Strategic Human Resource Management

Introduction to Strategic HR
 Strategic Human Resource Management
Introduction
1990s there has been an increased focus on the
strategic role of human resource management

The strategic approach to HRM refers to the

relationship between human resource
(HR)Practices and the strategic objectives that is
the long term goals of the organization
 Strategic Human Resource Management
With the increasing recognition of the potential of
human resources in providing competitive
advantage

Organizations have begun to consider employees

as valuable assets or investments
Todays knowledge economy depends on the skill
and knowledge of the workforce

From being routine administrative and reactive

function the HR function today has evolved to
being proactive and strategic
 Strategic Human Resource Management
In order to bring about a transformation from the fire fighting
role the HR manager has to don the garb of professionalism
A true professional with proper qualification and training to
meet the expectations of society and the organization in
particular

HR professionals need to know their organizations business

thoroughly not only in terms of people but also in terms of
economic ,financial,environmental and technological forces
affecting it
 Strategic Human Resource Management
As a strategic partner HR needs to participate and help the
top management in framing the organizational strategy
There is a paradigm shift from traditional HR function to
strategic HR functions

Example-strategic IR brings out the need to take the Trade

Unions along to meet the global competitions without the
traditional mutual distrust

HR system need re-engineering

Once performance standards fixed for HR professional need
for evaluation,audited and benchmarked for constant
improvement
 Strategic Human Resource Management
In the past HR researchers and practitioners directed their
attention to important questions

What is HR strategy?

What factors determine whether an organization adopts a

strategic approach to HRM?

Is there a relationship between the characteristic of the

organization and the adoption of a particular strategic
human resource management(SHRM)approach?

Does an organization achieve competitive advantage by

linking HR strategy with business strategy?
 Strategic Human Resource Management
 Human Resource management(HRM) is concerned with
the holistic approach towards the management of people
working in an organization who contribute to the
achievement of organizational objectives

 Effective and efficient use of human talent for

accomplishing the goals of an organization

 To achieve organizational objectives each organizations

need to develop a well –defined HR strategy
 Strategic Human Resource Management
Contd of HRM
• Organization has now to focus on its three core areas
• PEOPLE
• PROCESS
• PERFORMANCE

• Called the 3 Ps

• People- Known fact that the core strength of an organisation lies

on its people(human resource ) all other resources can be
replaced but not people

• Process-With the fast changing world emphasis is laid on

flexibility and adaptability. In an IT enabled environment re-
engineering of process can be done
• Contd of HRM
• PERFORMANCE: the existence of an organisation is primarily
dependent on its ability to create vale and continously increase
the rate of return on investment

 The two pillars supporting the performance of an organisation

are PEOPLE AND IT(technology)
 The integration of these two factors plays the pivotal role in
improving the performance of an organization at both individual
and organizational levels
 IT helps in documenting the knowledge pool in the organisation
and making it available to the employees through intranet etc
 Management of knowledge workers is different from that of
conventional employees-intelligence and maturity higher and
they expect greater levels of flexibility and freedom in their work
area in the case of knowledge workers
A Model of the Shift to
HRM
 Hard HRM
• The 'hard' approach rooted in the manpower
planning approach is concerned with
aligning human resource strategy with
business strategy
 Soft HRM
• The 'soft' approach is rooted in the human
relations school, with concern for workers'
outcomes and encourages commitment to
the organisation by focussing on workers'
concerns.
 Strategic Human Resource Management
Human Resource Strategy

Human resources-valuable resources that help an

organization to achieve its objectives(this depicts the centrality
of human resources for achievement of organizational goals)
Financial
capital

People Organizational
Processes utilization goals
People

Technology
 Contd of HRM
• Personnel policies and principles

 Policies are plans of action

 Organisations need to evolve HR policies as they ensure consistency
and uniformity in treating people
 They help motivate and build loyalty
 Policies become benchmarks to compare and evaluate performance

-policy on terms of hiring people

-policy with regard to medical assistance
-policy regarding housing allowance etc
-policy regarding training and development
-policy regarding IR-trade union recognition/CB/grievance/Participative
Mgmt/communication
 Principles
• If policies is a guide for managerial decisions and actions
• Principle is the fundamental truth establishment by research
/investigation and analysis
• Many principles have been established through practice/experience
and observation
• Principles are universal truths generally applicable to all organisations
• Policies on the other hand vary from organisations to organisations
• Principles guide managers in formulating policies programmes
procedures and practices
• Come handy in solving any vexing problem
• Some principles are:-
 Principle of individual development-equal opportunity for development
 Principle of scientific selection
 Principle of free flow of communication etc
 HRM Models
• To understand the theoretical perspectives on HRM we have to know
the models
• Four major models have identified and all these serve as many
purposes
1.They provide an analytical framework for studying HRM(situational
factors /stakeholders/strategic choice levels/competence)

2.They legitamise certain HRM practices: a key issue here being the
distinctiveness of HRM practices(it is not the presence of selection or
training but a distinctive approach to selection or training)

3.They provide a characteristics of HRM that establishes variables and

relationship to be researched

4. Serve as heuristic device-something to help us discover and understand

the world for explaining the nature and significance of key HR practices
 HRM Models
• The four models are:

1. The Fombrun

2.The Harvard

3.The guest

4. The Warwick
 Fombrun Model Of HRM

HRD

Selection Appraisal
Organisational
effectiveness

Rewards
The Harvard Model of Human
Resource Management
 Guest

Reflects view that a core set of integrated

HRM practices can achieve superior
individual and organizational
performance.
Guest’s Model of HRM
Guest
 Warwick

Extends the Harvard framework.

Maps the connections between the outer
and inner contexts and explores how
HRM adapts to changes in context.
Warwick
 Strategic Human Resource Management

• The transformed HR department performs the following functions

• participating in the strategizing sessions of business policy

• Preparing the HR strategies in coordination with the corporate strategies
• Implementing the various HR policies and practices including
 HR planning,
 recruitment and induction
 compensation structuring,
 career planning,
 competence mapping,
 performance management
 Strategic Human Resource Management

• Overall the HR department has outgrown its mere functional role and has
come to assume the responsibility of building the brand of the company
to:

• Attract best available talent in the market and retain them

• This helps in the recruitment cost and replacement cost

• Reducing the attrition rates

• This helps the organisation to completes its project

 Strategic Human Resource Management

• Holistic Facet Of HRM

• HR personnel are increasingly expected to involve themselves in

business planning and execution
• to understand the business requirements and tune the HR strategies to
the emerging business realities
• Any Holistic HRM approach would include the following dimension
 Participation in business strategies planning
 Tuning HR strategies to business strategy requirements
 Undertaking change management programmes to bring in cultural
transformation
 Coordination with the business heads to implement HR strategies and
policies
 Promotion of active ownership of HR policies by business heads to
improve credibility of the policies and also for their successful
implementation
 Strategic Human Resource Management

Holistic Facet Of HRM-contd

• HR function has therefore become more demanding and is no longer

restricted to be just a personnel training or administrative function

• It is a hybrid of all these functions which calls for new skills and attitude
from the HR personnel
 Strategic Human Resource Management

• ESSENTIAL SKILLS FOR AN HR MANAGER

• HR manager has to reorient him self to address the organizational
challenges
• The skills required are:

• Strategic planning:
 The global human resource development –participating in strategic
planning process suggests that strategic planner is the emerging role in
HR
 Strategic planning determines where an organization is headed for over
the next year or more
-How it is going to get there
-How would it know if it got there or not

An HR strategic plan helps in defining goals and strategies for achieving

Them/beyond day to day work/
 Strategic Human Resource Management
 Chandler (1962) defined strategy as the determination of
the long term goals and objectives of an organization and
the allocation of resources necessary for carrying out
these goals

Like strategy HR strategy is concerned with two key

elements (Richardson and Thompson 1999)

1.Determining the Strategic objectives(What goals is the

strategy supposed to achieve?-example high productivity-
reduced accidents etc

2.Developing a plan of action (How will the human resources

be organized and allocated to accomplish the objectives of the
 Strategic Human Resource Management
 Human resource strategy involves the planned and effective
use of human resources by an organization to help it to gain
or maintain an edge over its competitors

Gain competitive advantage-organizations achieve

competitive advantage when it is able to gain and maintain an
edge over its competitors by differentiating its products and
services from those of its competitors thereby increasing its
market share

The centrality of the people evident in knowledge based

organizations-where success and failure depends on the
skills and knowledge of its workforce rather than the
technology
 Strategic Human Resource Management
 Definition and Components

Given the increasingly significant role of human resources in

an organization HRM has become strategic in nature

Strategic human resource management(SHRM) is concerned

with the relationship between HRM and strategic management
in an organization

Strategic human resource management is an approach which

relates to decisions about the nature of employment
relationship,recruitment, training ,development ,performance
management, reward and employee relations
 Strategic Human Resource Management
 Definition and Components contd

Wright and McMahan (1992) defined SHRM as “the pattern of

planned human resource deployment and activities intended to
enable the firm to achieve its goals”

This definition implies the following four components of

SHRM
1.It focuses on an organization’s human resources(people)-
competitive advantage of the organization

2.The activities highlight the HR programmes ,policies and

practices as the means through which the people of the
organization can be deployed to gain competitive advantage
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 Definition and Components contd
3.The pattern and plan imply that there is a fit between HR
strategy and the organization’s business strategy(vertical
fit)and between all of the HR activities (horizontal fit)

4.The people practices, and planned pattern are all purposeful

that is directed towards the achievement of the goals of the
organization
 Strategic Human Resource Management
 Definition and Components contd

SHRM is concerned with people issues and practices that

affect or are affected by the strategic plan of the organization

The critical issues facing an organization today are mainly

human issues such as
-ensuring the availability of people
-retaining
-motivating
-developing these resources

Today organizations competes less on products or markets

and more on people
 Strategic Human Resource Management
Definition and Components contd
An organization uses a combination of several resources-
-Tangible
-Intangible in the pursuit of its objectives
These resources can be grouped into three basic types
1.Physical capital resources-plant ,equipment and finances

2.Organizational capital resources-the organization’s structure

planning, HR systems, history and organizational culture

3.human capital resources –the skills ,knowledge , judgement

and intelligence of the organization’s employee
 Strategic Human Resource Management
Definition and Components contd
An organization may have huge capital and the most
advanced machinery but if it does not have capable ,motivated
and high performing employees the organization is not likely to
demonstrate sustained levels of high performance
 Strategic Human Resource Management
Defined as “the linking of HR with strategic goals and
objectives in order to improve business performance and
develop organization culture that fosters innovation and
flexibility