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Learning Categories you, and practicing on that learning specialize you
The importance of any academic courses would gain advantage and the acceptance of the true
form, only through practical experiences. Hence it is quite necessary to put theories as into
Someone has greatly said that practical knowledge is far better than classroom teaching.
During this project I fully realized this and come to know about the present real world .The
present report entitled as Strategic human resource management issue in present
organizational enviornment a fruitful outcome of my research done during the course of
my fourth semester of MBA programmed. This research report forms an integral part of my
MBA degree course at Technical Education Research Institute, P.G. College, Ghazipur.
Strategic human resource management is the key department of the any business. Strategic
human resource management is the main part behind the companys success or failure.
Personnel management is that part of management, which concerned with people at work and
with their relationship within an enterprise.
The Aims and Objectives of this research are to have an in-depth knowledge of the Strategic
human resource management climate in India. I have tried my level best to make it simple
and understandable. The findings were in favor of Strategic human resource management
being vital for the Indian organization and they are not diminishing in todays world, but they
are at the booming stage; and every organization would want to use Strategic human resource
management. The research deals with basics of Strategic human resource management and its
climate affect in organization. The first chapter is dedicated to the introduction of the
Strategic human resource management, history of Strategic human resource management and

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its climate, functions of Strategic human resource management and definition of Strategic
human resource management. It also deals the factors affecting Strategic human resource
management. This chapter gives detail about the Strategic human resource management
climate with reference to pharmaceutical industries. It also deals the challenges and problems
come at the time of Strategic human resource management. The second chapter deals with the
Objective of the study and Importance of the study& also included the Scope of the study.
The third chapter is a summary of the various research methodologies used for the
development of the project. The methodology used for the implementation of the assigned
project is based on secondary data. The whole study is based on secondary data. The fourth
chapter deals the data analysis and interpretation Chapter five deals with the findings and
recommendations related to the research report. The conclusion& Limitation of the project is
provided in chapter six and this chapter also deals with the Bibliography & Reference of this

Deepali Singh

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Before I thank anybody for the compilation of this work I would like to thank Almighty for
providing guidance and me all the necessary help. It is grace only that I have completed this
An understanding of the study like this is never the outcome of the efforts of an individual;
rather it bears the imprint of a number of individuals who directly helped me in completing
the present study.
First & foremost, I would like to express my regard to Mr. Rahul Anand Singh (H.O.D. of
M.B.A.) and Dr. Neetu Singh, the training & placement-in-charge and the honorable
Readers of M.B.A. Department for this constant encouragement and support. I would also
like to express immense gratitude towards supervisor Dr. Neetu Singh, for providing the
knowledge, guidance and cooperation in research report.
I am also sincerely thankful to all my friends for giving me opportunity and resource to work
on the research report and giving me support whenever necessary.

Deepali Singh

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Human resource management
The concept of human resource management (HRM) is defined initially and the various
models of HRM are described. Consideration is then given to its aims and characteristics. The
chapter concludes with a review of reservations about HRM and the relationship between
HRM and personnel management. Human resource management is defined as a strategic and
coherent approach to the management of an organizations most valued assets the people
working there who individually and collectively contribute to the achievement of its
objectives. John Storey (1989) believes that HRM can be regarded as a set of inter- related
policies with an ideological and philosophical underpinning. He suggests four aspects that
constitute the meaningful version of HRM:
A particular constellation of beliefs and assumptions;
a strategic thrust informing decisions about people management;
The central involvement of line managers;
Reliance upon a set of levers to shape the employment relationship.

The matching model of HRM
One of the first explicit statements of the HRM concept was made by the Michigan School
1984. They held that HR systems and the organization structure should be managed in a way
that is congruent with organizational strategy (hence the name matching model). They
further explained that there is a human resource cycle, which consists of four generic
processes or functions that are performed in all organizations. These are:

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Selection matching available human resources to jobs;
Appraisal (performance management);
rewards the reward system is one of the most under-utilized and mishandled managerial
tools for driving organizational performance; it must reward short- as well as long-term
achievements, bearing in mind that business must perform in the present to succeed in the
Development developing high-quality employees.

The Harvard framework
The other founding fathers of HRM were the Harvard school of Beer et al (1984) who
developed what Boxall (1992) calls the Harvard framework. This framework is based on the
belief that the problems of historical personnel management can only be solved: when
general managers develop a viewpoint of how they wish to see employees involved in and
developed by the enterprise, and of what HRM policies and practices may achieve those
goals. Without either a central philosophy or a strategic vision which can be provided only
by general managers HRM is likely to remain a set of independent activities, each guided
by its own practice tradition. Beer and his colleagues believed that today, many pressures are
demanding a broader, more comprehensive and more strategic perspective with regard to the
organizations human resources. These pressures have created a need for: A longer-term
perspective in managing people and consideration of people as potential assets rather than
merely a variable cost. They were the first to underline the HRM tenet that it belongs to line
managers. They also stated that: human resource management involves all management
decisions and action that affect the nature of the relationship between the organization and its
employees its human resources. The Harvard school suggested that HRM had two
characteristic features:

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1) line managers accept more responsibility for ensuring the alignment of competitive
strategy and personnel policies;
2) personnel has the mission of setting policies that govern how personnel activities are
developed and implemented in ways that make them more mutually rein- forcing.

The overall purpose of human resource management is to ensure that the organization is able
to achieve success through people. As Ulrich and Lake (1990) remark: HRM systems can be
the source of organizational capabilities that allow firms to learn and capitalize on new
opportunities. Specifically, HRM is concerned with achieving objectives in the areas
summarized below.
Organizational effectiveness
Distinctive human resource practices shape the core competencies that determine how firms
compete (Cappelli and Crocker-Hefter, 1996). Extensive research has shown that such
practices can make a significant impact on firm performance. HRM strategies aim to support
programmes for improving organizational effectiveness by developing policies in such areas
as knowledge management, talent management and generally creating a great place to work.
This is the big idea as described by Purcelletal (2003), which consists of a clear vision and
a set of integrated values. More specifically, HR strategies can be concerned with the
development of continuous improvement and customer relations policies.
Human capital
The human capital of an organization consists of the people who work there and on whom the
success of the business depends. Human capital has been defined by Bontis et al (1999) as
follows: Human capital represents the human factor in the organization; the combined
intelligence, skills and expertise that give the organization its distinctive character. The

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human elements of the organization are those that are capable of learning, changing,
innovating and providing the creative thrust which if properly motivated can ensure the long-
term survival of the organization. Human capital can be regarded as the prime asset of an
organization, and businesses need to invest in that asset to ensure their survival and growth.
HRM aims to ensure that the organization obtains and retains the skilled, committed and
well-motivated workforce it needs. This means taking steps to assess and satisfy future
people needs and to enhance and develop the inherent capacities of people their
contributions, potential and employ- ability by providing learning and continuous
development opportunities. It involves the operation of rigorous recruitment and selection
procedures, performance-contingent incentive compensation systems, and management
development and training activities linked to the needs of the business (Becker et al, 1997).
It also means engaging in talent management the process of acquiring and nurturing talent,
wherever it is and wherever it is needed, by using a number of interdependent HRM policies
and practices in the fields of resourcing, learning and development, performance management
and succession planning.
Knowledge management
Knowledge management is any process or practice of creating, acquiring, capturing, sharing
and using knowledge, wherever it resides, to enhance learning and performance in
organizations (Scarborough et al 1999). HRM aims to support the development of firm-
specific knowledge and skills that are the result of organizational learning processes.
Reward management
HRM aims to enhance motivation, job engagement and commitment by introducing policies
and processes that ensure that people are valued and rewarded for what they do and achieve,
and for the levels of skill and competence they reach.

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Employee relations
The aim is to create a climate in which productive and harmonious relation- ships can be
maintained through partnerships between management and employees and their trade unions.
Meet diverse needs
HRM aims to develop and implement policies that balance and adapt to the needs of its
stakeholders and provide for the management of a diverse workforce, taking into account
individual and group differences in employment, personal needs, work style and aspirations,
and the provision of equal opportunities for all.
Rhetoric and reality
The research conducted by Gratton et al (1999) found that there was generally a wide gap
between the sort of rhetoric expressed above and reality. Managements may start with good
intentions to do some or all of these things, but the realization of them theory in use is
often very difficult. This arises because of contextual and process problems: other business
priorities, short-termism, lack of support from line managers, an inadequate infrastructure of
supporting processes, lack of resources, resistance to change and lack of trust. the levels of
skill and competence they reach.

The characteristics of the HRM concept as they emerged from the writings of the pioneers
and later commentators are that it is:
strategic, with an emphasis on integration;
based on the belief that people should be treated as human capital;

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unitarist rather than pluralist, individual rather than collective, with regard to
employee relations;
a management-driven activity the delivery of HRM is a line management
focused on business values

The diversity of HRM
But these characteristic of HRM are by no means universal. There are many models,
and practices within different organizations are diverse, often only corresponding to
the conceptual version of HRM in a few respects. Hendry and Pettigrew (1990) play
down the prescriptive element of the HRM model and extend the analytical elements.
As pointed out by Boxall (1992), such an approach rightly avoids labelling HRM as a
single form and advances more slowly by proceeding more analytically. It is argued
by Hendry and Pettigrew that better descriptions of structures and strategy- making
in complex organizations, and of frameworks for understanding them, are an essential
underpinning for HRM. A distinction was made by Storey (1989) between the hard
and soft versions of HRM. The hard version of HRM emphasizes that people are
important resources through which organizations achieve competitive advantage.
These resources have therefore to be acquired, developed and deployed in ways that
will benefit the organization. The focus is on the quanti- tative, calculative and
business-strategic aspects of managing human resources in as rational a way as for
any other economic factor. As Guest (1999) comments: the drive to adopt HRM is
based on the business case of a need to respond to an external threat from increasing
competition. It is a philosophy that appeals to managements who are striving to
increase competitive advantage and appreciate that to do this they must invest in

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human resources as well as new technology. He also commented that HRM reflects
a long- standing capitalist tradition in which the worker is regarded as a commodity.
The emphasis is therefore on the interests of management, integration with business
strategy, obtaining added value from people by the processes of human resource
development and performance management and the need for a strong corporate
culture expressed in mission and value statements and rein- forced by
communications, training and performance management processes. The soft version
of HRM traces its roots to the human-relations school. It emphasizes communication,
motivation and leadership. As described by Storey (1989) it involves treating
employees as valued assets, a source of competitive advantage through their
commitment, adaptability and high quality (of skills, performance and so on). It
therefore views employees, in the words of Guest (1999), as means rather than
objects. The soft approach to HRM stresses the need to gain the commitment the
hearts and minds of employees through involvement, communications and other
methods of developing a high-commitment, high-trust organization. Attention is also
drawn to the key role of organizational culture. In 1998, Karen Legge defined the
hard model of HRM as a process emphasizing the close integration of human
resource policies with business strategy which regards employees as a resource to be
managed in the same rational way as any other resource being exploited for maximum
return. In contrast, the soft version of HRM sees employees as valued assets and as a
source of competitive advantage through their commitment, adaptability and high
level of skills and performance. It has, however, been observed by Truss (1999) that,
even if the rhetoric of HRM is soft, the reality is often hard, with the interests of the
organization prevailing over those of the individual. And research carried out by
Gratton et al (1999) found that, in the eight organizations they studied, a mixture of

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hard and soft HRM approaches was identified. This suggested to the researchers that
the distinction between hard and soft HRM was not as precise as some commentators
have implied.

What is strategy?
The origin of this concept can be traced in its military orientation, going back to the Greek
word strategos, for a general who organises, leads and directs his forces to the most
advantageous position (Bracker, 1980; Legge, 1995; Lundy and Cowling, 1996). In the world
of business it mainly denotes how top management is leading the organisation in a particular
direction in order to achieve its specific goals, objectives, vision and overall purpose in the
society in a given context / environment. The main emphasis of strategy is thus to enable an
organisation to achieve competitive advantage with its unique capabilities by focusing on
present and future direction of the organisation (also see Miller, 1991; Kay 1993).
Over the past three decades or so a lot has been written under the field of strategic
management about the nature, process, content and formation of organisational strategy (see
e.g. Mintzberg, 1987; 1994; Quinn et al., 1988; Ansoff, 1991 Whittington, 1993; 2001). A
classical strategic management process consists of a series of steps, starting from
establishing a mission statement and key objectives for the organisation; analysing the
external environment (to identify possible opportunities and threats); conducting an internal
organisational analysis (to examine its strengths and weaknesses and the nature of current
management systems, competencies and capabilities); setting specific goals; examining
possible strategic choices / alternatives to achieve organisational objectives and goals;
adoption / implementation of chosen choices; and regular evaluation of all the above (see e.g.
Mello, 2006). The abovementioned first five steps form part of strategic planning and the last
two steps deal with the implementation of an ideal strategic management process. They also

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deal with both the content (revealed by the objectives and goals) and process (for
example, planning, structure and control) of an organisational strategy (Chakravarthy and
Doz, 1992; Lundy and Cowling, 1996).
However, in real life, it is important to note that for a variety of reasons and pressures
(such as scarcity of time, resources, or too much information), top decision-makers do not
follow such a formal and rational approach (also called as deliberate approach) when
formulating their organisational strategy. Based on their experiences, instincts, intuition and
the limited resources available to them (along with factors such as need for flexibility),
managers adopt an informal and bounded rational approach (resulting in informal
incremental process) to strategy formation (see Quinn, 1978; Mintzberg, 1978). Mintzberg
(1987) says that formal approach to strategy making results in deliberation on the part of
decision-makers, which results in thinking before action. On the other hand, the incremental
approach allows the strategy to emerge in response to an evolving situation. Lundy and
Cowling (1996: 23), summarising Mintzbergs thinking, write that deliberate strategy
precludes learning while emergent strategy fosters it but precludes control. Effective
strategies combine deliberation and control with flexibility and organisational learning. A
number of scholars (such as Ansoff, 1991) have criticised Mintzbergs work as over-

Identify and analyse the core issues (such as why, when and how) related to
both rational and bounded rational approaches to strategy formulation

The debate with regard to the formation of organisational strategy continues. For
example, Whittington (1993) presents four generic approaches to strategy formation along the
two dimensions of processes and outcomes of strategy (see Figure 1.1). The x axis deals

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[Fig. 1.1]
with the extent to which strategy is formed in a rational, formal, planned and deliberate
manner , is a result of bounded rational approach or is emergent in nature. The y axis
relates to continua of outcomes, i.e. the extent to which organisational strategy focuses on
profit-maximising outcomes. The top left-hand quadrant represents a mix of maximum profit-
maximisation and a formal planned and deliberate approach to strategy formation.
Whittington denotes this combination as classical. The combination in the top right-hand is
that of profit-maximisation and an emergent kind of strategy formation called the
evolutionary approach. The other two combinations the emergent approach to strategy
formation and pluralistic types of outcome and deliberate process and pluralistic outcomes
are denoted as processual and systemic approaches respectively.

Figure: 1.1 Whittingtons (1993) generic perspective on strategy
Classical Evolutionary
Systemic Processual

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Organisations adopting the classical approach (like the army) follow a clear, rational,
planned and deliberate process of strategy formation and aim for maximisation of profits.
This approach is most likely to be successful when the organisations objectives and goals are
clear, the external environment is relatively stable, the information about both the external
and internal environment is reliable and the decision-makers are able to analyse it thoroughly
and make highly calculated decisions in order to adopt the best possible choice. Strategy
formulation is left to top managers and the implementation is carried out by operational
managers of different departments. This scenario demonstrates the difference between first-
order strategy or decisions and second-order strategy or decisions, where the former
represents the strategy formation by top managers and the latter is an implementation of the
same by lower-level managers (for details see Miller, 1993; Purcell 1989; Legge, 1995). It
also represents the classic top-down approach of Chandler (1962) where organisation
structure follows the strategy.
The evolutionary approach represents the other side of the strategy formation continua
where owing to a number of reasons (such as unpredictability of the dynamic business
environment) it is not possible to adopt a rational, planned and deliberate process, although
profit-maximisation is still the focus. In such competitive and uncertain conditions where
managers do not feel they are in command, only the best can survive (survival of the fittest
or being at the correct place at right time). The key to success thus largely lies with a good fit
between organisational strategy and business environment (also see Lundy and Cowling,
The processual approach is different on the profit-maximisation perspective where
managers are not clear about what the optimum level of output is or should be. A high
degree of confusion and complexity exists both within the organisations and in the markets;

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the strategy emerges in small steps (increments) and often at irregular intervals from a
practical process of learning, negotiating and compromising instead of clear series of steps.
This is related to the inability of senior managers to comprehend huge banks of information, a
variety of simultaneously occurring factors and a lack of desire to optimise and rationalise
decisions. The outcome is then perhaps a set of satisficing behaviours, acceptable to the
dominant coalitions, which is the reality of strategy-making (Legge, 1995: 100).
As the name suggests, the systemic approach emphasises the significance of larger
social systems, characterised by factors such as national culture, national business systems,
demographic composition of a given society and the dominant institutions of the society
within which a firm is operating. The strategy formation is strongly influenced by such
factors, and faced by these pressures the strategist may intentionally deviate from rational
planning and profit-maximisation. It will not be sensible to suggest that organisations adopt
only one of the four particular approaches to strategy formation, but certainly it has to be a
mixture of possible combinations along the two dimensions of processes and profit-

The strategic nature of HRM

Perhaps the most significant feature of HRM is the importance attached to strategic
integration, which flows from top managements vision and leadership, and which
requires the full commitment of people to it. David Guest (1987, 1989a, 1989b, 1991)
believes that a key policy goal for HRM is strategic integration, by which he means
the ability of the organization to integrate HRM issues into its strategic plans, to
ensure that the various aspects of HRM cohere, and to provide for line managers to
incorporate an HRM perspective into their decision making. Karen Legge (1989)

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considers that one of the common themes of the typical definitions of HRM is that
human resource policies should be inte- grated with strategic business planning. Keith
Sisson (1990) suggests that a feature increasingly associated with HRM is a stress on
the integration of HR policies both with one another and with business planning more
generally. John Storey (1989) suggests that: the concept locates HRM policy
formulation firmly at the strategic level and insists that a characteristic of HRM is its
internally coherent approach.

Strategy: concept and process
Strategy is about deciding where you want to go and how you mean to get there. A
strategy is a declaration of intent: This is what we want to do and this is how we
intend to do it. Strategies define longer-term goals but they are more concerned with
how those goals should be achieved. Strategy is the means to create value. A good
strategy is one that works, one that guides purposeful action to deliver the required
result. Strategy has been defined in other ways by the many writers on this subject, for
example: Strategy is the determination of the basic long-term goals and objectives of
an enterprise, and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals.
Strategy is a set of fundamental or critical choices about the ends and means of a
business. (Child, 1972)
Strategy is concerned with the long-term direction and scope of an organization. It is
also crucially concerned with how the organization positions itself with regard to the
environment and in particular to its competitors It is concerned with establishing
competitive advantage, ideally sustainable over time, not by technical manoeuvring,
but by taking an overall long-term perspective. (Faulkner and Johnson, 1992)

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Strategy is the direction and scope of an organization over the longer term ideally,
which matches its resources to its changing environment, and in particular, to its
markets, customers and clients to meet stakeholder expectations. (Johnson and
Scholes, 1993)
Business strategy is concerned with the match between the internal capabil- ities of
the company and its external environment. (Kay, 1999)

A strategy, whether it is an HR strategy or any other kind of management strategy,
must have two key elements: there must be strategic objectives (i.e. things the strategy
is supposed to achieve), and there must be a plan of action (i.e. the means by which it
is proposed that the objectives will be met). (Richardson and Thompson, 1999)
The emphasis (in strategy) is on focused actions that differentiate the firm from its
competitors. (Purcell, 1999)

The concept of strategy is based on three subsidiary concepts: competitive advantage,
distinctive capabilities and strategic fit.
Competitive advantage
The concept of competitive advantage was formulated by Michael Porter (1985). Competitive
advantage, Porter asserts, arises out of a firm creating value for its customers. To achieve it,
firms select markets in which they can excel and present a moving target to their competitors
by continually improving their position. Porter emphasized the importance of: differentiation,
which consists of offering a product or service that is perceived industry-wise as being
unique; and focus seeing a particular buyer group or product market more effectively or
efficiently than competitors who compete more broadly. He then developed his well-known

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framework of three generic strategies that organizations can use to gain competitive
advantage. A distinction has been made by Barney (1991) between the competitive advantage
that a firm presently enjoys but others will be able to copy, and sustained competitive
advantage, which competitors cannot imitate. This leads to the important concept of distinct.
Distinctive capabilities
As Kay (1999) comments: The opportunities for companies to sustain competitive
advantage [are] determined by their capabilities. A distinctive capability or competence can
be described as an important feature that in Quinns (1980) phrase confers superiority on the
organization. Kay extends this definition by emphasizing that there is a difference between
distinctive capabilities and reproducible capabilities. Distinctive capabilities are those
characteristics that cannot be replicated by competitors, or can only be imitated with great
difficulty. Reproducible capabilities are those that can be bought or created by any company
with reasonable management skills, diligence and financial resources. Most technical
capabilities are reproducible. Prahalad and Hamel (1990) argue that competitive advantage
stems in the long term when a firm builds core competences that are superior to its rivals
and when it learns faster and applies its learning more effectively than its competitors.
Distinctive capabilities or core competences describe what the organization is specially or
uniquely capable of doing. They are what the company does particularly well in comparison
with its competitors. Key capabilities can exist in such areas as technology, innovation, and
marketing, delivering quality, and making good use of human and financial resources. If a
company is aware of what its distinctive capabilities are, it can concentrate on using and
developing them without diverting effort into less-rewarding activities. It can be argued that
the most distinctive capability of all is that represented by the knowledge, skills, expertise
and commitment of the employees of the organization. This belief provides the basis for the

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philosophy of strategic human resource management. Four criteria have been proposed by
Barney (1991) for deciding whether a resource can be regarded as a distinctive capability or

Fundamentally, strategy is about defining intentions (strategic intent) and achieving strategic
fit by allocating or matching resources to opportunities (resource-based strategy). The
effective development and implementation of strategy depends on the strategic capability of
the organization, which will include the ability not only to formulate strategic goals but also

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to develop and implement strategic plans through the processes of strategic management and
strategic planning.
Strategic intent
In its simplest form, strategy could be described as an expression of the intentions of the
organization what it means to do and how or, as Wickens (1987) put it, how the business
means to get from here to there. As defined by Hamel and Prahalad (1989), strategic intent
refers to the expression of the leadership position the organization wants to attain and
establishes a clear criterion on how progress towards its achievement will be measured.
Strategic intent could be a very broad statement of vision or mission and/or it could more
specifically spell out the goals and objectives to be attained over the longer term.
Resource-based strategy
The resource-based view of strategy is that the strategic capability of a firm depends on its
resource capability. Resource-based strategy theorists such as Barney (1991) argue that
sustained competitive advantage stems from the acquisition and effective use of bundles of
distinctive resources that competitors cannot imitate. As Boxall (1996) comments:
Competitive success does not come simply from making choices in the present; it stems
from building up distinctive capabilities over significant periods of time. Teece, Pisano and
Shuen(1997) define dynamic capabilities as the capacity of a firm to renew, augment and
adapt its core competencies over time
Strategic capability
Strategic capability is a concept that refers to the ability of an organization to develop and
implement strategies that will achieve sustained competitive advantage. It is therefore about

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the capacity to select the most appropriate vision, to define realistic intentions, to match
resources to opportunities and to prepare and implement strategic plans. The strategic
capability of an organization depends on the strategic capabilities of its managers. People
who display high levels of strategic capability know where they are going and know how
they are going to get there. They recognize that, although they must be successful now to
succeed in the future, it is always necessary to create and sustain a sense of purpose and
Strategic management
The purpose of strategic management has been expressed by Rosabeth Moss Kanter (1984) as
being too elicit the present actions for the future and become action vehicles integrating
and institutionalizing mechanisms for change. Strategic management has been defined by
Pearce and Robinson (1988) as follows: Strategic management is the set of decisions and
actions resulting in the formulation and implementation of strategies designed to achieve the
objectives of an organization. Strategic management has been described by Burns (1992) as
being primarily concerned with:
the full scope of an organizations activities, including corporate objectives and
organizational boundaries;
matching the activities of an organization to the environment in which it operates;
ensuring that the internal structures, practices and procedures enable the organization
to achieve its objectives;
matching the activities of an organization to its resource capability, assessing the
extent to which sufficient resources can be provided to take advantage of
opportunities or to avoid threats in the organizations environment;
acquiring, divesting and reallocating resources;

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Translating the complex and dynamic set of external and internal variables that an
organization faces into a structured set of clear future objectives, which can then be
implemented on a day-to-day basis.
Strategic management means that managers are looking ahead at what they need to achieve in
the middle or relatively distant future. It deals with both ends and means. As an end it
describes a vision of what something will look like in a few years time. As a means, it shows
how it is expected that the vision will be realized. Strategic management is therefore
visionary management, concerned with creating and conceptualizing ideas of where the
organization should be going. But it is also empirical management, which decides how in
practice it is going to get there. The focus is on identifying the organizations mission and
strategies, but attention is also given to the resource base required to make it succeed.
Managers who think strategically will have a broad and long-term view of where they are
going. But they will also be aware that they are responsible first for planning how to allocate
resources to opportunities that contribute to the implementation of strategy and, second, for
managing these opportunities in ways that will add value to the results achieved by the firm.

The formulation of corporate strategy can be defined as a process for developing a sense of
direction. It has often been described as a logical, step-by-step affair, the outcome of which is
a formal written statement that provides a definitive guide to the organizations long-term
intentions. Many people still believe and act as if these were the case, but it is a

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misrepresentation of reality. This is not to dismiss completely the ideal of adopting a
systematic approach as described below it has its uses as a means of providing an analytical
framework for strategic decision making and a reference point for monitoring the
implementation of strategy. But in practice, and for reasons also explained below, the
formulation of strategy can never be as rational and Linear A process as some writers
describe it or as some managers attempt to make it.
The systematic approach to formulating strategy,
the process of formulating strategy consists of the following steps:
1. Define the mission.
2. Set objectives.
3. Conduct internal and external environmental scans to assess internal strengths and
weaknesses and external opportunities and threats (a SWOT analysis).
4. Analyze existing strategies to determine their relevance in the light of the internal and
external appraisal. This may include gap analysis, which will establish the extent to which
environmental factors might lead to gaps between what could be achieved if no changes were
made and what needs to be achieved. The analysis would also cover resource capability,
answering the question: Have we sufficient human or financial resources available now or
that can readily been made available in the future to enable us to achieve our objectives?
5. Define in the light of this analysis the distinctive capabilities of the organization.

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6. Define the key strategic issues emerging from the previous analysis. These will be
concerned with such matters as product-market scope, enhancing shareholder value and
resource capability.
7. Determine corporate and functional strategies for achieving goals and competitive
advantage, taking into account the key strategic issues. These may include business strategies
for growth or diversification, or broad generic strategies for innovation, quality or cost
leadership; or they could take the form of specific corporate/functional strategies concerned
with product-market scope, technological development or human resource development.
8. Prepare integrated strategic plans for implementing strategies.
9. Implement the strategies.
10. Monitor implementation and revise existing strategies or develop new strategies as
This model of the process of strategy formulation should allow scope for iteration and
feedback, and the activities incorporated in the model are all appropriate in any process of
strategy formulation. But the model is essen- tially linear and deterministic each step
logically follows the earlier one and is conditioned entirely by the preceding sequence of
events; and this is not what happens in real life.

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Strategic human resource management: concept and process
The concept of strategic human resource management (strategic HRM) and the processes
involved are considered in this chapter under the following headings:
a. strategic HRM defined;
b. the meaning of strategic HRM;
c. the aims of strategic HRM;
d. approaches to strategic HRM;
e. limitations to the concept of strategic HRM.
Strategic HRM defines the organizations intentions and plan s on how its business goals
should be achieved through people. It is based on three propositions: first, that human capital
is a major source of competitive advantage; second, that it is people who implement the
strategic plan; and, third, that a systematic approach should be adopted to defining where the
organization wants to go and how it should get there. Strategic HRM is a process that
involves the use of overarching approaches to the development of HR strategies, which are
integrated vertically with the business strategy and horizontally with one another. These
strategies define intentions and plans related to overall organiza- tional considerations, such
as organizational effectiveness, and to more specific aspects of people management, such as
resourcing, learning and development, reward and employee relations.
Strategic HRM focuses on actions that differentiate the firm its competitors (Purcell, 1999). It
is suggested by Hendry and Pettigrew (1986) that it has four meanings:

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the use of planning; l a coherent approach to the design and management of personnel
systems based on an employment policy and workforce strategy and often underpinned by a
philosophy; l matching HRM activities and policies to some explicit business strategy; l
seeing the people of the organization as a strategic resource for the achievement of
competitive advantage.
Strategic HRM addresses broad organizational issues relating to changes in structure and
culture, organizational effectiveness and performance, matching resources to future
requirements, the development of distinctive capabilities, knowledge management, and the
management of change. It is concerned with both human capital requirements and the
development of process capabilities, that is, the ability to get things done effectively. Overall,
it deals with any major people issues that affect or are affected by the strategic plans of the
organization. As Boxall (1996) remarks: The critical concerns of HRM, such as choice of
executive leadership and formation of positive patterns of labor relations, are strategic in any
The rationale for strategic HRM is the perceived advantage of having an agreed and
understood basis for developing approaches to people management in the longer term. It has
been suggested by Lengnick-Hall and Lengnick-Hall (1990) that underlying this rationale in a
business is the concept of achieving competitive advantage through HRM. Strategic HRM
supplies a perspective on the way in which critical issues or success factors related to people
can be addressed, and strategic decisions are made that have a major and long-term impact on
the behaviour and success of the organization. The fundamental aim of strategic HRM is to
generate strategic capability by ensuring that the organization has the skilled, committed and
well-motivated employees it needs to achieve sustained competitive advantage. Its objective

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is to provide a sense of direction in an often turbulent environment so that the business needs
of the organization, and the individual and collective needs of its employees can be met by
the development and implementation of coherent and practical HR policies and programmes.
As Dyer and Holder (1988) remark, strategic HRM should provide unifying frameworks
which are at once broad, contingency based and integrative. When considering the aims of
strategic HRM it is necessary to consider how HR strategies will take into account the
interests of all the stakeholders in the organization: employees in general as well as owners
and management. In Storeys (1989) terms, soft strategic HRM will place greater emphasis
on the human relations aspect of people management, stressing continuous development,
communication, involvement, security of employment, the quality of working life and work
life balance. Ethical considerations will be important. Hard strategic HRM on the other
hand will emphasize the yield to be obtained by investing in human resources in the interests
of the business. Strategic HRM should attempt to achieve a proper balance between the hard
and soft elements. All organizations exist to achieve a purpose and they must ensure that they
have the resources required to do so and that they use them effectively. But they should also
take into account the human considerations contained in the concept of soft strategic HRM.
In the words of Quinn Mills (1983), they should plan with people in mind, taking into
account the needs and aspirations of all the members of the organization. The problem is that
hard considerations in many businesses will come first, leaving soft ones some way behind.
There are five approaches to strategic HRM. These consist of resource-based strategy,
achieving strategic fit, high-performance management, high-commitment management and
high-involvement management, as described below.

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The resource-based approach
A fundamental aim of resource-based HR strategy, as Barney (1991) indicates, is to develop
strategic capability achieving strategic fit between resources and opportunities and
obtaining added value from the effective deployment of resources. A resource-based
approach will address methods of increasing the firms strategic capability by the
development of managers and other staff who can think and plan strategically and who
understand the key strategic issues. The resource-based approach is founded on the belief that
competitive advantage is obtained if a firm can obtain and develop human resources that
enable it to learn faster and apply its learning more effectively than its rivals (Hamel and
Prahalad, 1989). Human resources are defined by Barney (1995) as follows: Human
resources include all the experience, knowledge, judgment, risk-taking propensity and
wisdom of individuals associated with the firm. Kamoche (1996) suggests that: In the
resource-based view, the firm is seen as a bundle of tangible and intangible resources and
capabilities required for product/market competition. In line with human capital theory,
resource-based theory emphasizes that investment in people adds to their value in the firm.
The strategic goal will be to create firms which are more intelligent and flexible than their
competitors (Boxall, 1996) by hiring and developing more talented staff and by extending
their skills base. Resource-based strategy is therefore concerned with the enhancement of the
human or intellectual capital of the firm. As Ulrich (1998) comments: Knowledge has
become a direct competitive advantage for companies selling ideas and relationships. The
challenge to organizations is to ensure that they have the capability to find, assimilate,
compensate and retain the talented individuals they need. A convincing rationale for
resource-based strategy has been produced by Grant (1991) when the external environment is
in a state of flux, the firms own resources and capabilities may be a much more stable basis

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on which to define its identity. Hence, a definition of a business in terms of what it is capable
of doing may offer a more durable basis for strategy than a definition based upon the needs
(eg markets) which the business seeks to satisfy. Unique talents among employees, including
superior performance, productivity, flexibility, innovation, and the ability to deliver high
levels of personal customer service, are ways in which people provide a critical ingredient in
developing an organizations competitive position. People also provide the key to managing
the pivotal interdependencies across functional activities and the important external
relationships. It can be argued that one of the clear benefits arising from competitive
advantage based on the effective management of people is that such an advantage is hard to
imitate. An organizations HR strategies, policies and practices are a unique blend of
processes, procedures, personalities, styles, capabil- ities and organizational culture. One of
the keys to competitive advantage is the ability to differentiate what the business supplies to
its customers from what is supplied by its competitors. Such differentiation can be achieved
by having HR strategies that ensure that the firm has higher-quality people than its
competitors, by developing and nurturing the intellectual capital possessed by the business
and by functioning as a learning organization.
Strategic fit
The HR strategy should be aligned to the business strategy (vertical fit). Better still, HR
strategy should be an integral part of the business strategy, contributing to the business
planning process as it happens. Vertical inte- gration is necessary to provide congruence
between business and human resource strategy so that the latter supports the accomplishment
of the former and, indeed, helps to define it. Horizontal integration with other aspects of the
HR strategy is required so that its different elements fit together. The aim is to achieve a

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coherent approach to managing people in which the various practices are mutually
High-performance management
High-performance management (called in the United States high- performance work systems
or practices) aims to make an impact on the performance of the firm through its people in
such areas as productivity, quality, levels of customer service, growth, profits and, ultimately,
the delivery of increased shareholder value. High-performance management practices include
rigorous recruitment and selection procedures, extensive and relevant training and
management development activities, incentive pay systems and performance management
processes. A well-known definition of a high-performance work system was produced by the
US Department of Labor (1993). The characteristics listed
careful and extensive systems for recruitment,
selection and training;
formal systems for sharing information with the individuals who work in the
clear job design;
high-level participation processes;
monitoring of attitudes;
performance appraisals;
Properly functioning grievance procedures;
Promotion and compensation schemes that provide for the recognition and financial
rewarding of the high-performing members of the workforce.

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High-commitment management
One of the defining characteristics of HRM is its emphasis on the impor- tance of enhancing
mutual commitment (Walton, 1985). High-commitment management has been described by
Wood (1996) as: A form of management which is aimed at eliciting a commitment so that
behaviour is primarily self-regulated rather than controlled by sanctions and pressures
external to the individual, and relations within the organization are based on high levels of
trust. The approaches to achieving high commitment as described by Beer et al (1984) and
Walton (1985) are:
the development of career ladders and emphasis on trainability and commitment as
highly valued characteristics of employees at all levels in the organization;
a high level of functional flexibility with the abandonment of potentially rigid job
the reduction of hierarchies and the ending of status differentials;
a heavy reliance on team structure for disseminating information (team briefing),
structuring work (team working) and problem solving (improvement groups or quality
HR strategies
Strategic HRM as described above is the process that results in the formulation of HR
strategies. The terms strategic HRM and HR strategy are often used interchangeably, but a
distinction can be made between them. Strategic HRM can be regarded as a general approach
to the strategic management of human resources in accordance with the intentions of the
organization on the future direction it wants to take. What emerges from this process is a

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stream of decisions over time, which form the pattern adopted by the organization for
managing its human resources and define the areas in which specific HR strategies need to be
developed. HR strategies will focus on the specific intentions of the organization on what
needs to be done and what needs to be changed. This chapter starts by defining what HR
strategies are and what they set out to do, continue with descriptions of different types of
strategy with examples, and concludes with a list of the criteria for an effective strategy.
HR strategies set out what the organization intends to do about its human resource
management policies and practices, and how they should be integrated with the business
strategy and each other. They are described by Dyer and Reeves (1995) as internally
consistent bundles of human resource practices, and in the words of Peter Boxall (1996) they
provide a framework of critical ends and means. The purpose of HR strategies is to guide
development and implementation programmes. They provide a means of communicating to
all concerned the intentions of the organization about how its human resources will be
managed. They enable the organization to measure progress and evaluate outcomes against
Because all organizations are different, all HR strategies are different. There is no such thing
as a set of standard characteristics. Research into HR strategy conducted by Armstrong and
Long (1994) and Armstrong and Baron (2002) revealed many variations. Some strategies are
simply very general declarations of intent. Others go into much more detail. But two basic
types of HR strategies can be identified. These are:
1) Overarching strategies; and

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2) Specific strategies relating to the different aspects of human resource management.
Specific HR strategies
Specific HR strategies set out what the organization intends to do in areas such as:
Latent management how the organization intends to win the war for talent
Continuous improvement providing for focused and continuous incremental
innovation sustained over a period of time;
Knowledge management creating, acquiring, capturing, sharing and using
knowledge to enhance learning and performance;
Resourcing attracting and retaining high-quality people;
Learning and developing providing an environment in which employees are
encouraged to learn and develop;
Reward defining what the organization wants to do in the longer term to develop
and implement reward policies, practices and processes that will further the
achievement of its business goals and meet the needs of its stakeholders;
Employee relations defining the intentions of the organization about what needs to
be done and what needs to be changed in the ways in

An effective HR strategy is one that works in the sense that it achieves what it sets out to
achieve. In particular, it:
will satisfy business needs; be founded on detailed analysis and study, not just wishful
thinking; can be turned into actionable programmes that anticipate implementation

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requirements and problems; is coherent and integrated, being composed of components that
fit with and support each other; takes account of the needs of line managers and employees
generally as well as those of the organization and its other stakeholders. As Boxall and
Purcell (2003) emphasize: HR planning should aim to meet the needs of the key stakeholder
groups involved in people management in the firm. Here is a comment on what makes a
good HR strategy: A good strategy is one which actually makes people feel valued. It makes
them knowledgeable about the organization and makes them feel clear about where they sit as
a group, or team, or individual. It must show them how what they do either together or
individually fits into that strategy. Importantly, it should indicate how people are going to be
rewarded for their contribution and how they might be developed and grow in the

Emergence of strategic human resource management (SHRM)

The above developments in the field of HRM highlight the contribution it can make towards
business success and an emphasis on HRM to become an integral part of business strategy
(Lengnick-Hall and Lengnick-Hall, 1988; Brewster and Larsen, 1992; Bamberger and
Meshoulam, 2000; Schuler and Jackson, 2007). The emergence of the term strategic human
resource management (SHRM) is an outcome of such efforts. It is largely concerned with
integration of HRM into the business strategy and adaptation of HRM at all levels of the
organisation (Guest, 1987; Schuler, 1992).

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Past View of SHRM
Back in the dark ages around the mid-1970s (there werent even any computers avail- able to
most managers!), Human Resource Manager (we usually called them Personnel Managers
then) were sometimes selected for the job because they had limited skills as an Operational
Managerthey might have had less experience or been considered a people person rather
than a tough boss. In other words, they werent considered to be as capa- ble of managing
what were considered to be real operations, so we put them in HR. Why? In general, Human
Resource Management was considered to be a bit easier than other man- agement jobs.
Human Resource Managers were only expected to be paper pushers who could keep all of
the Personnel files straight. They maintained organizational records on the people who
worked for the company but had very little to do with the management of the organizations
business processes. Since all they had to do was manage paper, we frequently put those with
more limited skills in Personnel. In this environment, most Human Resource Departments
provided limited services to the organizationkeeping track of job applicants, maintaining
employee paperwork, and filing annual performance evaluations. The line managers were the
ones responsible for directly managing the people within the organization. Cost centers. In
these types of organization, the Human Resource Department was considered to be a cost
center for the organization. Whats a cost center? In simple terms, a cost center is a division
or department within the organization that brings in no revenue or profitit only costs
money for the organization to run this function. As you can easily see, we dont want many
(or any) cost centers in an organization if we can help it. We need revenue centers instead.
Revenue centers. Revenue centers are a division or department that generates monetary
returns for the organization. Where cost centers eat up available funds, revenue centers
provide funds for the organization to operate in the future. So, whats a good HR Manager to

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do?How can this course help you in your personal and professional lives? What are your
goals, or what do you want to get out of this course?
Present View of SHRM
The old workplace, in which managers simply told employees what to do, is gone. You will
most likely work in a team and share in decision making and other management tasks. Today,
people want to be involved in management, and organizations expect employees to work in
teams and participate in managing the firm.16Productivity centers. Welcome to the 21st
century and the productivity center. A productivity center is a revenue center that enhances
profitability of the organization through enhancing the productivity of the people within the
organization. So, why does a modern organization worry so much about HRM? Todays
Human Resource Manager is no longer running an organizational cost center. Their function,
along with all other managers within the organization, is to improve organizational revenues
and profitsto be a profit center. How does HR create revenue and profits for the
organization? They do it through enhancing the productivity of the people within the
organization. Productivity is the amount of output that an organization gets per unit of input,
with human input usually expressed in terms of units of time. We must be more competitive
in todays business environment in order to survive for the long term. As a manager of any
type, we do things that will improve the productivity of the people who work for us and our
organizationwe create productivity centers. But, how can we become more productive?
Productivity is the end result of two components that managers work to create and improve
within the organization: Effectivenessa function of getting the job done whenever and
however it must be done; it answers the question Did we do the right things?
Efficiencya function of how many organizational resources were used in getting the job
done; it answers the question Did we do things right?

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Both of these are important, but most of the time we are focused on efficiency. Human
resources (our people) allow us to be more efficient as an organization if they are used in the
correct manner. This course is about how to make our people more efficient. Recall that
efficiency is a function of how many organizational resources we use up in order to get the
job done. It doesnt matter what kind of resource we are talking about. We burn up material
resources doing our jobs, we burn up monetary resources doing our work, and we burn up
facility resources doing our jobs. Do we burn up human resources? Well, not literally, but we
burn up peoples time. This is the value that we have in our peopletheir time. We
physically use up monetary resources, facility resources, and material resources, but we use
up the time available from our people. Managing HR deals primarily with improving the
efficiency of the people within your organization. If your people are inefficient, it can kill
youliterally kill your organization. Your organization will fail if your people are inefficient
over long periods of time. If we dont use our people efficiently, were ultimately going to be
forced out of business by somebody who is better at using those resources than we are. So the
primary reason were worried about HR Management within an organization is to improve
efficiency of our human beings. So how do we make our people more efficient? Well, the
problem is that we cant really directly affect the performance of individuals within the
organization. We cant force an employee to act in a certain way all of the time within the
organization. We have the ability to sanction (punish) them when they dont do what we need
them to do, but we dont have the ability to directly control all of their actions. As managers
for the organization, we have to do things that will have an indirect effect on our peoples
productivitytheir efficiency and effectiveness. We have certain things within our control as
managers that can cause our people to do things that we need them to do.

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21st-Century HRM Challenges
The following issues as among the most important and most difficult things that they deal
1. Productivity
2. Job satisfactiona feeling of well-being and acceptance of ones place in the
3. Turnoverpermanent loss of workers from the organization (People who quit would
be considered voluntary turnover, while people who were fired would be involuntary
4. Absenteeismtemporary absence of employees from the workplace

21st-Century HRM Strategic View
Strategy and strategic planning deal with a process of looking at our organization and
environmentboth today and in the expected futureand determining what we as an
organization want to do to meet the requirements of that expected future. We work to predict
what this future state will look like and then plan for that eventuality. Line managers in
organizations have participated in strategic planning for around 70 years, but their HR
cousins did not really get involved until about the mid-1980s at the earliest. Only in the last
30 or so years has HR Management really gone from reactive to pro- active in nature. Instead
of waiting for someone to quit and then going out and finding a replacement, HR Managers
are now actively seeking talent for their organizations.24 Good HR Managers are constantly
looking at processes within the organization and, if there is something going wrong, figuring

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out how to assist the line management team in fixing the problem, whether it is a training
problem, a motivation problem, or any other people- oriented problem. The function of HR
has been redesigned to enhance the other (line) functions of the business.

Sustainable competitive advantage: Why has HR been redesigned? To make our
organizations more competitive and create sustainable competitive advantages. This is the
basis for strategic HRM.25 Strategy and strategic planning deal with the concept of creating
sustainable competitive advantages. Sustainable competitive advantage is a capability that
creates value for customers that rivals cant copy quickly or easily, and allows the
organization to differentiate its products or services from competitor products or services. An
organization creates a sustainable competitive advantage over its industry rivals by doing
something that creates value for its customers that rivals cant copy quickly or easily,26 and
that allows it to differentiate its products or services from competitor products or services. So
the question then is: Can we get an advantage from our buildings or physical facilities? Can
we gain an advantage from our equipment? Can we create machinery that our competitors
cant create or imitate? Do we have access to computers that they dont have access to? Of
course notnot in most cases anyway. It is very rare that we can create any real
technological advantage over any significant period of time, even if our technology is
proprietary. If we create a technological advantage in todays business environment, its
usually overcome, or at least closely matched, fairly quickly. So where within the
organization can we create sustainable competitive advantage? The only place we can

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consistently create advantage that our rivals cant quickly match is through the successful use
of our human resourcesgetting them to be more productive than our rivals. If we can create
an organization where people want to come to work, and as a result of wanting to come to
work they are more productive, less likely to leave, less likely to be absent, and more creative
and innovativeif we create that kind of organization, guess who wins? We win; you lose;
you die. Its that simple.
The main goals of strategic HRM: So then, what are the main goals of strategic
HRM? In the 21st-century organization, the primary HRM function is no longer just ensuring
that the company has (1) the correct number of employees with the levels and type of skills
the organization requires and (2) control systems to make sure employees are working toward
the achievement of the goals in the strategic plan. This is a control model for organizational
management that doesnt work in todays organization. While we must successfully do these
things sometimes, we also have to encourage our human resources to the maximum extent
possible through motivation, leadership, environmental analysis, and organizational changes
that work to improve job satisfaction. The model for a successful HR Manager has evolved to
encompass the processes required to get that necessary employee engagement and the
associated increases in productivity and job satisfaction while lowering absenteeism and
turnover. Thats a full plate for any manager. As a result, HR Managers have to be part of the
strategic planning team today.
Analyze strategic direction for HR fit: One of the most interesting and exciting jobs
within the HRM field is as part of the strategic planning efforts for the organization. Why is it
so interesting and exciting? It is because, if you play a role in creating the strategy for the
organization, you have a hand in creating the organizations future. As we have already
noted, HRM efforts are critical in order to be able to carry out organizational plans and reach

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goals that have been defined by the strategic plan. While this is not usually an option for
those who are early in their HR careers, it is certainly an option as they get experience in four
skills sets human relations skills, technical skills, conceptual and design skills, and especially
business skills.
Technology and Knowledge: Why has the job of the HR Manager changed so
drastically? It has changed primarily because of the type of work that we do today in
organizations compared to the type of work that was common in the last century. The 20th
century saw the growth and decline of the Industrial Age in the United States and most other
developed countries around the world. However, as we neared the end of the 20th century we
started to enter the Information Age an era that began around 1980 in which information
became one of the main products used in organizations and that is characterized by
exponential increases in available information in all industries. This is when assembly line
work began to be taken over more and more by computers and robots, and the humans in our
organizations were beginning to provide more than just labor. They started to provide
intelligenceor knowledge. In this Information Age, we began to see a new kind of worker.
Knowledge workers and the knowledge-based firm: Knowledge workers are
workers who use their head more than their handsknowledge workers gather and
interpret information in order to improve a product or process for their organization. There
has been a lot written in the past 20 years on knowledge workers, but we can boil it down to
the fact that most workers in your generation are not going to be working primarily with their
hands; they will be working with their minds. Knowledge workers manage knowledge for
the firm.

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The pace of technological change: One of the most critical issues that we face in the
21st century is that technology is currently outstripping our ability to use it. In other words,
we are creating computers and other technological systems that we cant figure out how to
use as quickly as they are created. Computers get faster and faster, but the human beings who
have to use them dont. What does this mean to a business? It means that if we (the people in
the organization) can figure out ways to take advantage of the technology better and quicker
than our competitors, then we can create a sustainable competitive advantage. Notice that we
didnt say that we create better technologythat wouldnt give us a sustain- able advantage.
Our competitors could just copy the technology in one form or another once we designed it.
We create the ability to continually figure out ways to use the technology more successfully.
So, as the technology changes, our people continually figure out ways to take advantage of it
before our competitors people do. This ability within our people is the thing that creates a
continuing advantage over competitors who either dont have people with as much
knowledge and as many varied skill sets, or dont have people who want to assist the
organization because they are not engaged and not satisfied. Knowledge is precious in an
organization. We never have enough knowledge. There is a continuous shortage of
knowledge workers for our organizationsthose people with specialized sets of knowledge
that they can apply to the problems within our companies. They dont work with their hands;
they work with their heads. In fact, the majority of jobs being created in the United States
require skills possessed by only twenty percent of the current workforce.27 And the United
States is not alone. In most countries of the world, the news is the sametoo few knowledge
workers with too many knowledge jobs open and waiting for them. This means that for the
foreseeable future, we will have a shortage of knowledge workers in our organizations across
the globe. What does this mean to the organizations HR Manager? It means that they are
going to be competing for talent (20% of adults) with every other HR Manager in the world.

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If the organization has a reputation as a difficult place to work, will the organization succeed
in getting people to come to work for them when they have so many other opportunities? I
think not! Only if the organization manages their human resources successfully and maintains
a reasonable working environment will they have any chance of filling most of the jobs that
they have available.
Companies are already seeing a reduction in the number and quality of potential employees,
as well as greater gender, ethnic, and age diversity than at any time in the past. The lack of
skilled workers for increasingly complex jobs is considered to be a major, ongoing
problem.28 partly as a result of this shortage of skilled labor, we are seeing more older
employees with high-level skill sets remain in the workforce. Some agencies estimate that
over 90% of the growth in the U.S. labor force between 2006 and 2016 will be from workers
ages 55 and older.29 So as a manager in a 21st-century organization, your workforce will
look much older than has historically been the case. Your organization will also look more
culturally diverseeven compared to today. The growth in immigrant workers will be
substantial. Hispanic workers (of all nationalities) alone are predicted to be approximately
24% of the workforce in 2050, but today they compose only about 14% of the workforce.
Asian workers are expected to move up from about 4% of the workforce to about 8%. But the
gender mix will stay fairly close to what it is today. The percentage of women in the
workforce has stabilized at about 47%48%.30 what does all of this mean? It means that
managers of a 21st-century organization will need to be more culturally aware and able to
deal with individuals with significantly different work ethics, cultural norms, and even
Labor cost controls: What can and cant line managers do to minimize labor costs? All
managers need to know how they can manage labor costs, both from an efficiency stand-

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point and from the standpoint of understanding the state and federal laws that limit our ability
to manage our labor resources.
Leadership and motivation: Obviously, one of the major reasons we have managers is
to provide motivation and leadership to employees in our organizations. Managers are worth
less than nothing if they dont improve their workers performance and productivity
through use of motivation and leadership of those followers.
Training and development: Line managers are generally the first to see when there is a
problem with organizational processes. This is frequently an indication that some type of
trolleys on their annual performance appraisals. This is another situation in which a manager
might recognize the need for further training of the workforce. Finally, line managers are the
people responsible for making changes to organizational processes. As a result of these
changes, we frequently need to train our people on the new methods of doing our work.
Finally in this area, line managers are the people responsible for identifying the talented
workers in the organization that we need to develop so that they can move into higher- level
positions when they are needed. The organization needs to have these people in the
pipeline so that as people leave the company or retire we have qualified individuals to take
their place.
Appraisal and promotion: Line managers should almost always be responsible for the
appraisal (also called evaluation) of the people who work for them as well as the process of
debriefing these individuals on their annual (or more frequent) work evaluations. The line
manager would also have a strong voice in who should be eligible for promotions in the
organization, since their job is to know their people and each of their capabilities and

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Safety and security of employees: Line management has primary responsibility for
seeing to the safety and security of our workforce. They must know federal and state laws
concerning occupational safety and health as well as procedures for security of the
organizations workspaces and people from both outsiders and employees who would want to
harm them. They need to monitor the areas under their physical control to minimize the
hazards that can occur inside our companies.

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The following are the objectives of the research project report:

1. To study about the Strategic human resource management and its relevance
in competitive environment.
2. To understand about the current issue of Strategic human resource
management in present environment.
3. To examine the various issues of Strategic human resource management in
present environment.
4. To examine the various variables which need to be improved for better
strategic human resource management in present environment?

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Importance of the study

The importance of a project report is following.

The study will help to know that what additional features & what facilities should be
to increase.
The procedure of strategic human resource development in organizations.
It helps in identify reason behind problems.
The importance of project study is that it is helpful to make good knowledge about the
strategic human resource management and human resource development.
It is important to know challenges & prospects in view of future with unique
suggestions& strategic human resource management facilities that will be preferred
by the industries.
Environmental factors of strategic human resource management are prime
influencing elements of change in strategic human resource management strategy.
It gives HR professionals time to anticipate opportunities in HR area and time to
Plan optional responses to these opportunities.
It helps HR professionals to develop an early warning system to prevent threats
Emerging out from HR scenario, or to develop strategies, which can turn a threat.

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It forms a basis of aligning the organization strengths to the changes in the
It enables the entry of the latest national/international HR developments and strategic
human resource management developments.

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Scope of the study
The project report covers the human resource development and variables. For better
understanding various strategies with different situations and actions have been given its also
includes the challenges and prospects for the human resource development in industries
India. Here the researcher collected the recent year data .the study extends the knowledge of
human resource development and strategic human resource management in India. Here the
mainly consider about present scenario of strategic human resource management to
completing the research project report.
To prepare strategic human resource management present environment in organization,
Manager and Supervisors responsibilities are more or we can say that they are the key
players. Manager and Supervisors have to help the employees to develop the competencies in
the employees. To help the employees at lower level they need to updated properly and they
need to share their expertise and experience with employees.

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Research Methodology

Research as A systematic investigation, including- research development, testing and
evaluation, designed to develop or contribute to generalizable knowledge. Activities which
meet this definition constitute research for purposes of this policy, whether or not they are
conducted or supported under a program which is considered research for other purposes. For
example, some demonstration and service programs may include research activities
According to Cassel, C. & Symon, G., (2004), all research involves data collection
and analysis, whether through observation, reading, measurement, asking question or a
combination of these or other strategies. The collection of the data and for research may,
however vary considerably in its characteristics. In simple words research can be primary or
secondary. In primary research the collection of data is specifically for study at hand. It can
be obtained by communicating directly or indirectly with the subject or directly by the
investigator. Qualitative research and quantitative research are included in the direct
communication techniques. For the purpose of this research, a combination of primary and
secondary data has been used; and, under primary, although largely quantitative data was
collected, room for qualitative data was made available whenever thought necessary.
Methods of Collection of Data
Flower (1985) opines the choice of collection of data mode-mail, personal interview,
group administration, or telephone is directly related to the sample frame, research topic,
characteristics of sample and the resources available; it has implication of rates of response,
question form, and survey costs. As mentioned earlier, that there are two main researches
which are primary and secondary research

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Primary Research
Primary research is conducting original research to obtain a variety of social indicators that
can help to determine the risk of community and protective factors identify community
resources, and determine community readiness for prevention efforts. For instance primary
research can involve researching community laws and surveys to determine norms, gaps,
attitudes or social services. Some methods of conducting primary research are as follows:
Documentary Sources
Secondary Research
Secondary research as data which already exist in some form, having been collected for a
different purpose, perhaps even by a different organization, and which might be useful in
solving a current problem. Although secondary research less expensive than primary
research, it is not always accurate, useful, as specific, custom-made research. There are
various sources available to the marketer, and the following list is by no means conclusive:
Census data
Public records
Business libraries
Trade directories
Trade Associations
Omnibus surveys
Published company accounts
previously gathered marketing research

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Informal contracts
National/ International governments
Professional institutes and organizations
National and local press Industry magazines

Types of Secondary data include:
There are basically two types of research ofresearch methods, qualitative and
quantitative. Silverman (2000) opines that the danger in the title, however, is it seems to
assume a fixed preference or pre-defined evaluation of what is good (i.e. qualitative) and bad
(i.e. quantitative) research.
Research Process
The research process is the step-by-step procedure of developing one's research
and research paper. However, one can seldom progress in step-by-step fashion as such. It is
often necessary to revise an initial research plan. The research process involves identifying,
locating, assessing, analyzing, and then developing and expressing your ideas. These are the
same skills that will be needed in the post-university "real world" when you produce reports,
proposals, or other research for your employer. All of these activities will be based on
primary and secondary sources from which recommendations or plans are formulated. There
is no fixed number of stages to be followed since it varies from research to research. At the
same time every research process does in reality follow a common trend in its completion.
This includes formulating and clarifying a topic, reviewing the literature, choosing a strategy,
collecting the data, analyzing the data collected and finally writing up.

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Research Design
Naresh K. Malhotra (2004) opines that research design is a blueprint or framework for
conducting the research project. It is in simple words, a plan for study that guides the
collection and analysis of data. It, in fact, is the central part of any activity involving any
work of research. It serves as a guide to the investigation methods, the instruments in
research used, nature of data with the sampling frame and plan. One of its key features should
be to hold the parts and phases of the enquiry together. It should be comprehensive in its
coverage of the work i.e. it should allow for logic, tight-ness, precision, and effective use of
resources. A research design lays the foundation for conducting the project. A good research
design will ensure that the research plan is conducted efficiently and effectively.

Pharmaceutical sectors are chosen for understanding the human resource development
benefits and its factors in Indian industries.

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Which is the factor that enforces employees to work with organization?

Table- 1


Impact on stress level

Non-impact on
stress level
Job Security 27.9 45.6
Social 22.1 52.9
Fiscal Equity 33.8 35.3
Skill Variety 25.0 41.2
Autonomy 17.6 51.2
Advancement 41.8 40.3
Recognition 33.8 44.1
Task Identity 33.8 55.9
Feed Back 20.6 39.7

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Chart- 1

The above table shows various factors that enforce the employees to
work in a pharmaceutical industry.

From the analysis we came to know that the financial security and
technology soundness is very much necessary for any industry.

Impact on stress level
Non-impact on stress level

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Method of estimating manpower requirements


Sr. No. Method No. of companies
using this method

Work study

Methods (Like

annuation -

Chart- 2

1 2 3 4 5
1 1 1
Sr. No
No. of companies
using this method

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The above chart shows that in pharmaceutical co. used method Work study sampling 9
companies, 3000Planned productivity estimation used by 1 company, Statistical Methods
(Like regression, correlation etc) used by 1 company, Super annuation cum replacement
charts used by 1 company.

From the analysis researcher comes to know that maximum companies used the method of
Work study sampling out of 10 companies

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In every project report it is considered to be an important part to find and analyze all the facts
and figures been produced by the research work. It helps in drawing out final conclusions and
reaching at a final result or to find the solution of the problem for which the research is being
done. In the winter project the research is been carried out on the Environmental factors of
strategic human resource management of Indian Industries, their layout, implementation,
policies, rules and regulations that are been carried out in an organization. The research is
done to analyze that whether the strategic human resource management structure is fulfilling
the demands of the employees or any need or change is been required in their schedule or not.
For that purpose a small questionnaire session is been conducted in order to find out the
employees views regarding the current Environmental of strategic human resource
management implemented in their organization.
In manufacturing companies policy regarding ratio of skilled employees, supervisor
and managerial staff is 60:2:1 hence above graph and table justifies the no of
employees ratio is adequate.
Most of the companies pointed out that manpower requirement were determined on
the basis of work study. However, the work study generally relates to production
orientation. Hence a square approach covering the other aspects such as productivity
relation application of statistical methods and replacement on account of promotion,
transfers, resignation, super annotation and punitive action is also needed to be
Amongst all the companies it was observed that they give 100% importance to subject
knowledge &work experience for the selection while physical abilities &
psychological attitudes were also carefully scrutinized during the selection process

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Probation period for skilled & unskilled workmen is 6 months whereas for officers it
is 12 months. Ideal HR policy reflects the same thing .Because the workmens skill
could be checked actually while working on machine. For officers it is actually work
performed by him/her hence it is 1 year.
Environmental factors of strategic human resource management in the Indian
Current issues in strategic human resource management environmental in the Indian
Uses by HR manager the current opportunity of strategic human resource
management environmental.

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After completion of the research work the researcher came to some conclusions which could
help in development & improvement of strategic human resource management
environmental. This is helpful in future development of the strategic human resource
management environmental. The following points come in the suggestion parts which came
after the analysis and conclusion of the research:-

Further Research in this area after a span of years time would be worthwhile to do
because the human resource developments are not stable.
A research based on strategic human resource management environmental and new
environment may be come in future.
Since human resource development depends on company on a large scale and they are
of a very fluctuating nature, further research on exchange rate would be prudent.
At the same time, research on the interest rate would be sensible; because, as human
resource have a fluctuating nature, variables depends upon the manpower of any country for
its progress and on the whole interest rate are co-related with the human resource

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In the market more scripts are required in the human resource development segment
and strategic human resource management environmental.
To have a consistent method of HRD for losses and gains from the HRM, a proper
framework to HRD for needs to be developed and strategic human resource management
environmental. .
Harmonization of regulations is required.

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Although an earlier study on the subject has been made, there is still a large and wide scope
for scientific study over the HR policies and practices in the industries. Pharmaceutical
industries play a major role in the annual turnover of Indian economy. If the working of these
industries is not smooth and well organized then there is a possibility that these organizations
may collapse resulting in bottlenecks of career of the employees working in these industries.
Also it will affect the well being of the consumers since industries are directly related to the
public health. Over the HR policies & practices was done however the study did not stretch
up to the pharmaceutical industries. Due to globalization liberalization and liberal polices of
Indian Govt. the small, middle as well as the large scale companies are on the way of
expansion, amalgamation, joint ventures, enriching present market with penetration and
concentration therein. Hence there is a growing need for skilled and scientific study of
Human Resource Management in these companies. Privatization, introduction of new
technology, latest machinery are all responsible for the expansion of the companies however
the HRM study focuses on the utilization of manpower which is the need of the Day. Proper
utilization of manpower helps in the growth, expansion and success of the company and
study of HRM policies and practices deals with this utilization of manpower and hence the
need of the Day.

Human resource development play a very important role in the up-bringing of an
organization; it plays a major role in the any industry.
Today, with the help of human resource development, the Indian market has recently
rocketed up to become Asias fourth largest exchange traded derivatives market.

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In terms of growth of derivative markets and a variety of derivatives users, the Indian
market has exceeded or equaled many other Indian markets.
The variety of instruments in strategic human resource management environmental
development instruments available for developing.
Corporations, private sectors institutions, state-owned and smaller companies are
gradually getting into the act.

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The time available to conduct the study is little; it being a wide topic has a limited

Limited resources are available to collect the information about the human resource

market is so much volatile and it is difficult to forecast anything about it whether you
trade online or offline.

Some of the aspects may not be covered in my study, its gives knowledge about
human resource development and strategic human resource management
environmental small prospects and its challenges.

In a rapidly changing industry, analysis on one day or in one segment can change very
quickly. The environmental changes are vital to be considered in order to assimilate
the findings.

The foremost limitation is regarding the sources of information. The information
contained has been obtained from sources believed to be reliable and in good faith,
but which may not be verified independently.

The limitation is that some of the calculations are based on certain assumptions
considered appropriate.

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Using several statistical tools derives the estimates. Hence the findings obviously
carry all the limitations of the statistical tools used.
Same sets of data from different sources are different. Since not all the data are
available from a single source, an attempt has been made to standardize the data
wherever required, which is essential to maintain uniformity throughout the project.
The aggregate figures for various parameters are subject to exclusion or inclusion of
various constituent variables. While sincere efforts are made to ensure the absence of
mismatch, the extent to which this can be done is limited.

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Bibliography & References

Books Referred :-

A Srikanth and AnupMenon (2003) Index Futures - the Scope of Arbitrage.
Alan C. Shapiro (2000), Prentice- Hall Multinational Financial Management.
Bansal M., Bansal N. (2003) - Derivatives & Financial Innovations, Bombay Stock
Bharti V (1999).Pathak, Pearson Education Indian Financial System.
Blaxter (1997) How to Research.
David Silverman (2000) Do Qualitative research.
Dr. NarendraJhadav (2000) Indian Banking.
Donald S. Tull and Del I. Hawkins (1993)- Marketing Research
E. Sirisha (2001) Stock Market Derivatives: Role of Indices ( 2
Flower (1985) How to collect Data.
G R K Murty (2000) Indian Derivatives Market: Issues at Stake.
Hathaway (1995) Qualitative VS Qualitative research analysis.
Hull J. (1995) Introduction to Futures and Options Market (1st Edition).
J Marlowe (2000) Hedging Currency Risk and Options and Futures.

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Journals Referred:-

Dhingra G. (2010), An understanding of financial derivatives of financial
derivatives, The Chartered Accountant, March
Kandathil C.(2009), Indian Derivatives Markets Structural Issues,, Chartered
Financial Analyst, December
Gulati S. (2011)Curreny Options, Chartered Financial Analyst, November
Sisodiya A.S.(2008)Credit Derivatives: Is Indian Banking Sector Ready, Chartered
Financial Analyst, July

Website Referred:-
Web1 Derivative Definition (Online) (Cited on 27
April 2013) Available from
Web 2 Definition of Forward Contract (Online) (Cited on 29
April 2006) Available
from <www.ers.usda.gov/Briefing/RiskManagement/glossary.htm>
Web 2 Definition of Forward Contract (Online) (Cited on 30
April 2006) Available
from <http://wikipedia.org/wiki/Forward_contract>
Web 3 Definition of Futures Contract (Online) (Cited on 1
May2006) Available from
Web 4 Definition of Futures Contract (Online) (Cited on 2
July 2006) Available
from <http://www.investorwords.com/2136/futures_contract.html>
NSE & BSE home page.