Analyzing The Role Of Strategic Human Resource Management
Assessment Task 1
Based on the Article: Managing human resources remains challenge to growth (thenational.ae, 2015)
As the region's economies exit the financial crisis and shift gears towards more inclusive and sustainable growth, the challenge of creating adequate knowledge and talent resources - and managing them - is becoming more obvious.
The international focus on the GCC has sharpened following the global economic downturn and the subsequent austerity measures put in place to wither its impact.
Resilient economies in the Gulf are seen as drivers of regional and, to a great extent global, recovery and expansion. Countries such as Saudi Arabia, the UAE and Qatar show a strong appetite for growth and diversification. GDP last year for Saudi Arabia is expected to be Dh1.7 trillion (US$463 billion), and in the UAE, Dh1tn GDP. The new phase of growth is expected to create significant opportunities for local populations and companies.
To attain and sustain such growth, robust, qualified human capital and knowledge resources, and the proper management of both, is needed. There is no serious dearth of qualified people in the region judging by the increasing number of GCC graduates passing out of local and foreign universities and technical training programmes, as well as the influx of the foreign workforce and companies helping to construct and operate various industries. With almost half of the population in the GCC estimated to be below the age of 20 such investment is inevitable. But, at the same time, governments and policymakers in the region are baffled as to why this investment is not bringing the desired outcomes in terms of the overall human capital performance and sustained economic output.
That brings us to the most serious challenge facing human capital development in the region: inadequate management of knowledge and talent among organisations in the region. Talent management refers to the processes for identifying, assessing, acquiring, developing, deploying and retaining employees who are critical to an organisation's success.
There is widespread acknowledgement that finding the right framework to recruit, retain and manage human capital resources remains one of the toughest challenges to growth and continuity for organisations and governments in the GCC. With its vast financial and infrastructural resources and reserves of international expertise, the GCC has ample raw material and capabilities to groom and manage talent.
So given such favourable circumstances, what prevents organisations and governments in the region from effective assessment, monitoring and management of talent.
One of the studies contributed to examine this issue showed insufficient opportunities to integrate talent fully in organisations, resistance to different ideas and opinions, over-reliance on strict seniority and hierarchy, gaps between expertise and job content and between knowledge and authority, and poor placement of graduates as the major challenges hindering knowledge and talent management.
Taking the time to reflect on and think strategically about how people and organisations interact and how the human resources capital is managed and motivated is crucial. This requires a thorough understanding of the broader challenges, which are organisation culture, knowledge management and talent management.
With knowledge emerging as the key differentiator between the successful, highly competitive economies and those that are merely "surviving" , knowledge management should be a top priority for the fast-growing countries in the region aiming to position themselves as knowledge economies.
There are abundant reserves of knowledge within GCC organisations as the region has been a hotbed of commercial and industrial activities that need specialisation and expertise; oil and gas exploration, aviation and export processing, to name a few.
However, much of the knowledge and expertise within GCC organisations lies with their expatriate workforce. This accumulated knowledge is often untapped and thus lost once those expatriates leave the region.
Read the following questions and prepare a Report.
1. Explain the importance of SHRM in any organisation by justifying with an example.
2. Based on the Article given above, it states explicitly that “There is widespread acknowledgement that finding the right framework to recruit, retain and manage human capital resources remains one of the toughest challenges to growth and continuity for organisations and governments in the GCC”.
(a) Choose an organization of your choice, preferably the organization where you are working (or) worked (or) familiar with in the GCC region. Understand the chosen organization’s objectives and understand the working procedures of the organizations related to the HR management. Give out clearly the chosen organisation’s goals and objectives.
(b) State the SHRM activities pertaining to recruitment, retention and management of important human capital resources in the chosen organisation and assess the purpose of such SHRM activities in the organisation.
(c) Finally, evaluate the contribution of SHRM of the organisation, towards achieving and meeting the chosen organisational objectives and goals.
Part 1: Explain the Importance of strategic human resource management in any organization, justifying with an example
Introduction to SHRM: Over the last decade, a lot of work has been done in the field of study related to HR practices and strategic human resource management, and efforts have been made to link the Strategic human resource practices to firm’s performance. This brings us to the first question, what exactly is SHRM, which will be closely followed by what purpose or importance does it serve to a business organization, small, medium or large?
Strategic human resource management in simple words can be understood as the comprehensive plan of managing resources to support and fulfill the organizational goals and objectives within the strategic framework. In other words it can be defined as the alignment of strategic business goals of the organization with human resources in order to create and develop a culture of innovation, improve motivation within the organization leading to increased satisfaction and increased productivity. Strategic human resource management is therefore a bridge that unites the human resources to the strategic goals of the business and manages them effectively (McClean & Collins, 2019).
What is the importance of Strategic Human resource management? Discuss.
Strategic human resource management is of paramount importance to business organizations across the globe as it lays down the foundation of organizations to derive benefits for the business, create a structure and a culture in the organization, and lay down the value propositions for the employees and strategic plan for human resource management (Kasemsap, 2019). In order to further explain the importance of strategic human resource management, we would use Starbucks Company as an example. Starbucks treats its human resources as not employees, but partners of the organization, and these partners are very important stakeholder group for the organization. Below is a list of points explaining the importance of SHRM with relevance to Starbucks as an organization?
Organization Performance: Imagine a situation in an organization, wherein the employee’s goals are well aligned with those of organizational goals, the vision of the culture is deep rooted amongst the employees and at the same time, the culture of the organization is one which fosters innovation and support for each other. This kind of organization will 100% would be hitting back to back yearly profits, the stock prices of the company would be getting sky rocketed and most importantly the employees would be massively happy working for such organization, implying the increased productivity. This is what happens at Starbucks, Kevin Johnson, CEO of Starbucks believe that its partners are the biggest asset of the organization, and if they are managed in tandem with the goals of organization, they not only work efficiently, but the entire organizations performance improves drastically. Hence, strategic human resource management has implication on the performance of the business organization (Stewart & Brown, 2019).
Productivity: As explained in the first section, the role of SHRM is to strategically align employees or the workforce to the goals of the organization. Now, this alignment is done on the basis of employee skill, capability, prior experience, people skills and many other factors which makes the person ideal for the job role. Once all the resources in the organization are given job roles to the best of their capabilities, there is no scope or less scope for any error in the process or work flow. No error implies cost saving for the firm, which in turn means more quality of work or production. Therefore, strategic human resource management has a direct implication on the productivity of the organization. Starbucks, which has over 31,000 stores globally and recruits over 300,000 people is able to standardize all its process and replicate the same elsewhere. All this is possible due to effective use of strategic human resource management at Starbucks, which makes it easier for employees to quickly learn and adapt to the changing business conditions (Armstrong & Taylor, 2020).
Stakeholder Satisfaction: Stakeholders can be both internal as well as external, external stakeholders are the ones who lie outside the business entity ( Shareholders, Customers) and internal are the ones who lies inside the business entity (employees, owners etc.). Now, Stakeholders happiness is a metric of organizational performance, employee motivation and satisfaction, profitability of the company, increased share price of the company, positive working environment and more so. All of these factors are in turn related to benefits of strategic human resource management to the organization (Chams & Garcia-Blandon, 2019). Hence, if SHRM plan is effective, Stakeholders are satisfied, which in turn implies better brand loyalty, increased sales and increased hare prices. Starbucks for instance has seen a 15% spike in its share price since last 3 years; this has been possible after Kevin Johnson made certain changes related to employee performance and benefits in the organization. Thus, Stakeholder happiness, which is relevant and important to the business entity, is a derivate of a sound strategic human resource management plan (Tweedie, Wild & Rhodes, 2019).
Part 2A-Choose an organization of your choice, preferably the organization where you are working (or) worked (or) familiar with in the GCC region. Understand the chosen organization’s objectives and understand the working procedures of the organizations related to the HR management. Give out clearly the chosen organization’s goals and objectives.
Introduction to the Organization
The National Commission Bank (NCB) is one of the leading Saudi Arabian Banks and financial institution in the gulf region. It is also the largest bank and the first one to receive the license to operate in Saudi Arabia. NCB has been the pioneer in launching a number of financial projects in the gulf region, the most popular of it being the mutual fund project. It further demonstrated effective leadership in business by introducing credit cards for the first time in the gulf region, the first to open an ATM, the first to open student saving scheme and the first to open ladies only branch (Abudirbala & Mukhtar, 2019). All these accomplishment does not merely prove the organizational capabilities of NCB; it is also an indication of the finesse by which it implements process and programs for people in the gulf region. The NCB group headquartered in Saudi Arabia has over 413 branches, 12,883 employees and earned a revenue of SAR 20.6 Trillion in the year 2019 (Bajwa, Syed, Alaraifi & Rafi, 2019).
Goals & Objectives of NCB
Being a leader in the Banking industry in Gulf region, NCB has set for itself some benchmarks goals and objectives. The goals and objectives also helps other banks to follow its lead and set their own goals and objectives keeping in mind the development of gulf, its population, employees and the infrastructural landscape(Khokhar et.,al 2020). The goals and objectives for NCB for the year 2020 can be seen under the light of Asset Deployment and Funding:
- In retail sector goal of NCB is to grow its mortgages and it has decided to do the same through its digital channels and digitization in its banking process.
- Another goal which NCB has set is to improve its return from the corporate sector, finance mega corporate project and leverage transaction banking.
- In terms of treasury the goal of NCB is to sustain the return on its investments and reduce its Non Profitable assets. NCB has also set a goal to work towards the liquidity of the portfolio and improving its quality.
- NCB has also pledged to increase and improve the efficiency and productivity of its subsidiaries and to increase their contribution in the revenue. This means that all the subsidiaries will now be more closely watched and much improvement will undergo within the branches (Miyajima, 2020).
- NCB wants to aggressively grow its current accounts by digital and physical distribution of funds and making the process of transaction easier.
- Focus more on the cash management and increase the reserves and surplus.
- NCB has identified a couple of models which will help it in covering a wider business audience.
- NCB has set goals to expand the funding options it provides to its customers.
- A couple of program have to be launched with the objective of funds being matured and seniority spectrums
- Cost optimization goal in expanding the horizons of funding.
- NCB wants to accelerate the digital transformation in its banking business and use digital technology as a core strategic enabler (Aljaed et.,al 2019).
- Increasing the operational efficiency by investing heavily and training it’s personal on Lean Distribution, Artificial Intelligence & Robotics.
These are the goals and objectives identified by NCB in its Annual general meeting and the implication for the HR management is to align the employee goals with the goals as identified above. The organizational goals and employee goals have to be in sync in order to achieve the above mentioned objectives and increased the productivity and efficiency of the banking corporation. Hence, the first step for the HR starts with:
- Identification of organizational goals (Identified from the AGM)
- Setting up employee goals in sync with organizational goals.
- Alignment of employees according to goals and business functions.
- Training of the employees or skill development, if need to achieve a particular objective.
- Filling the gap of resources and creating an additional resource pool of employees.
- Work towards the motivation, satisfaction and empowerment of the employees.
- DO a periodic check on the goal achievement by setting smaller milestones for the organization and employees (Al-Muharrami, 2019).
- Review and feedback by the employees and communicating the same to the top in case of any conflict.
- Lastly, keep up the morale of the organization high by rewarding the employees who have been achieving and meeting the organizational and personal goals. This would further motivate other employees to work effectively, which in turn will improve organizational efficiency.
Part B) State the strategic human resource management activities pertaining to recruitment, retention and management of important human capital resources in the chosen organization and assess the purpose of such SHRM activities in the organization.
Answer B) NCB employees over 13000+ in 413 branches, which implies that the HR team hands are full and they have a lot on their plate when it comes to recruitment, retention and management of most important asset of any organization, Human resources. Below let’s quickly see, activities undertaken by NCB for the following activities of strategic human resource management (Berber & Slavic, 2020).
Recruiting top talent is pivotal for the success of any business organization. Especially at the time when it has been identified that GCC countries despite having all the resources in the world in terms of Human , capital and education, still there has been a gap in hiring the best talent. Most of which has been due to improper management of human resources after recruitment, resulting in employee resigning from the companies (Kulkarni, 2020).
NCB back in 2003 launched its corporate career section by “Career Al-Ahli” which is part of its corporate website. This career section provides NCB to gain a competitive advantage in its corporate recruiting efforts. Bayt.com, the online recruitment leader has leveraged its proprietary ASP technology and recruitment expertise to build this beautiful section for the Saudi employer. The Bank was not able to fill up the vacancies in the traditional methods, as it was unable to recruit the best of the talent in the industry, thus it took help of Bayt.com and leveraged the Internet based technology to attract the best talent. The recruitment portal is fairly simple, job seekers can make their professional CV online on its career page and look up for search agents, who in turn can notify them when there is a job they have been looking for. Leveraging its corporate section for recruitment the company has joined the league of Fortune 500 companies which have been leveraging technology, internet and website to recruit best talent in the industry (Dayel, Debrah & Mulyata, 2020).
Retention and Management of Employees at NCB
Employee retention in the current business dynamics and industry landscape has become a really tough job. Especially when the employees have more options to choose from, they do not give a second though about switching their jobs. This has become a huge problem not only at NCB but also in the industry. However, some of the strategies used by NCB to retain and manage its employees are:
- NCB has instructed its HR team to identify the motivation needs of the employees working at different branches using different motivation theories. They have been asked to identify what are the needs that motivate them and makes them work productively for longer time in the organization (Cherif, 2020).
- Bring in more efficiency during the hiring program and check on the stability of the recruits
- Helping the employees make their own personal goals, shaping them for career development
- Initiating open communication with the employees.
- Providing them benefits which no other employer has been providing, exclusive benefits come handy in retention of its employees.
- Empower and appreciate the employees
- Development of various orientation program to help the employees better understand on how they can excel at work (Vetrakova et.,al 2020).
- Reward & Recognition program
- Helping them maintain a work life balance
- Practicing a feedback culture and open door policy.
- Continuous review of goal and milestones set for the employees.
These are some of the best practices which need to be followed in order to retain and manage the human resources in the best of manner. These activities fall under strategic human resource management, and are helpful to the organization in managing its human resources effectively.
Part C) Finally, evaluate the contribution of strategic human resource management of the organization, towards achieving and meeting the chosen organizational objectives and goals.
Answer C) until now, in the sections covered so far, we have tried to establish and understand the various roles of strategic human resource management in the business organization and specifically with regards to National Commercial Bank of Saudi Arabia. We have come to an understanding that Strategic human resource management is one of the most pivotal functions of HR department as it aligns the goals of the employee with those of the organization. When the goals of the employees are aligned with those of the organization, there result an ecosystem of enhanced productivity and efficiency in the organization (Malik, Baig & Manzoor, 2020). One think which needs to be understood here is that, instead of getting into internal HR problems, strategic human resource management tries to solve bigger problems related to people management issues which affect the company globally in the longer run. Let us quickly evaluate the contribution of SHRM for National Commercial Bank:
Providing Direction to the Organization: One of the biggest and most important roles of SHRM in the organization is to guide the workforce in the right direction, the direction of business growth and profitability. It ensures that all the employees working in the organization are well aware of their purpose in the organization, in sync with the mission, vision, sustainability plan of NCB and the immediate goals which have to be achieved in the shorter run. Without strategic human resource management, imagine a scenario where there is no accountability for any kind of work, and none of the employees are aware of the right direction. Hence, strategic human resource management helps to provide the right strategic direction to the entire organization, which in turn implies better growth, more productivity and efficiency in the organization. Proverbial saying, an organization without Strategic Human resource management is just like a city without any education (Karman, 2020).
Development of Resource Pool: This problem has been rightly identified in the case study as well, GCC have all the resources to develop an efficient human resource, they have necessary global and domestic brands of schools and colleges, necessary skill and training for the individual, right exposure and environment, still GCC is struggling with retaining its employees. This also reflects that GCC is unable to provide the necessary opportunities and able to manage the human resources effectively. SHRM thus have to work strategically towards this goal as this is affecting even NCB. The need of the hour is to effectively manage the human resources. This is being taken care of by employee engagement activities at NCB. These employee engagement activities help the employees to engage and connect deeply with rest of the individuals and build a strong connect with the organization. Another thing which SHRM has been doing effectively is, keeping the culture quite dynamic and unique. The team is now more concerned about the emotional and mental well- being of the staff and regular one to one session with the employee’s further build their trust in the organization (Ragmoun & Alwehabie, 2020).
Resource Allocation to the Teams: Allocating resources internally to the teams in the organization is another important function of strategic human resource management which leads to organizational development and improvement in performance. Teams within the organization time in and time out requires resources which can be capital, human or other operational resources they need in order to complete their work effectively. In a situation wherein the organizations are unable to provide such resource, the morale of the entire team goes down which further results in employee turnover. Hence, at NCB, the strategic human resource management plan is to ensure all the workforce and the teams have whatever resources they need in order to conduct and carry out their job effectively. Once the teams have all the resources they need to excel at work, they feel empowered and work with better determination and enhanced productivity towards the organization (Pierce, 2020).
Hence, towards the end the report can be concluded by saying that although strategic human resource management is a function which falls under the purview of HR, this is one single function which is responsible for the organizational development and growth. In the absence of strategic human resource management, the organization can fall flat on its face which may lead to mayhem in the organization resulting in employee turnover which may lead to organizational bankruptcy.
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