Strategic human resource management


Apr 12 - 18, 2004





Resources are scarce, capabilities are limited, and environment is competitive. Organizations fail, or thrive on the basis of quality and performance of their employees. Strategic human resource management means proactive alignment and participation of HR function in formulation and implementation of overall corporate and business level strategies. It results in effective utilization of organization's human resource capacities to fulfil its mission and objectives. Its key characteristics are long-term focus (involving vision, consistency and commitment), impact on grand strategy, and coordination with line managers in HR policy making, and execution.

Pakistan's textile industry generates about 60 to 65 percent of national foreign exchange earnings. With about 46% share in manufacturing and 27% in industrial value addition, this sector employs millions of direct and indirect workers in farms and factories. Apparel industry in Pakistan is the highest value-added sector in textiles, distinguished by competitive quality of end product. Pakistan's total apparel exports (including knitwear) in the fiscal year 2002-2003 were US$2.239 billion that is 30% higher than the 2001-2002 figure of US$ 1.721 billion. The realization of agreement on textile and clothing on January 1, 2005 (abolishment of quota on textile trade) poses a major challenge to Pakistan's apparel industry. As it prepares itself for the challenging nature of business in 2005 and beyond, an ever-increasing responsibility lies in the function of effective human resource management. Alone this function can help companies achieve their strategic objectives of quality, cost, timelines, and social and legal compliances. In other words, HR will be the strategic competitive advantage for apparel industry in a quota free regime.

Strategic goals of apparel industry may be summarized as follows:

* Optimum utilization of organizational capacities that will be possible through effective planning, so that timelines are simultaneously realistic and extending capabilities. Recently industry had to bear huge costs in form of delay penalties, and airfreights caused by either overbooking, or poor line balancing a production planning issue.

* Zero defect rate in garments shipped to buyers (that will necessitate less than 0.5 percent defect rate at final audit in factory)



* Minimum (possibly less than one percent) rework in all stages of garment manufacturing (to control undue costs)

* Ongoing R&D, to explore technologies that are economical in terms of time and material, and support merchandising by new/original developments in value-added.

* Proactive merchandising that can look beyond available, and creates a culture of trust and strategic partnership with buyers and their agents.

* One hundred percent compliance in letter and spirit with all social, environmental and legal obligations.

To fulfil these goals, CEOs must consider following steps for much needed organizational development in apparel industry:

1. STRATEGIC UPLIFT OF HR FUNCTION: Traditionally human resource has been a sub-function of administration department, being sole responsibility of a personnel or labour officer. Often times in Pakistan, we find a retired army officer serving as administrative manager, who has little conceptual knowledge or understanding of human resource development in a business enterprise. In the post 2005, it would be naive to expect our ex-soldiers to be of much help for appropriate human resource development efforts in this industry. There may, however, be a few exceptions where retired army personnel have equipped themselves with appropriate qualification in this field.

An independent human resource function (staffed by competent personnel) is useful in four ways:

A. STRATEGIC PARTNER: HR function should (find ways to) align its aims and objectives with the organizational mission and goals e.g. proactive participation in addressing quality and productivity issues in knitting, dyeing and sewing departments.

B. CHANGE AGENT: Apparel industry is undergoing a continuous change due to a host of technological, economical, political, and other reasons. HR should develop awareness and appreciation in management and employees about change, and how this can be managed in a better way.

C. SYSTEM PROVIDER: At present, there is no or a little formal system in apparel industry to address strategic issues of staffing, training and development, performance management, and compensation. There are only a few policy manuals, and procedures are scanty and inconsistent. HR function should develop smart, user-friendly, and effective staffing, development and compensation procedures to support strategic objectives of each functional area e.g. production, merchandising, R&D etc.

D. EMPLOYEES' ADVOCATE: Apparel is a labour-intensive industry (that's one major reason for all outsourcing from Europe and North America). It is vital to keep employees committed and involved to create and maintain high performing culture. Contrary to administration (or administration and personnel) department that invariably aligned itself on employers' side, HR must carefully position itself on various issues, so as not to lose employees' trust and commitment that is indispensable in a high performing organization. In terms of compliances, HR may in fact serve as employees' champion, not for political or popularity gains, but with a genuine interest to promote organization's strategic objectives in a socially responsible manner e.g. waste water treatment, working hours protocol, personal safety and hygiene, day-care, special provisions for female workers etc.

2. INTERNAL ALIGNMENT OF HR FUNCTION: Internal alignment of HR function involves setting up an effective human resource department that can contribute in following three areas:

A. STRATEGIC STAFFING: This involves strategic HR planning forecasting and preparing for future needs and supply of skilled and semi-skilled human resource for induction and retention of high performance employees. This also entails labour cost budgeting, and turnover analysis for various business units and functional areas. At tactical level, job redesign may help to restructure and designate specific work activities to achieve strategic functional objectives. Currently apparel industry desperately needs personnel qualified in their respective field (e.g. dyeing, knitting, sewing, merchandising) with essential skills of planning, supervising and execution.

B. STRATEGIC DEVELOPMENT: This involves alignment of performance standards (ascertained though strategic job analysis) with learning objectives of corresponding training and development program. This coupled with an appropriate system of succession planning and career matching will result in an overall improvement in individual and functional performance. Key areas that need training intervention in apparel sector include sewing quality, housekeeping, and dyeing.



C. STRATEGIC COMPENSATION: At strategic level, it is imperative to conduct compensation and contracts forecasting. This is to ensure adequate financial and non-financial compensation to all personnel in the organization. Employees should be compensated according to their knowledge, skills, and performance vis-a-vis their functional objectives. HR must deploy stick and carrot approach to offer positive and negative reinforcements for the desired set of behaviour. Confronted with the tricky challenge of quantity and quality, apparel industry needs employees who are skilled and productive, and understand focus market. Experienced employees expect higher wages. For certain areas (e.g. in sewing production), jobs may be re-engineered to require minimum skills (e.g. separation of roving quality from intermediate quality), and lower compensation. But such employees may not stay long with the organization, and the options should be clearly weighed and analysed. An effective compensation system, supported by equity and competitiveness will enable a high performing culture in the organization.

Jawad S. Naqvi is a human resource practitioner, and trainer. Currently he is serving a textile unit in Lahore, Pakistan as head of HRD. He may be reached at thejawad@yahoo.com