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The nature of strategic HRM

Strategic HRM is an approach that defines how the organization’s goals will be achieved through
people by means of HR strategies and integrated HR policies and practices. It was defined by Mabey et
al (1998: 25) as the process of ‘developing corporate capability to deliver new organizational
strategies’. It is based on two key ideas, namely the resource-based view and the need for strategic
fit, as discussed later in this chapter.

SHRM can be regarded as a mindset underpinned by certain concepts rather than a set of techniques.
It provides the foundation for strategic reviews in which analyses of the organizational context and
existing HR practices lead to decisions on strategic plans for the development of overall or specific HR
strategies. SHRM involves the exercise of strategic choice (which is always there) and the
establishment of strategic priorities. It is essentially about the integration of business and HR strategies
so that the latter contribute to the achievement of the former.

Strategic HRM is not just about strategic planning, nor does it only deal with the formulation of
individual HR strategies. Its main concern is with integrating what HR does and plans to do with what
the business does and plans to do. As modelled in Figure 2.1, SHRM is about both HR strategies and
the strategic management activities of HR professionals.

Succession Planning

Updated Jun 5, 2019

What Is Succession Planning?
Succession planning is a strategy for passing on leadership roles, and often the
ownership of a company, to an employee or group of employees. Also known as
"replacement planning," it ensures that businesses continue to run smoothly after
a company's most important people move on to new opportunities, retire, or pass
away. It can also provide a liquidity event enabling the transfer of ownership in a
going concern to rising employees.

How Succession Planning Works

Succession planning evaluates each leader’s skills, identifying potential
replacements both within and outside the company and, in the case of internal
replacements, training those employees so they’re prepared to take over.
Succession planning is not a one-time event; succession plans should be
reevaluated and potentially updated each year or as changes in the company

In addition, businesses might want to create both an emergency succession plan,

in the event a key leader needs to be replaced unexpectedly, and a long-term
succession plan, for anticipated changes in leadership.

In small companies, the owner alone may be responsible for succession planning.
In large corporations, the board of directors, not just the CEO, will typically oversee
succession planning. Also, in large corporations, succession planning impacts not
just owners and employees, but shareholders as well. For small businesses and
family-owned companies, succession planning often means training the next
generation to take over the business. A larger business might groom mid-level
employees to one day take over higher-level positions.

Benefits of Succession Planning

There are several advantages for both employers and employees to having a
formalized succession plan in place:

 Employees know that there is a chance for advancement and possibly

ownership, which can lead to higher satisfaction.
 Knowing that the company is planning for future opportunities reinforces
career development among employees.
 Management's commitment to succession planning means that supervisors
will mentor employees to transfer knowledge and expertise.
 Management keeps better track of the value of employees so that
positions can be filled internally when opportunities arise.
 With succession planning, leadership and employees are better able to
share company values and vision.
 With Baby Boomer business owners and leadership retiring in huge
numbers, a new generation of leaders will be needed.
 Succession planning can cultivate a new generation of leaders, thereby
providing an exit strategy for business owners who want to sell their stake.

Special Considerations: Life Insurance

In a partnership, one method of succession planning has each partner purchase a
life insurance policy that names the other partner as the beneficiary. That way, if a
partner dies at a time when the surviving partner otherwise would not have enough
cash to buy the deceased partner’s ownership share, the life insurance proceeds
will make that purchase possible. This type of succession plan is called a cross-
purchase agreement and allows the surviving partner to continue operating the

What is the difference between job design and job


Job analysis is the process that identifies tasks, duties, responsibilities, required
qualifications, skill and knowledge etc. for an individual for a job. Job analysis is done for
recruitment, to evaluation the employee's need of training and evaluation. On the other hand Job
design is allocation of tasks to an employee or group of employees in an organization. Job
design determines those job, tasks and responsibilities and employee (group) have to perform.

Job design and Job analysis differs not only on their purpose of creation but also their
timing of performing. That means Job design is performed before Job analysis. Job analysis is
performed when new job is created or job nature and method is changed due to change in
technology or requirements. Job design mainly focuses on work division and effective
performance of tasks and job completion whereas Job analysis is about effective and appropriate
selection of candidates. Job design attempts to implement the available manpower effectively
and efficiently but Job analysis deals with the required skills, qualification of employees who are
to be assigned tasks. Job analysis covers wide range of information viz. Job description, Job
Specification, Job Design, Recruitment and Selection process, Compensation and remunerating
employees. Job analysis defines about evaluation of employees too. Job design deals with
business objectives and structuring works.
Methods for evaluating job
Job Ranking

If you've been running your business long enough, you know how the jobs rank in
importance to the overall goal and mission of the company. Being able to rank the
positions within a company based on their contributions toward your goal is one of the
easiest job evaluation methods. With the job ranking method, jobs and the employees
who perform them are ranked from highest to lowest, depending on their quality and
value to the organization. But before you tackle this method of job evaluation, make
sure each position has a job description. This description will help you determine the
importance based on performance tasks, rather than how you feel about the person
doing the job.

Job Classification

The job classification method uses job classes or groups to provide more customization
in the evaluation. The easiest way to understand the job classification method is to look
at positions in the federal government where classification and pay is based on the
grade of the job. For example, someone working as a GS-4 is typically a student or an
intern. Whereas a GS-13 is in a top-level supervisory position. The job classification
method allows you to predetermine the job classes and assign each job to these
classes, which makes evaluating the jobs based on classification very objective.

Factor Comparison

If the job classification and ranking systems seem fairly straightforward and simple,
that's because they are. As soon as you move to a factor comparison method for
evaluating jobs, things begin to get a little more complex. What differentiates this
method from the others is that it is more systematic and analytical. Rank each job
according to a specific set of factors, such as physical effort, mental effort or
responsibility – all of which have predetermined weights indicating their importance to
success. The goal is to apply these factors to all jobs within the company, which allows
you to make job-to-job comparisons and rank each one accordingly.

Point Method

The final job evaluation method is the point method, which measures performance
through scales and job factors rather than focusing on entire job functions and ranking
employees against each other. This method works by identifying key job factors and
then assigning points based on importance. For example, you may determine that skill
is one of the factors. You can then break this category down even further and assign
points based on experience, education and ability. Then, cross-reference the points with
a pay structure, which allows you to determine compensation for a particular position
Selection Process
Definition: The Selection is a process of picking the right candidate with prerequisite
qualifications and capabilities to fill the jobs in the organization.

The selection process is quite lengthy and complex as it involves a series of steps before making
the final selection. The procedure of selection may vary from industry to industry, company to
company and even from department to department. Every organization designs its selection
process, keeping in mind the urgency of hiring people and the prerequisites for the job vacancy.

Selection Process
The selection procedure comprises of following systematic steps:

1. Preliminary Interview: The preliminary interview is also called as a screening interview

wherein those candidates are eliminated from the further selection process who do not meet the
minimum eligibility criteria as required by the organization.
Here, the individuals are checked for their academic qualifications, skill sets, family
backgrounds and their interest in working with the firm. The preliminary interview is less formal
and is basically done to weed out the unsuitable candidates very much before proceeding with a
full-fledged selection process.

2. Receiving Applications: Once the individual qualifies the preliminary interview he is required
to fill in the application form in the prescribed format. This application contains the candidate
data such as age, qualification, experience, etc. This information helps the interviewer to get the
fair idea about the candidate and formulate questions to get more information about him.
3. Screening Applications: Once the applications are received, these are screened by the screening
committee, who then prepare a list of those applicants whom they find suitable for the
interviews. The shortlisting criteria could be the age, sex, qualification, experience of an
individual. Once the list is prepared, the qualified candidates are called for the interview either
through a registered mail or e-mails.
4. Employment Tests: In order to check the mental ability and skill set of an individual, several
tests are conducted. Such as intelligence tests, aptitude tests, interest tests, psychological tests,
personality tests, etc. These tests are conducted to judge the suitability of the candidate for the
5. Employment Interview: The one on one session with the candidate is conducted to gain more
insights about him. Here, the interviewer asks questions from the applicant to discover more
about him and to give him the accurate picture of the kind of a job he is required to perform.

Also, the briefing of certain organizational policies is done, which is crucial in the performance
of the job. Through an interview, it is easier for the employer to understand the candidate’s
expectations from the job and also his communication skills along with the confidence level can
be checked at this stage.

6. Checking References: The firms usually ask for the references from the candidate to cross
check the authenticity of the information provided by him. These references could be from the
education institute from where the candidate has completed his studies or from his previous
employment where he was formerly engaged. These references are checked to know the conduct
and behavior of an individual and also his potential of learning new jobs.
7. Medical Examination: Here the physical and mental fitness of the candidate are checked to
ensure that he is capable of performing the job. In some organizations, the medical examination
is done at the very beginning of the selection process while in some cases it is done after the final

Thus, this stage is not rigid and can take place anywhere in the process. The medical examination
is an important step in the selection process as it helps in ascertaining the applicant’s physical
ability to fulfill the job requirements.

8. Final Selection: Finally, the candidate who qualifies all the rounds of a selection process is
given the appointment letter to join the firm.

Thus, the selection is complex and a lengthy process as it involves several stages than an
individual has to qualify before getting finally selected for the job.
Types of test