The Importance of Strategic Human Resource Management Practices in Banking Sectors

 

Strategic human resource management is a process that helps the human resources department maximizes the potential of its workforce through strategic planning, talent management, leadership development, organizational design, and performance management.

In the past, strategic HR management was an administrative function. Today, HR managers play a critical role in ensuring that the organization has the right people that help improve business performance and ensure that it delivers on its mission.

It means that HR professionals need to understand its goals and objectives. How they can best help the organization achieve those goals, and what actions will allow them to do so. This article will help you better understand what strategic human resource management is and how a smart plan can bring tremendous value to the organization. (Hr.university, 2023)

Strategic Contingency Theory

One of the HR theories is strategic contingency theory. The second one among the human resource management theory and practice is strategic contingency theory, which, as the name suggests, is based on two concepts i.e. ‘Contingency’ and ‘Strategic’ aspect of contingency.

A Contingency is a need for different tasks of a subunit in an organization on which tasks of other subunits create an effect. This contingency becomes strategic once other subunit starts controlling more contingencies and becomes powerful in an organization.

As per the Strategic contingency theory, a leader becomes a central part of an organization due to his/her unique skills to solve the biggest HR challenges which others are unable to solve. Too much dependency lies on a leader so he/she is not easily replaceable. (Peoplehum, 2023)

“Organizations can be described as a collection of departments or functions that align together to cope with uncertainty.” (Hickson, 1971)

Advantages of Contingency Approach to Management

·         Contingency approach is dynamic in nature. So, it changes according to the situations. It allows managers to change the policies according to the situation.

·         Contingency approach helps the manager to enhance their leadership and decision-making skills.

·         Contingency approach provides options to the employees that help them to grow and share their ideas to the business.

·         It helps to design the organizational structure and plan the information decision systems. (commercemates, 2023)

Disadvantages of Contingency Approach to Management

·         Contingency approach has a complex approach. The suggestion of the approach is very simple but when it comes to practical it becomes more complex.

·         Contingency approach is basically reactive in nature. Sometimes the handling the situations become hard for the manager.

·         Contingency approach suffers from inadequately of literature. It is not sufficient to say that ‘a managerial action depends on the situation.

The NDB bank strategy is clearly linked to the individuals' performance in achieving the Bank's strategic goals, and is evaluated via a robust performance management system using balanced scorecard. (ndbbank, 2017)

NDB bank has a better strategic resource management that will leads to the growth of the organization, where the management of the organization provides the opportunities for the employee to attend in their carrier within different aspects. This means the organization promote their employees to develop their academic and professional aspects by using the organizational resources. This will lead to the growth of the organization, where the knowledge regarding the banking field will flow into the business and it will create innovative business ides to achieve the organizational success. And also the NDB bank provides training and development activities to their employees by utilizing the organizational resources. By using this technique, the utilized amount by the organization will return as the knowledge of the employees, and then it will make the employees more knowledgeable and more technical about the job that the particular employee performs. By this conduct the company can achieve their growth. NDB bank will stimulate the employees through motivating them and through introducing some monetary benefits. This will lead to a certain loyalty of the employees toward their organization and the employees will tend to perform their job efficiently and effectively without harming to the organizational resources.

NDB is a leading financial institution in Srilanka and they have recorded profits in past consecutive years, in the past few year this financial institution has used strategic management theories to maintain their vision and mission stable. The company has also used the competitive advantage to stay on with the rivals and to attract customers. NDB has used the welfare management strategies, customer relations with the combination of strategic human resource management to achieve the reputation over the society and to face the rivalry successfully (Bank, n.d.). They have used the employees to make the decision of the company, they have introduced some monetary and non-monetary incentives to employees to perform better within their job and through the motivation the potential abilities of the employees have been generated to perform well on behalf of the organization. The employees commitment towards the organization Is the main strength of the company and they have used the human resource strategies with a proper utilization and a proper accomplishment to achieve the targets of the organization.

Referances

commercemates. (2023). Retrieved 04 06, 2023, from https://commercemates.com/advantages-disadvantages-contingency-approach/

Hickson, D. (1971). Studiousguy. Retrieved 04 24, 2023, from Studiousguy: https://studiousguy.com/strategic-contingency-theory/#:~:text=Hickson's%20concept%20is%20based%20on,another%20subunit%20in%20an%20organization.

Hr.university. (2023). Retrieved 04 21, 2023, from Hr.university: https://hr.university/shrm/strategic-human-resource-management/

ndbbank. (2017). Retrieved 04 24, 2023, from https://www.ndbbank.com/annual-report/2017/management-discussion-and-analysis.humcap#:~:text=OUR%20APPROACH%20TO%20HUMAN%20CAPITAL%20MANAGEMENT&text=Employees%20are%20also%20governed%20by,conflicts%20of%20interest%20among%20others.

Peoplehum. (2023). Retrieved 04 24, 2023, from Peoplehum: https://www.peoplehum.com/glossary/hr-theories