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Increased Strategic Importance of Human Resource Management

HRM: Increasing Strategic Importance

The image of HR as a strategically important function had started changing decades ago. Now, its importance in terms of organizational efficiency is more than established. Since organizations like Google proved that people could be a source of competitive advantage, focus has shifted towards deriving better value through improved HR practices and policies. The myth that HR did not hold strategic value has been busted. Traditionally, HR had been viewed as a backyard function that bore no direct relationship to business goals. Its task was to do the paperwork and formulate policies. Things have changed and time has proved that nothing is possible without managing your human capital strategically.

So much has changed in the past decades including the evolution of technology, labor regulations and worker diversity. The importance of HRM to respond to these changes occurring in the business environment has been duly recognized by research. All the things that were once considered secondary to marketing and finance like organizational culture, employee engagement and leadership have grown important suddenly. The fast changing global environment has impressed major demands on businesses. Apart from polices, the focus is on skilled employees who can efficiently handle pressure and respond to the changing market conditions and customer demands. If more and more companies are providing better salaries and perks to their employees then it is because employee motivation has been recognized as a facilitator of organizational performance. The better your employees perform, the better is your organizational performance and the higher is your productivity. Moreover, your employees’ skills are something that your competitor will never be able to imitate easily.

In the past, all the focus used to be on production, finance and marketing. However, in the 21st century, HR has come directly to the front yard. Its role in the achievement of business objectives has become critical. This has changed its image and the old attitude towards HR too. Now, it is a strategic partner on which businesses depend for critical decisions and policies. Its function is more mainstream and HR innovation has become the route to organizational success.  HR has also focussed on being more modern and using better tactics to improve its effectiveness and bring great results. The use of technology across HR has increased. Across the Human Resource department more focus is being placed on the use of technology for better outcomes. HR is using better tools for better performance throughout. From recruitment planning to retention, performance management, feedback, job design and every other process it is using technology to deliver better results. It is also playing an active role in mainstream planning and designing training programs. The role and duties of the HR managers have not changed a lot but the level of participation in strategy formulation and decision making has increased manifold.

Now, HR matters are being discussed more often in the high level meetings. Take the example of Google. Hiring is quite an elaborate process here. Candidates go through several rounds of interviews before they are finally selected. It is so because the things like culture and environment hold value. Why is there so much focus on planning a recruitment strategy and then induction and retention? It is because every single employee matters. So, from the time of hiring to induction and onwards HR continues to play an empowered role there. It has to plan and execute several things. Every employee is valuable and HR ensures that no mistake happens at any stage whether it is hiring, training, performance planning or retention. However, that does not mean that HR’s role is easy. As the time has passed, complex needs have come up. Now, training and performance management are critical areas where more synchronization between the line managers and the HR is important.  

The HR function is no more the clerk lost among the files but it is sitting in the centre and doing more important things.  It has become more active, playing the role of coach and counsellor. The changing landscape of HR has also brought new opportunities. The number of jobs in this field has grown.  Apart from talent management, HR is also focusing on legal issues and compliance which have become a key part of its responsibility. This is because the web of labor laws has become increasingly complex. HR leaders are now more involved in high level decisions and problem solving. The role of HR will continue to evolve as the focus will continue to remain on employee performance and productivity. Technology will also add to its capabilities. The use of Artificial Intelligence for the purpose of job allocation and project management has already begun. Future might see better use of AI for employee management. Moreover, better managing your staff reduces costs and eases your burden. Greater use of data and analytics will help HR managers achieve better results. Overall, HR has proved that it affects the most critical things inside an organization and based on that its role will become more central to the achievement of business objectives.