groups. Eventually, the Authors201 add
195
Dutton, J. E., and Ashford, S. J. (1993): Selling Issues to Top management, Academy of Management Review,
18, 397-428.
196
Bower, J. L. (1970): Managing the Resource Allocation Process. Harvard Business School, Boston.
197
Pugh, D. S., Hickson, D. J., Hinings, C. R., and Turner, C. (1968): Dimensions of organization structure, Administrative Science Quarterly, 13, 65-91.
198
Likert, R. (1961): New Patterns of Management, McGraw-Hill, New York.
199
Dutton, J. E. and Jackson, S. E. (1987): Categorizing Strategic Issues: Links to Organization Action. Academy of
Management Review, 12, 76-90.
200
Floyd, S. W., and Wooldridge, B. (2000). Building Strategy from the Middle, Sage, Thousand Oaks, 41.
201
Floyd, S. W., and Wooldridge, B. (1992): Managing Strategic Consensus: The Foundation of Effective Implementation, Academy of Management Executive, 6, 27-39.
167
PART THREE I CHAPTER SIX Strategic role of human resource managers
that the involvement of human resource managers in the process of strategic decision-making does not only enhance the quality of decisions but
the overall success of the organization as well.
An important precondition for successful strategy formulation is that
all actors who participate in the formulation and implementation of the
strategy ensure a continuous analysis of the situation in the environment
to use the obtained information during the process of making decisions on whether to maintain the current strategic orientation or make
changes following new circumstances in the environment.202
Human resource managers are very important in this context because
they are usually the first ones to spot changes in the environment and
propose new initiatives based on those changes. On the other side, if
they realize that the potential initiative goes against their interests, they
are very likely to sabotage it.203 Considering the aforementioned, it is necessary to integrate information of top management and human resource
managers and use them as a joint and unique base for implementation
of future steps.
In the context of the above stated, Raes, Heijltjes, Glunk, and Roe204
defined the first function of the interaction of top management and
human resource managers as the recognition of discontinuity in the environment. The function refers to the process in which top management
and human resource managers filtrate information about the market,
buyers, suppliers, and partners and create links with the current strategy
in the organization. Since top management and human resource managers have different information from the environment, integration and
filtration of that information are crucial aspects of strategy formulation
and implementation. The second function of interaction is the management of forces for stability and change. In this process, top management
and human resource managers balance the endeavors of each party for
the continuation or change of the current strategy. The final decision is
reached based on harmonized information from the environment.
For a long time in the past, it was considered that the role of human
resource managers in the strategic decision-making process is to provide some basic information and implementation. Although there are
no developed theories on the strategic role of human resource managers,
202
Floyd, S. W., and Lane, P. J. (2000): Strategizing Throughout the Organization: Managing role conflict in strategic renewal. Academy of Management Review, 25, 154–177.
203
Martin, J. A. and Eisenhardt, K. M. (2010): Rewiring: Crossbusiness-unit Collaborations and Performance in
Multibusiness Organizations, Academy of Management Journal, 53, 265–301.
204
Raes, A., Heijltjes, M., Glunk, U., and Roe, R. (2011). The Interface of the Top management Team and Middle
Managers: A Process Model, Academy of Management Review, 36, 102-126.
168
Strategic role of human resource managers CHAPTER SIX I PART THREE
contemporary authors emphasize that their role exceeds implementation. It’s necessary to point out here, at the very beginning of this text,
that every manager has some role relating to human resource management. Just because we do not have the title of a human resource manager doesn’t mean we won’t perform all or at least some of the human
resource management tasks.
NEW ROLES OF HUMAN RESOURCE MANAGERS
In an organization, according to Šušnjar-Štangl and Zimanji205 concrete
division of roles varies significantly and depends on the specificity of
the organizational structure. Human resource managers are those who
ensure that organizational arrangements are following the strategy.
Many authors have assigned different roles to human resource managers.
However, Ulrich206 from the University of Michigan proposes the roles
of human resource managers which focuse on aligning human resource
strategies and practices with strategy formulation and implementation,
as shown in Figure 6.1.
FIGURE 6.1. Four new roles of human resource managers
STRATEGIC PARTNER
CHANGE AGENT
ADMINISTRATIVE EXPERT
EMPLOYEE CHAMPION
Source: From Ulrich, 1997, 24. Reproduced with permission of Harvard Business School
Press.
Human resource managers become a strategic partner when they participate in the formulation of business strategy, when they ask questions
that move strategy to action, and when they design human resource practices that align with organizational strategy. Responsibility for the role of
the strategic partner is shared by a human resource manager and line managers. The role of a strategic partner is related to human resource management and is presented as the most important role of human resource
managers. Strategy implementation refers to interventions executed by
leaders to join actions to strategic goals set by the top management.
205
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 420.
206
Ulrich, D. (1997): Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,
Harvard Business Scholl, Boston, 24.
169
PART THREE I CHAPTER SIX Strategic role of human resource managers
Human resource managers become an employee champion when they
spend time with employees and train and encourage managers in other
departments to do the same. With employee champions who understand the employee’s needs and ensure that those needs are met, overall employee contribution goes up. This role has changed the most in
the recent past when it was traditionally believed that a human resource
manager was solely responsible for employees’ loyalty. Today, a human
resource manager is expected to train line managers to adequately
respond to requests of their subordinates and to educate employees to
know how to solve the emerging problems.
Human resource managers acting as a administrative expert ferret out
unnecessary costs, improve efficiency, and constantly find new ways to
do things better. Successful implementation of human resource tasks, or
the role of administrative expert, is largely the task of a human resource
manager. Top management is aimed at reducing the administrative tasks
of specialized human resource managers. Outsourcing human resource
activities have been an experiment at many organizations that are trying
to find ways to reduce human resource costs while increasing the quality
of services. Information technology uses computers to do much of the
human resource administrative work that users will probably increase.
Human resource managers serving as a change agent honoring the past
means appreciating and respecting the tradition and history of a business while acting for the future. Human resource professionals may need
to facilitate a dialogue about values that will help the organization to gain
sustainability competitive advantage. Human resource managers share
the role of change agent with line managers and external consultants.
Proposing new initiatives as a convincing way of communicating with
top management about strategically important issues is a very important
role of human resource managers in strategic decision-making.
According to Ulrich207 each of the four roles is essential to the overall
partnership role. Too often, business today esteems the human resource
strategic partner and/or change agent roles while discounting the administrative expert and employee champion roles as traditional. Based on
the research in numerous organizations, it could be said that the time has
come for human resource managers to become even more professional
often, labeled as a business partner. The term business partner is narrowly defined as a human resource manager working with top manage207
170
Ulrich, D. (1997): Ibidem, 38.
Strategic role of human resource managers CHAPTER SIX I PART THREE
ment to implement the strategy. Business partners exist in all four roles
defined in the multiple-role model. That can only be achieved through
the simultaneous performance of the described roles. The concept can be
presented in the following way using mathematical symbols:
BUSINESS PARTNER = STRATEGIC PARTNER + ADMINISTRATIVE EXPERT +
EMPLOYEE CHAMPION + CHANGE AGENT
According to Ulrich208 strategic partners (top left cell) are business partners because they align human resource with strategy formulation and
implementation. Administrative experts (bottom-left cell) are business
partners because they save their business money through a more efficient
business model. Furthermore, as the Author states, employee champions (bottom right cell) are business partners because they ensure that
employee contribution to the business remains high. Change agents (top
right cell) are business partners because they help businesses through
the process of organizational change.
A common use of the above-mentioned roles poses the following question: “What is the line managers’ responsibility in each role?” This made
the researcher Ulrich209 ask the crucial question and provide a two-part
answer:
First, human resource managers in a business have unique responsibility
and accountability for ensuring that the deliverables from each role are
fulfilled. If, for example, a rating of 10 represents the complete accomplishment of the deliverables for each role, it is human resource professionals who own the achievement of a 10 rating.
Second, accomplishing the goals and designing the processes for achieving the goals are different issues. While human resource managers own
the accomplishment of each of the four roles, they may not have to do
all the work of the four roles. That is, human resource professionals must
guarantee that a 10 will be achieved for each role, but they don’t have to
do all the work to make that 10 happen.
After learning about the concept of multiple roles of the human resource
function, it is very important, according to Šušnjar-Štangl and Zimanji210,
to find out to which extent the human resource managers are ­responsible
208
Ulrich, D. (1997): Ibidem, 38.
Ulrich, D. (1997): Ibidem, 37.
210
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 425.
209
171
PART THREE I CHAPTER SIX Strategic role of human resource managers
for the execution of the mentioned roles, and to which extent they should
involve the line managers, external consultants, employees, technology,
or other delivery mechanisms for doing human resource work.
This was explored by researchers led by Ulrich211, and it was concluded
that human resource managers are independently responsible for the
results of every role. They can also include assistants in the execution of
tasks that derive from the four described roles. The following figure illustrates the division of responsibility, where the total responsibility equals
to number 10.
FIGURE 6.2. Division of responsibilities between roles
Source: From Ulrich, 1997, 43. Reproduced with permission of Harvard Business School
Press.
Figure 6.2. shows, that human resource managers share responsibility
for the fulfillment of their four new roles with their partners. Point distribution will vary significantly depending on the nature of the monitored organization. The largest change over a certain amount of time
211
172
Ulrich, D. (1997): Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,
Harvard Business Scholl, Boston, 43.
Strategic role of human resource managers CHAPTER SIX I PART THREE
can be recognized if the employee contribution role is monitored. Traditionally, human resource managers were allocated 8 out of every 10
points for the delivery of employee commitment. Today, many organizations are dividing delivery: 2 points for human resource managers, 6
points for line managers, and 2 points for employees, which undoubtedly points to the conclusion that this role has experienced the greatest
change in the recent past. In addition, the observation of the role of efficiency leads to the conclusion that the introduction of information systems significantly increases the efficiency of business operations. Many
organizations today put 5 of the 10 points for infrastructure human
resource managers services into organizations. The remaining 5 points
are divided between outsourcing administrative transactions (3 points)
and information technology (2 points) leading to the conclusion that
information technology is slowly taking over a part of administrative
transactions. Now, the distribution of roles needs to be considered when
implementing a strategy. Responsibility for strategy execution in most
firms today is shared between human resource professionals and line
managers (5 points each). As partners, each brings to the strategy discussion unique skills and talents which can be the source of competitive
advantage. Finally, the role of culture change needs to be considered in
which human resource professionals are asked to deliver approximately
3 of the 10 points, while line managers are allocated 4 points and outside
consultants the remaining 3. The low allocation of 3 points to human
resource professionals indicates that many of them are not fully comfortable or competent in the role of a change agent.
According to Šušnjar-Štangl and Zimanji212, each role of a human
resource manager is crucial in achieving partner relations with managers
on all levels, as well as for contributing to the achievement of strategic
goals. As the authors state, apart from focusing on traditional activities
of human resource management, such as staffing and compensations,
they must dedicate increasingly more attention to results.
It is important to confirm once again that a human resource manager is
responsible for the fulfillment of roles, although he delegates concrete
tasks of human resource to others. It is very important, however, to
select persons to whom the tasks will be delegated. In the future, human
resource managers will not be defined based on what they do, but based
212
Šušnjar-Štangl, G., and Zimanji, V. (2006): Menadžment ljudskih resursa, Ekonomski fakultet Univerziteta u
Subotici, Subotica, 420.
173
PART THREE I CHAPTER SIX Strategic role of human resource managers
on what they bring to the organization - a result that increases the value
of the organization. According to Urlich 213, a human resource manager
can contribute to the increase of the described value in several ways:
(a) A human resource manager must become a partner of top management
and line managers in the strategy implementation by moving planning
from the conference hall to the market reality, taking into consideration
chances and risks for human resource in the environment.
(b) A human resource manager must become an expert in organizing and
executing activities of human resource management. In this way, they
will contribute to the organizational administrative efficiency by reducing costs related to maintenance of the quality of services of human
resource.
(c) A human resource manager must strongly present employees’ interests in relationship with the organization’s management and at the same
time work on increasing the level of employees’ satisfaction, loyalty,
and ability to contribute to the increase in the operations results.
(d) A human resource manager must become continuous change agents,
changes that have incremental character (meaning they are planned
and executed step-by-step), and shape processes and organizational
culture to improve the organization’s change capability.
(e) A human resource manager must become those who facilitate the transition to new ways of work and prepare a human resource for the future
through a focus on strategic activities and ensuring necessary competencies in the future, as well as on finding creative ways to motivate
employees, solve conflicts, accept changes, manage stress, etc.
In short, the task of human resource managers is to find solutions and
contribute to new and best ways of performing work and major processes in a way that maximizes the added value and satisfaction of consumers. They also play an important role in preparing people for major
and drastic changes that might shock people and cause resistance.
213
174
Ulrich, D. (1997): Human Reosurce Champions: The Next Agenda for Adding Value and Delivering Results,
Harvard Business Scholl, Boston, 11-17.
Strategic role of human resource managers CHAPTER SIX I PART THREE
Summary
The transformation of human resource function must include
the transformation of human resource managers’ positions.
Their traditional competencies cannot answer all the demands
put forth by the transformed human resource function. Their
responsibilities must be clearly defined by the top management
responsibilities. The human resource manager’s task is to find
solutions and contribute to new and best ways of performing
work and major processes in a way that maximizes the added
value and satisfaction of consumers. Such differentiation ensures
human resource managers take up position number two in the
organization, right next to the top manager. Accordingly, human
resource managers take over four completely new roles: (1) strategic partner, (2) change agent, (3) administrative expert, and (4)
employee champion. Human resource managers share responsibility for the fulfillment of their four new roles with their partners. Human resource managers must fulfill both operational
and strategic roles, they must be both police and partners and
they must take responsibility for goals. Each of the four stated
roles taken over by a human resource manager is of equal importance. The role employee champion has changed the most in the
recent past. Today a human resource manager is expected to
train line managers to adequately respond to requests of their
subordinates and to educate employees to know how to solve the
emerging problems. Successful implementation of the administrative role of the expert is largely the task of a human resource
manager. Human resource management on the organizational
level is aimed at reducing the administrative tasks of specialized
human resource managers. Responsibility for the role strategic
partner is shared by a human resource manager and line managers. Human resource managers share the role change agent with
line managers and external consultants. Each role of a human
resource manager is crucial in achieving partner relations with
managers on all levels, as well as for contributing to the strategic
goals achievement.
175
PART THREE I CHAPTER SIX Strategic role of human resource managers
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184
INDEX
A
Branch competency 120
Buble, M. 49, 77, 120, 121, 134
Absenteeism rate 123
Business partner 31, 142, 143, 170
Administrative linkage 145
Business partners teams 148, 149
Administrative expert 126, 152, 155, 170
Business Scorecard 10, 124, 125,
Alignment 108, 127
127, 129, 130, 131, 141, 159, 164,
Ansoff, I. H. 47, 77
166
Armstrong, M. 33, 39
Business strategy 35, 51, 63, 64, 91,
Ashford, S. J. 163, 167
94, 95, 99, 100, 126, 169
Assessing HR competencies 126
Assessing HR practices 126
C
Assessing HR system 127
Career management 118, 127, 165
Assessment of strategic readiness
Carson, K. 28, 39, 144, 159
114
Cascio, F. W. 34, 39
Atkinson, C. 26, 27, 40, 59, 78, 98,
Catalytic period 20
100, 102
Centers of administrative services
B
Bahtijarević-Šiber, F. 89, 90, 95, 96
Balkin, D. B. 28, 39, 144, 159
Bamberger, P. 112, 134
Beamont, P. B. 32, 39
Beatty, R. W. 125, 127, 129, 131, 134,
164, 166
Becker, G. F. 62, 77
Beer, M. 66, 77
Behavior 129
Belak, V. 88, 102
Berthel, J. 62, 77
Biron, M. 112, 134
Bogićević-Milikić, B. 17, 31, 67, 93,
95, 164, 165
Bohlander, W. G. 58, 78
Boljanović-Đorđević, J. 25
Boudreau, J. W. 39
Bourgeois, L. J. 163
Bower, J. L. 167
148, 149
Centers of expertise 148, 149, 150
Certo, P. 51, 77
Certo, S. 51, 77
Chandler, A. 60, 61, 77, 163, 176, 180
Change 31, 72, 74, 75, 118, 126, 153,
154, 155, 171
Change agent 126, 151, 153, 155, 170
Chruden, J. H. 58, 78
Coherence 72, 73, 74
Collins, J. 87, 102
Commitment 27, 72, 73, 75
Communication 72, 73, 74, 167
Compensation system 28, 84, 86, 92,
95, 98, 108, 110, 118, 119, 127, 133,
142, 152
Competence 53, 54, 72, 74, 75
Competencies 10, 93, 119, 129
Comprehensiveness 72, 73, 74
Concentration strategies 92
Configuration approach 28
185
INDEX
Control 72, 73, 74, 165
Core Competence 53, 54
Corporate strategy 10, 64, 91
Cost-effectiveness 72, 74, 75
Cost leadership strategy 94, 95, 112
Cost reduction strategy 95, 96
Coulter, M. 48
Crawford, J. 58, 77
Creative techniques 55
Creativity 72, 74, 75
Credibility 72, 73, 74
Currie, G. 176, 180
Customer Intimacy 124, 134
Customer Relationship Management
53, 54
Ćamilović, S. 143
Expert competency 119
Explicit reimbursement 116
External analysis 10, 89
External growth strategy 92
D
G
Define competency profile 114
DeNisi, A. S. 58, 77
Dessler, G. 33, 39, 176
Devanna M. A. 35, 36
Dialogue model (C) 100
Differentiation 94, 95, 128
Differentiation strategy 94, 95
Digital tools 55, 57
Doran, G. T. 88, 102
Downsizing strategies 92
Dutton, J. E. 163, 166, 167, 176
Gap analysis 55, 56
Gerhart, B. 23, 29, 33, 39, 83, 102,
110, 111, 117, 118, 126, 132, 134,
142, 144, 150, 159
Glunk, U. 168
Goals 186
Gomez-Meija, L. R. 28, 39, 144, 159
Grant, D. 58, 77
Griffin, R. W. 58, 77
Growth strategies 92, 111
E
Eisenhardt, K. M. 163, 168
Eligh, L. 63, 77, 83, 102, 132
Emergent strategies 10, 105, 111,
131
Employee advocate 155, 156
Employee champion 151, 152, 155, 170
Empowerment 10, 119, 120
Environmental variables 122
Environmental analysis 10, 81, 89
Evans, P. A. L. 62, 77
Experience curve 55
186
F
Fisher, D. C. 25, 28, 39, 147, 148, 150,
159
Fit model (B) 98
Five forces 55, 56
Floyd, S. W. 167, 168
Fluctuation rate 123
Fombrun, C. J. 35, 36, 39
Frasch, K. B. 141, 159
Functional expert 148, 155, 156
Fusing 20
H
Hall, L. 26, 27, 35, 37, 40, 59, 78, 98,
100, 102
Harris, L. 23, 25, 39, 64, 66, 77
Harrison, R. 39
Heijltjes, M. 168
Hendry, C. 33, 37, 39
Hickson, D. J. 167
Higgins, J. H. 109, 134
Hinings, C. R. 167
Hollenback, J. R. 23, 29, 33, 39, 83,
102, 110, 111, 117, 118, 126, 134,
142, 144, 150, 159
INDEX
HR Scorecard 10, 124, 125, 128, 129,
130
Human capital 27, 31, 114, 126, 156
Human resource abilities 119
Human resource activities 10, 105,
121
Human resource development
program 114
human resource management 5, 6,
9, 15, 17, 18, 19, 20, 21, 22, 23, 24,
25, 26, 28, 29, 30, 31, 32, 33, 34, 35,
36, 37, 38, 39, 40, 45, 57, 58, 59, 60,
61, 62, 63, 64, 65, 66, 67, 68, 69, 71,
72, 73, 74, 75, 76, 77, 78, 83, 84, 85,
94, 95, 101, 102, 112, 115, 117, 119,
120, 127, 131, 133, 141, 142, 143,
144, 148, 150, 151, 153, 158, 163,
164, 169, 173, 174
Human resource needs 10, 85, 105,
113
Human resource practices 10, 105,
117, 155
Human resources philosophy 70
Human resources policy 70
Human resources practices 70
Human resources processes 71
Human resources programs or
strategies 70
Human resource strategy 10, 27, 91,
97, 100
Human resource transformation 142,
143
Huselid, M. A. 125, 127, 129, 131, 134,
141, 159, 164, 166
I
Iacocca, L. 91, 102, 181
Identify strategic job families 114
Implicit reimbursement 116
Innovation strategy 95, 96
Integration 81, 85, 93, 105, 109, 128
Integrative linkage 146
Internal analysis 10, 89, 90
Internal growth strategy 92
J
Jackson, S. E. 34, 40, 58, 59, 78, 166,
167
Janićijević, N. 30, 34, 156
K
Kahwajy, J. L. 163
Kane, B. 58, 77
Kaplan, N. 107, 134
Knowledge Management 53, 54
Kovač, J. 77
Kramar, R. 102
Kreitner, R. 107, 134
Kulović, Dž. 21, 88, 122,
Kurtić, A. 48, 50, 122
L
Lake, G. 17, 19, 40
Lane, P. J. 168
Leader 155
Learning Organization 53, 54
Legalistic period 20
Legge, K. 77
Leopold, J. 23, 25, 39, 64, 66, 77
Likert, R. 167
Losey, M. R. 17, 19, 40
M
Martin, J. A. 168
Mašić, B. 47, 52, 53, 54, 55
McKee, K. D. 20, 39
McMahon, C. 40
Meaning 121
Mechanistic period 19
Mekić, E. 88
Meshoulam, I. 112, 134
187
INDEX
Methodical competency 119
Milkovich, G, T. 39
Mindset 129
Mintzberg, H. 50, 131
Mission 31, 47, 49, 50, 58, 69, 83, 86,
87, 88, 109, 111, 124
Motivation 10, 93, 113, 115
Možina, S. 25
N
Nel, P. S. 33, 39
Noe, R. A. 23, 29, 33, 39, 63, 77, 83,
102, 110, 111, 117, 118, 126, 134,
142, 144, 150, 159
Norton, D. 107, 108, 114, 115, 116,
134
Novak, W. 91, 102
O
Oertig, M. 159
Ohmae, K. 50, 51, 77
One-way linkage 144, 145, 458
Operational excellence 124
Opportunities 47, 89
Organic period 20
Organizational mission 10, 81, 87
Organizational success 10, 105, 124
Organization-specific competency 120
P
Performance appraisal 118, 127, 165
Personal control 121
Pettigrew, A. 33, 37, 39
Physiological variables 122
Pierce’s 10-C model 9, 72
PIMS program 55
Planning 49, 118, 127, 164
Porras, I. J. 102
Porter, L. W. 123, 134
Porter, M. E. 77
Portfolio concept 55
188
Price, A. 58, 59, 72, 73, 75, 77
Procter, S. J. 176, 180
Product leadership 124
Psychological variables 122
Pugh, D. S. 167
Purcell, J. 33, 40
Q
Quality enhancement strategy 95, 96
R
Raes, A. 168
Rahimić, Z. 142, 159
Readiness 10, 53, 113
Resource-based approach 27
Results 10, 123, 126, 134, 153, 159,
169, 172, 174
Roe, R. 168
S
Scenario method 55
Scheiner, C. E. 125, 127, 129, 131,
134, 164, 166
Schmid, T. 163
Schoenfeldt, F. L. 25, 28, 39, 147, 148,
150, 159
Schuler, R. S. 34, 40, 58, 59, 78
Schuler’s 5-P model 9, 68
Self-determination 121
Self-efficiency 120
Separation model (A) 98
Shadovitz, D. 141, 159, 181
Shaw, J. B. 25, 28, 39, 147, 148, 150,
159
Shelly, J. 141, 159
Sherman, W. A. 58, 78
Sims, D. 166, 176
Social competency 119
Staffing 118, 127, 164
Steer, R. M. 123, 134
Storey, D. J. 78
INDEX
Strategically-oriented human
resource management 59, 61
Strategic best-fit 26, 27
Strategic choice 10, 81, 91, 105, 111,
125
Strategic goals 10, 81, 88
Strategic management process 9, 45,
49, 67
Strategic partner 32, 141, 142, 151,
152, 155, 156, 169
Strategic period 20
Strategic role 5, 6, 9, 11, 15, 29, 38,
39, 40, 126, 158, 159
Strategy as a revolution 53, 54
Strategy control 50
Strategy formulation 50, 62, 85
Strategy implementation 50, 62, 109,
133
Strategy-oriented human resource
management 59, 60
Strength 90
Susan, E. J. 95, 102
SWOT analysis 55, 64
Systematic competency 119
Šunje, A. 49, 60, 66
Šušnjar-Štangl, G. 24, 31, 65, 92, 94,
141, 151, 155
Torrington, D. 26, 27, 35, 37, 40, 59,
78, 98, 100, 102
Total Quality Management 53, 54
Training 93, 118, 127, 165
Treacy, M. 124, 134
Trust 121
Turner, C. 167
Two-way linkage 144, 146, 158
Tyson, S. 78
U
Ulrich, D. 17, 19, 40, 126, 134, 151,
153, 154, 155, 159, 169, 170, 171,
172, 174
Universalist approach 26, 27
Uyterhoeven, H. 163
V
Value chain 55
Vision 87, 102
Vujić, V. 143
W
Waters, J. 131, 134
Weaknesses 90
Werner, A. 33, 39
Wiersema, F. 124, 134
Wooldridge, B. 163, 167
T
Workforce structure 123
Taylor, S. 26, 27, 35, 37, 40, 59, 78, 98, Wright, P. 23, 29, 33, 39, 40, 63, 77,
83, 102, 110, 111, 117, 118, 126,
100, 102
132, 134, 142, 144, 150, 159
The focus strategy 94, 95
Wright, P. M. 23, 29, 33, 39, 63, 77, 83,
The holistic model (D) 100
102, 110, 111, 117, 118, 126, 132,
The HR-driven model (E) 100
134, 142, 144, 150, 159
The Michigan model 35, 36
The strategic job family model 114
Z
The strategic values model 114
Zimanji, V. 24, 31, 40, 65, 78, 91, 92,
Threats 89
94, 102, 141, 151, 155, 159, 163,
Tichy, M. M. 35, 36, 39
169, 171, 173
Todorović, J. 50, 52,
189
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