Prior to this, Personnel Management was thought of as a department to control labor in terms of timely attendance and work output. The HR is playing the most important part in the firm’s overall strategy be it productivity or profitability or competitive skills to contribute for attaining increase in Market share and consequently growth. The growth may lead to increase in revenue as well as number of product varieties.
Efforts to measure Human Resource influence on the Organization performance is developed by various methodologies. Specifically, theorists examined methodologies and practices that are focused at the level of the individual employee, the individual job, and the individual practice (such as employee selection, incentive compensation, and so on) The idea was that improvements in individual employee’s performance would automatically enhance the organization’s performance.
A new emphasis on strategy and the importance of HR system emerged in the recent past. Researchers and practitioners alike began to recognize the impact of aligning those HR systems with the company’s larger strategy implementation effort. Many kinds of HR models are in use today, we can think of them as representing the following evolution of human resources as a strategic asset:
The personnel perspective
The firm hires and pays people but doesn’t focus on hiring the very best or developing exceptional employees.
The compensation perspective
The firm uses bonuses, incentive pay, and meaningful distinctions in pay to reward high and low performers.
This is a first step towards relying on people as a source of competitive advantage, but it doesn’t fully exploit the benefits of HR as a strategic asset.
The alignment perspective
Senior managers see employees as strategic assets, but they don’t invest in overhauling HR capabilities. Therefore, the HR system can’t leverage management’s perspective.
The high-performance perspective: HR and other executives view HR as a system embedded within the larger system of the firm’s strategy implementation. The firm manages and measures the relationship between these two systems and firm performances.
In this article we have emphasized in the aforesaid paragraphs that HR must be looked at as a strategic asset of a firm and not just a department of administrative control. Methodologies are also discussed above as to how to make the work force a highly skilled and competitive one for Organization’s growth. Most of the progressive firms in the world have in its Board a Director level Professional to look after the Human Resource strategic activities to have an edge over its competitors.