For such detailed evaluation of HRM policies auditor makes use of various techniques and methods. Such techniques include- interviews, group discussion and workshops, observation and questionnaire. Each of such components requires different technique at different stages of audit. This chapter attempts to discuss each of such components of HR and to evaluate the same. Such audit will reveal the effectiveness and maturity level such components.
The main dimensions of HR Audit are as
| Main Area | Categories |
| Human Resource Systems and Strategies | ü HRD Systems: Objectives, structure, Understanding Implementation and Business Relevance of Manpower Planning, Performance Management, Training, Recruitment, OD and Self-renewal, etc. ü HRD Strategies: Quality, Cost, Customers, Culture Building, Entrepreneurship, Communication and Commitment. |
| Human Resource Competencies | ü Competencies of HR staff ü Learning attitude of line managers ü Empowering styles of top management ü Learning orientation of non-supervisory staff ü Credibility of HR department and its activities |
| Human Resource Culture and Values | ü OCTAPACE Values ü Organisational Culture |
| Human Resource Impact and Alignment | ü Talent Management ü Intellectual Capital ü Financial Contributions |
Human Resource Strategy (HR Strategy) is a designation for a long-term plan created to achieve objectives in the field of human resource and human capital management and development in the organization. Human Resource strategy is one of the outputs of strategic management in the field of human resources management.
Human resource strategy differs from traditional HR in a couple of important aspects. HR strategy is long-term and focuses on workforce planning and workforce development from a forward-thinking perspective. Traditional HR, or personnel as it was once called, is focused more on the transactional nature of HR, such as reviewing applications, maintaining a census of FTEs (full-time equivalents) and signing up employees for insurance benefits. Strategic human resource management, on the other hand, focuses on alignment of employee qualifications with the organization’s workforce needs. This type of HR management provides employee training and development to prepare the workforce for company growth, as well as the employee’s professional growth. An effective way to approach strategic HR management is for HR leadership to participate in or lead high-level or executive discussions about the strategic direction of the company and how to ensure the workforce meets the company needs. Human resource strategy is critical in both the private sector and in the public sector. Specific employer needs may differ between the sectors; however, the need for a strategic vision where human resources are concerned are universal.
Some of the activities that fall under the purview of human resources strategy include gaining a seat at the executive table so that human resources doesn’t operate as a silo. Participating in executive-level discussions and decisions ensures that the human resources function of the organization is an integral part of the organization. Obtaining feedback from department supervisors and managers is another function of human resource strategy. If your strategy has an impact on the organization, then it should include department-specific input.
HR strategy in practice: Human Resource Strategy helps to unify and direct the behavior and actions of all people and their overall development in accordance with the needs of the organization. It allows a meaningful planning and management of all work with human resources.
- Defines processes, responsibilities and requirements on recruitment and staff selection
- Defines requirements on staff training and qualification development
- Defines the way of management of work performance, motivating and rewarding people, social programs and employee benefits
- Defines working conditions, labor relations and influences the way of organizing
Human resources strategy usually follows a global strategy and includes specific goals in human resources and a schedule for implementation – through projects or other actions and tasks. Sometimes personnel audit can be part of developing a personnel strategy. When creating HR strategy, it is also used a number of analytical techniques and methods such as SWOT Analysis, VRIO Analysis, PESTLE Analysis and more.
An example of human resources strategy might involve your employee relations or labor relations functional areas. Employee relations is responsible for improving and sustaining positive relationships with current employees, and labor relations is responsible for administering the labor union contract (collective bargaining agreement) for employees who are union members. Strategic human resources within the context of employee relations could involve providing seminars on workforce diversity, training supervisors on compliance measures (equal employment) and ensuring that you have an effective affirmative action program. This would be particularly important if you are a government contractor with reporting requirements regarding hiring practices and outreach methods that ensure a diverse workforce.
HR Strategies Types
The human resources department generally has several functional areas. They include recruitment and talent acquisition; employee relations and labor relations; compensation and benefits; workplace safety; and employee training and development. Although these functional areas may operate separately, they are interdependent, meaning you cannot have recruitment and talent acquisition without compensation benefits. You also must have employee training and development if you’re thinking strategically about human resources. Employee relations are required to sustain positive employment relationships among the workforce, but labor relations may only be necessary if your workforce is unionized or under threat of becoming unionized. Employers are required to provide a safe work environment for employees, so workplace safety is another required functional area.
HR Strategy Relevance
If you intend to stay in business, a human resource strategy is critical for your business to survive. Businesses that focus solely on the transactional nature of human resources, such as payroll processing, record keeping and administering sick leave policies may find themselves scrambling to prepare for future growth. You need human resource strategy to stay on par with your competitors and ultimately to exceed those competitors’ capabilities if you want to become best-in-class in the industry or in your market. Because human resource strategy focuses on individual and organizational growth, you also need a strategic plan for sustaining job satisfaction and engagement throughout your workforce.
Human resource strategy addresses the systemic issues that are inevitable in any organization in a proactive way. For example, if your organization is a team-focused work environment, there will be, at some point, workplace conflict. Whether the conflict is between employees or between supervisors and employees, it’s incumbent upon the human resources department to create an environment where supervisors are capable of resolving interdepartmental conflict so that it doesn’t affect other departments or the entire organization.
Human resource strategy also is important if you are in an industry where there is rapid and ongoing change, such as the technology industry. It will be virtually impossible for your company to survive in an industry where change is constant. Greek philosopher Heraclitus said thousands of years ago that the only thing that is constant in life is change, and, of course, he wasn’t referring to the technology industry.
Your company’s reputation correlates with your human resource strategy. The job-seeker community is relatively small. If your company is known for its proactive stance on employees’ personal and professional development, it can foster high morale in your current workforce. Your forward-thinking strategy and actions will also boost your reputation in the job-seeking community. Inc. magazine routinely profiles “The Best 50 Employers,” and many of the companies they choose are applauded for their strategic vision, as well as their efforts to give their employees the tools they need to be successful.
Your stellar business reputation will also be a significant benefit for customer acquisition and for keeping current customers happy. Whether you are still developing your customer base or have many customers, an effective, well-thought-out human resource strategy is bound to pay off tremendously in customer support. The return on investment for your human resource strategic efforts is improved employee engagement scores, as well as consistently high client satisfaction and positive feedback.
Strategic Planning and Human Resource Practices
In every organization, motivation and incentives should be attached with a goal to work on. A needs assessment and HR development strategies should be deployed focused towards accomplishing the organization’s mission. Such needs assessment and HR development and their effective planning leads to improved productivity. It is then implemented by using macro tools, such as Management by Objectives at the individual level, and Total Quality Management at the group level.
Strategic planning is referred to as rational examination, considering ‘what should be implemented’ and ‘what is the right path to implement a strategic plan’. Strategic planning is focused on the future, how and what it should be. Therefore, it steers the development of an organization. Besides, it also helps in converting individual efforts into a team effort. It helps in the development of goal-oriented performance evaluation and total quality management. Employees can be assigned with accountability for results. The process itself is a team-building course that contemplates into perceptions different individual and different projects and is focused upon achieving systemic viewpoints. All the managers involved in making strategic planning should also make themselves aware of other potential concerns, for which they need ample training as well as revised training in order to cope with unexpected queries that may arise post implementation. There could be fights, ambiguities and chaos in the beginning and for some time thereafter.
The real benefits of strategic planning can only be well utilized if the individuals learn how to implement it and know its value. In a cosmopolitan, knowledge-based organization, strategic planning is basically referred to as strategic human resource planning. The empirical research studies revealed that the strategic human resource management affects organizational performance. Some of the common HR practices include formal training systems, career structure, result-oriented performance evaluation, employee participation, employment security, detailed job profiles and reward-based compensation, which form the basis of the theory of strategic human resource management and contribute significantly to organizational success.
Formal Training Systems – It should not be taken for granted that each employee comes with a required skill set. In today’s world of advancement, there is the need for particular adjustment. Not just a fresher but even a well-trained employee would need specific training to become an ideal worker for a particular job and make a valuable contribution to the existing team. It is the supervisor’s prime role to arrange for the capacity build of the people in his / her unit. While the managers play the role of coaches, other employees take on the role of implementation. Each manager needs to ensure that the employee is geared up to undertake the task. Though the potentiality of training and development is known, they are often neglected at many organizations.
Career Structure – A career structure is essential for an individual to focus on the strategic concerns of an organization in the due course. Any goals and incentives attached to the short-term can result into dysfunctional behaviour and objective dislodgment. A long-term perspective encourages an employee’s dedication towards the organization. This induces organizations to deploy training and invest in productivity enhancements, with an expectation of reaping benefits through improved knowledge and experience. Trainings are focused on the development of existing job skills instead of that of the employee for further performance improvements.
Result-Oriented Performance Evaluation – A performance evaluation system acts as a support to making informed decisions related to promotion, demotion, compensation, and transfer, and as a guiding tool for assessing training requirements and employee feedback. Besides, it also supports in effectuating various other functions of the organization, in terms of selecting and hiring practices, maintaining employee-employer relationship and fostering the organizational culture.
Employee Participation – When an employee exits the organization, a typology of his/her responses to dissatisfaction should be recorded. The theory of employee self-interest drives on the economic market in relation to socio-political values, and attempts to justify the survival of the organization. The decisions taken on the acceptance or dissatisfaction of an organization’s goods or services are correlated to similar decisions taken by the organization’s manpower vis-à-vis the organization. Any efforts made to bring change to a perceived depressing situation can evoke voice, which could indicate a political dimension encompassing a basket of behaviours, including participative management, democracy and grumbling. This signifies a feasible, non-market source to ensure the survival of an organization. The voice is based on the internal advocacy of reform, and loyalty on the willingness of the employee to ‘stand up’ for the organization. Advocacy is an outcome of external criticism and an expression of confidence in the organization.
Employment Security – Employee rights act as a safeguard to assure that employees maintain the dignity every human being has the right to. There ought to be legal, formal systems to cope with abuses and prohibit any wrongful practices. Employment security always remains a characteristic of public employment, in that it enables employees to focus in doing their job than worrying about losing their job anytime.
Performance-based Pay – It is important that all decisions concerning pay and incentives are designed to attract, motivate and retain employees in an organization. Therefore, the pay structure should be designed such that it adheres to above. However, a majority of organizations put a limit to their pay system to only a percentage of the pay package. Only those who perform well are guaranteed a standard pay package. Nevertheless, this also keeps the employees ensured about them financial security and helps in retaining them in the organization. Various extrinsic performance-based pay systems are adopted by organizations. The most known and frequently used system is the base-pay system. Here, the pay is put at risk without endangering the employee’s basic financial security. The employee’s overall performance can be addressed, whilst simultaneously the group performance can also be measured at team level. Individual pay systems on the basis of performance increases, whereas bonuses, gratuities and annuities are standard across all skill sets. Also, performance-based incentives are encouraged at all levels to induce employees to work efficiently throughout.
