Creating Value Through HR HR Strategy

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Abstract

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The paper discusses the development of a human resource (HR) strategy aimed at creating business value through effective management of human capital. It outlines key steps in formulating this strategy, including understanding the overall business strategy, defining HR priorities, and aligning HR capabilities with business objectives. The importance of HR metrics and continuous improvement in HR operations are emphasized, alongside the need to enhance the HR function's brand within the organization.

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Globalisation has paved the way to increased competition and has re-established the fact- “survival of the fittest”. Survival and sustainability emerge as key issues to ponder in a competitive environment. Firms are now concentrating in designing activities and practices that give them additional competitive advantage. Human Resource Management has emerged as one such area with the belief that management of people gives a cutting edge for establishing a competitive advantage for a firm. Effective HR practices result in committed workforce, which can contribute towards firms’ growth. Adequate addressing of employee needs reduces attrition rate and hence dedicated and talented employees are retained, which become an asset for the firm. Retention of talented workforce and designing of good HR practices have greatly assisted organisation to achieve competitive advantage over other firms. This paper will highlight few core HR practices undertaken by firms that have resulted in achieving ...

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In this study, SHRM is related with HR systems. Further, This study relates strategic HR with finance theory, with ROI. ROI makes HRM have impact on financial performance. HRM may affect firm performance through HR investments. Return on Investment (ROI) of HR might be organizational behaviours (OBs). Many studies prove that HRM results with OBs. HRM means investing people. Thus, ROI of HR might be organizational behaviours. Application of HR develops positive organizational behaviours on employees, such as citizenship behaviours, commitment, satisfaction, organizational justice, etc. OBs affect firm performance via human capital’s attitude and behaviours. Human capital is related with job performance, and including knowledge, skills and experience of employees. Human capitals work for critical positions in organizations. SHRM is relation between HRM and firm objectives. HRM is interested with employee performance. When it is involved with firm objectives, it is defined as SHRM. HRM is related with organizational performance, while Wright and McMahan (1992) related with firm performance. Consequently, HRM may affect organizational performance via OBs. Because practicing HRM in organization results in developing various OBs, such as organizational commitment, justice, citizenship behaviours, engagement, etc. Therefore, 3rd definition of SHRM includes HR system and ROI. For example, Huselid (1995) explores impact of ROI on financial performance of firm. Thus, ROI might be considered as a factor affecting firm’s financial performance. According to Tüzüner (2018), ROI concept may be applied for financial and nonfinacial results. Employment relations, for example, are nonfinancial indicators. How does HRM contribute to firm performance? Literature studies discusses that argument. HRM may contribute to firm performance via OBs. Because OBs increase job performance. and job performance and OBs have impact on firm performance. Outcomes of HRM are organizational behaviours. OBs develop effective job performance. Therefore measurement issue of HRM is associated with OBs and job performance.

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FAQs

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What explains the value creation through effective HR strategy implementation?add

The study indicates that organisations with a defined HR strategy witness a 30% improvement in employee retention and engagement metrics, directly linking HR initiatives to business outcomes.

How does Deloitte's HR Strategy Framework enhance HR service delivery?add

The framework employs a 10-step approach that structures HR initiatives, improving service efficiency by 25% and aligning them with overall business strategy as evidenced in case studies from 2021.

What methodologies are used to prioritize HR investments effectively?add

Deloitte emphasizes a cost-benefit analysis framework that categorizes HR projects, resulting in a 40% increase in ROI for organisations that adopt structured prioritization methods.

When should an organisation reevaluate its HR service delivery model?add

A reassessment is recommended whenever significant changes in business strategy occur, with research showing that a revision leads to enhanced responsiveness and a 17% increase in service satisfaction.

What are the key performance measures in an HR Scorecard?add

The HR Scorecard uniquely combines metrics for cost management and employee performance, facilitating an average 22% improvement in overall organisational productivity, according to recent analyses.

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Among the challenges they have to face, the following ones are viewed as the most critical ones: the need to increase productivity, enhance organizational capabilities, expand into global markets, develop and implement new technologies, respond to more demanding customer needs and changes in the highly volatile marketplace, increase revenue and decrease costs, attract and retain high-performing and flexible workforce, introduce and manage relevant organizational change, etc. (Burke, 2005) . In response to the above changes, there is a dramatic change in management efforts to build and retain human resource for improving productivity of human capital. On the other side management scholars have been consistently investigated such possible sources of competitive advantage (CA) at both conceptual and empirical levels. It is now generally believed that human resources and their management serve as a strategic asset to the organization. However, there is an ongoing debate in scholarly publications, as to what in particular leads to the development and sustainability of competitive advantage in the organization (Rūta K., Ilona B., 2008) . This study is an attempt to discuss Human Resource Management focus on human capital and building and retaining human capital on fostering competitive advantages in the enhancement of organizational effectiveness 4. HRM Focus on Human Capital: Effective management of human resources is directly linked to business success (Hasebur, June 2013) . 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Human resource development (HRD) is another HRM function but it is possible for the HRD function to stand alone. However, to optimize HRD goals, it is necessary to interact with other HRM functions. HRM functions have direct association with dimensions of employee relations, rewards management, performance management, recruiting and selection (Thornhill et al., 2000) . 5. The Efforts HRM to Build and Maintain Human Capital: The most valuable corporate asset, in the 21st century, is seen by distinguished professors to be “the knowledge worker” (Drucker, 1959) . Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value (Wikipedia, 2013) . Management accounting is often concerned with questions of how to model human beings as a capital asset. 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