Can SHRM be usefully applied in a public sector context?

by Muhammad Hammam, MPA

Since 1989, strategic human resource management (SHRM) has become one topic in human resource
management. This essay will explain the definition of SHRM, the usefulness of SHRM in the private
sector, its implementation and usefulness in the public sector and possible challenge to implement
SHRM in the public sector.
Fisher (1989) uses the term SHRM linked to situations where there is more involvement of the top
human resource (HR) executives in a strategy formulation. This approach is slightly different with
human resource management (HRM) that focus on an integrated set of HR policies (Fisher, 1989).
More than a set of HR policy, SHRM implies that a human resource management system should be
designed around organization objectives.
Wright and Boswell (2002) uses the term macro, that reflect a more organizationally focused HRM,
because of the ambiguity of the word strategic. The term indicated that SHRM is more
organizationally focused than functionally focused. This means how the HRM, in the private sector,
gives impact on a strategic goal, such as profitability and additional organization value. SHRM
indicated more collaborative between HRM and organization strategies, it is more than a human
resource practices on individuals.
SHRM also refers to a strategic partner role in which HR professionals give their knowledge about
business, changes, consulting and learning to partnership with line managers so they can get their
objectives with strategy formulation and execution (Ulrich and Brockbank, 2005). This definition
indicates that HRM is supporting line managers to achieve their goal. SHRM is a practice where
practitioners of human resource management focus on helping line managers to achieve organization
objectives. Even though there are some different definitions, it is agreed that SHRM more
organizational focus and strategically try to achieve those organizational objectives.
Some evidences have shown the usefulness of SHRM in the private sector. Arthur (1994) claimed that
SHRM related to higher manufacturing performance and lower turnover. His study in measuring the
relation between a committed human resource systems with manufacturing performance, using the
labour rate and scrap rate, shows that a committed HR system significantly related to fewer labour
hours and lower scrap rates. Moreover, the study also shows that turnover rates more than twice
higher in control organization than in committed HR organization. Furthermore, Richard and Johnson
(2001) study also present that SHRM effectiveness related to employee turnover and overall market
performance assessment, which reduced the turnover and increased the performance. A later study
also proved that a communication of strategic goal to the employee is positively related with profit
(Van De Voorde et al., 2010).
Other research has also supported SHRM usefulness in the private sector, which has positive relations
with overall organizational performance (Combs et al., 2006). Combs et al (2006) measure the
relation of high-performance work practice (HPWP), a performance enhancer that considered by
SHRM theorists, with organizational performance. They concluded that HPWP significantly related to
organizational performance, and the relation is stronger for HPWP system than for individual HR
practices. Another conclusion from that study is the relation of HPWP with organizational
performance at manufacturing organizations is stronger than the relation at service organizations.
With the new public management reform, public sector manager has brought the private sector
practice into the public sector (Rodwell and Teo, 2008). This included a reform in the civil service or
personnel management into human resource management. Several studies show that implementing

SHRM in the public sector is beneficial. The example of this is the studies of implementing SHRM in
revenue authorities and health services organization.
Revenue authorities (RA) were traditionally a part of the general civil service, where the human
resource management followed the general rules of civil service (Jenkins, 1994). Jenkins (1994) said
that this condition had led to low salaries, political patronage hiring system, and rent-seeking
behaviour. He argued that to be a professional, an employee in RA should have adequate
remuneration, clear job classification, employment stability, and minimum requirements while doing
recruitment and organized training system. To be able to do that, RA strategically should have
autonomous HR.
Brazil is an example of countries that try to have more autonomous management of human resource in
its revenue authorities (Kidd and Crandall 2006). The Brazilian Federal Tax Administration
(Secretaria de Receita Federal, SRF) enjoys a certain extent distinction within the public service. In
recruitment, the SRF sets a two-stage exam, which are a written test and a three-month in-house
training. Even though a public exam is mandatory for all civil servants in Brazil, the SRF has its
separate exam. Besides that, the SRF enjoys higher paid-remuneration than any regular civil servants
and receive a bonus that related to performance. These practices lead to the creation of culture of
professionalism, and has eliminated the political appointment practice in the organisation. This might
also have helped to guarantee commissioners stability.
Another example is in Peru with its National Superintendency of Tax Administration
(Superintendencia National de Administration Tributaria, SUNAT) (Kidd and Crandall 2006). SUNAT
is a decentralized public institution that has autonomy to manage its budget and human resources,
including the ability to determine personnel salaries on the basis of staff evaluations independently of
the rest of the public sector (Kidd and Crandall 2006, p28). When it is first established, it reduced the
number of employees from 3,100 to 800. SUNAT was also hired new staff on a merit-based system.
The staff average salaries increased from US$50.00 in 1990 to US$1,000.00 in 1991. Since SUNAT
establishment, tax revenue collection has risen from 5.9 percent of GDP in the first semester of 1991
to 14 percent of GDP in 2005. Even though it is difficult to be directly linked what percentage of this
improvement can be associated with the SUNAT establishment, it is clear that tax administration
effectiveness has improved and the level of noncompliance has fallen.
Kidd and Crandall (2006) discuss an autonomy for human resource management in a revenue
authority as one desirable factor that should exist to make governance's revenue authorities work.
They collect information from twenty one countries that practiced RA and eight HR-related functions,
which are recruitment, remuneration, performance pay, retention, internal staffing,
organization/positions, training and development; and the last one, staff discipline and integrity. This
practice can be seen as a SHRM, because this move was done to achieve RA's objective which was to
operate effectively.
These are several observations on HR-related functions (Kidd and Crandall 2006). In recruitment
function, almost all countries have the ability to recruit employee from outside and half of the
countries have improved (reduced) the time allocation for recruiting foreign employee. Remuneration
also affected by the movement to RA, majority of sample countries had reported an improvement in
salary. Performance pay is one function that indicated by twelve countries had in one kind or another.
Besides that, many of that countries had bonus plans too. However, in terms of retention, it was
unclear as more than half countries were unable to tell whether they achieved a better retention rate or
not. The same case happened in internal staffing because more than half countries did not indicate
improvement in time frames for internal staffing. In terms of training and development, only seven of
twenty one countries indicated rising number of training days per employee. Lastly, all countries
reported that staff discipline and integrity were improved.

Kidd and Crandall (2006) conclude that in a revenue authority, an autonomy for human resource
management is desirable, but it is challenging to measure the impact of this autonomy on
performance. In their study, most RA countries have considerable human resource's autonomy, and
gain large improvement in performance related to that autonomy. However, they face difficulties in
quantifying these improvements.
Another implementation of SHRM in the public sector is in health service (HS). Rodwell and Teo
(2008) examined management characteristic variations of for-profit and not-for-profit health service
industry organizations. They argue that HRM in HS organization is critical and need to be managed
strategically. Their findings had linked commitment to employee in a not-for-profit HS organization to
SHRM. Then, SHRM and customer service orientation led to an adoption of human capital-enhancing
HR practices that, in their study, have positive impacts on overall performance.
Case study in two hospitals in the Midwest showed that lack of strategic view in HRM caused unclear
and inconsistent management (Khatri et al., 2006). The senior management in both hospitals had not
clearly articulated their hospitals strategic objectives. Moreover, one of the chief clinics officers felt
that strategic management was not quite practicable useful. Therefore, a clear strategic objective and
an identification of HR practice that support those objectives are important in hospital organizations
(Khatri et al., 2006).
Research on a non-specific public sector shows that high-performance work system (HPWS), another
term for HPWP, is significantly related to departmental performance (Messersmith et al., 2011). The
relation shown in several indirect effects was a positive relation between HPWS and organizational
citizenship behaviour (OCB), and prove that OCB is positively related to departmental performance
(Messersmith et al., 2011). The research also resulted in other evidences that HPWS is positively
related to job satisfaction, organizational commitment, and employee psychological empowerment,
where those three employee's attitudes are also positively related to OCB (Messersmith et al., 2011).
Messersmith et al. (2011) did their data collection on 16 local authorities in Wales, focused on eight
service departments. The departments are Education, Social Services, Planning, Housing
Management, Revenue and Benefits, Waste Management, Leisure and Culture, and Human Resource.
Total service departments that participated are 119 departments represented by 1,372 Welsh
government employees. With these large and multi-unit samples, Messersmith et al. (2011) tested the
departmental level model.
The relation between HPWS and departmental performance, advises that departmental performance is
affected by HPWS through several paths (Messersmith et al., 2011). HPWS may partly work through
a path that link the attitudes of the employee toward discretionary employee behaviours and finally to
the performance of the unit-level organization. This logic of this finding is as follows, [a]s employees
begin to sense greater commitment from departmental leaders as expressed via HPWS, they are more
likely to engage in the prosocial behaviors that help organizational units to meet goals and objectives
(Messersmith et al., 2011, p1114).
In the public sector, as explained above, SHRM can be applied in RA, HS, and in local governments.
In another context, an implementation of SHRM in the public sector may less applicable than in the
private sector because of the nature of public sector organizations that have greater goal ambiguity,
multiplicity, and conflict (Rainey, 2009). Public organizations, particularly, have vaguer and more
intangible goals compare with private business firms; besides that, public organizations usually have
multiple and conflicting goals (Rainey, 2009). This vague resulted from the nature of public
organizations that, in some case, produce goods and services that have no market replacement;
besides that, the government patronage and oversight, and also authorizing legislation, impose such
multiple, conflicting, and often intangible goals on public organizations to include as the

constitutional, competence, and responsiveness values (Rainey, 2009). This led to a challenge in
determining organizational strategies and HRM strategies.
Rainey (2009) gives some example how multiple, vague, and conflicting goals in the public sector.
First, conservation agency receives mandates not only to conserve natural sources, but also to develop
it. Second, prison commissioners have duties both to punish offenders and to rehabilitate them. Third,
police agency has mandated to preventing crime, controlling crime, enforcing the law, keeping the
peace, assuring fairness and respect for citizen rights, and operating efficiently with minimal costs.
It is challenging to determine HRM policy based on an organizational strategy along with that
conflicting goals. HR manager in conservation agency may build an HR system around conserves
natural source mandate and less in developing it. A focus on conserving natural source would lead the
manager to recruit more employees to guard the conservation area than to recruit scientists or
environmentalists who can enhance the natural resource in that area. While a human resource policy is
built around that objective, a change in political wills can make the latter objective is more important,
therefore, ongoing human resource strategy would fail to accomplish new objective.
Same cases can also happen in prison agency and police agency. If they only focus on one of the
many objectives, they can fail in achieving the others objectives. For example, when the prison HR
head office wants to focus on punish the offenders, he or she might place guard to pressure the
offender to make more mistakes. On the contrary, if he or she more focus on rehabilitate them, the
guard will more likely persuade the offender to not make more mistakes. The manager of public
sector with vague goals needs to balance between its objectives when implementing SHRM, because
each objectives usually equally important.
Moreover, goal complexities also have several effects on work attitude and performance (Rainey,
2009). Buchanan on Rainey (2009) found that the vagueness and conflicts of values which are
inherited in public organizations goal make managers in federal agency reported lower work
satisfaction, job involvement, and organizational commitment compare with private business
managers did. He also argued that vagueness of agencies goals made the process of designing
challenging job for public sector manager harder, and it weakened sense of having impacts on their
organizations, which in turn lower the commitment and satisfaction of federal agency managers.
These situations, make SHRM is harder to implement in the public sector.
Difficulties in applying SHRM in the public sector might also arise because of the blurring of the
sectors. Some of government organizations look like business firms; for example, state-owned
enterprise, government corporations and government-sponsored corporations (Rainey, 2009). Such
organizations, even though owned by the government, which means part of public sector, are operated
more like for-profit organization. On the other hand, some non-profit organization performs similar
functions as government agencies. Moreover, some for-profit private organizations work with the
government until the distinction between them unclear, such as defence contractors that receive so
much funding and direction from government (Rainey, 2009).
This blur rises the questions in which kind of public sector SHRM can be fit. To adopt SHRM, public
sector entity needs to identify himself. Whether the SHRM practice can fit or not depends on that
identification. State-owned enterprise can easily implement SHRM because it looks like a private
company. On the contrary, to implement SHRM in charity organization owned by a government will
be needed different set of understanding.
The usefulness of SHRM implementation in the public sector may need the understanding that the
workforce characteristics in the public sector may differ with the private sector. Public sector
employees sometimes have unique characteristics where they have altruistic values and desires to
serve the community at large that called public service motivation (PSM) (GouldWilliams et al.,

2014). PSM is defined by Gould-Williams et al. (2014, p938) as an attitude that motivates both
public and private sector workers to display altruistic or prosocial behaviors. PSM is easier to find in
the public sector as most services in the public sector is to serve the community.

With different motives, SHRM might work differently in the public sector. There are four dimensions
of PSM, which are attraction to public policy-making, commitment to public interest or civic duty,
compassion, and self-sacrifice (Perry on Gould-Williams et al., 2014). The PSM central focus is on
employees attitude to the public or the community at large, while job satisfaction concern the
organization. Thus, it is possible that employee still want to serve the community, even though the
working environment is not satisfactory.
Study in civic duty, which means an employees commitment to serve the publics interests (Gould
Williams et al., 2014, p937), shows that civic duty is positively associated with job satisfaction and
affective commitment, and negatively related to intentions to quit (GouldWilliams et al., 2014). As
previously explained, job satisfaction is positively related to OCB and in turn related to departmental
performance (Messersmith et al., 2011). Therefore, SHRM should link HR system with civic duty, and
PSM in general, in favour to achieve improvement in performance.
From the discussion above we can take some conclusions. First, SHRM is a practice where HR
system is designed with a more organizational focus to achieve its objectives. Second, in the private
sector, SHRM proved to be useful, which related to organizational performance and profit. An
implementation of SHRM in the public sector has been done in revenue authorities, health system
industry, and local authorities, indeed, SHRM can be usefully applied in a public sector. Its usefulness
in the public sector can be seen in improvements in departmental performance. Nevertheless, an
implementation of SHRM in the public sector need to address goal ambiguity and conflict problem
that are greater in the public sector than in the private sector. Importantly, an implementation of
SHRM in the public sector will need to consider different motive of public sector employees, such as
the PSM.

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