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Shivaji University,Kolhapur

Course- MBA- II Sem. IV

Elective –II Human Resource Management Paper-V


Strategic Human Resource Management and International Perspective
Notes prepared by: Mr. Subhash B Redekar (8999384246)
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Syllabus:

1. Strategic HRM –
Meaning, significance of strategic HRM, Evolution of SHRM,
difference between traditional HRM & strategic HRM, 5- P model of
strategic HRM, Outcome of strategic HRM .Strategic HR Tools –
Strategy map,HR Scoreboard , Digital Dashboards.

2. Changing Environment of HRM -


Globalization, Technological development, Nature of work, Exporting
jobs, Workforce Demographics, HRM and Change.

3. Strategic Management Process –


Environment Scanning, Strategy formulation, strategy implementation,
Evaluation and control, Role HR – translating strategy into HR policy
and practice HRP & Strategic HRP, types of strategic HRP, strategic
issues in recruitment, selection, training and employee separation.

4. International HRM –
Difference between Global & Domestic HRM, Strategic Global HR -
Purpose, selection, orientation, ethnocentric, polycentric, geocentric,
Repatriation, career and personal problems, Compensation, performance
appraisal of expatriates, HRM Practices in India, China, USA, UK &
Japan.
Meaning of Strategic HRM :

Strategic HRM refers to HR that is co-ordinate and consistent with the overall business
objectives in order to improve business performance. According to Purcell (1999), SHRM
focuses on actions that differentiate the business from its competitors.

Strategic human resource management is the practice of attracting, developing,


rewarding, and retaining employees for the benefit of both the employees as individuals and the
organization as a whole. Strategic HRM utilizes the talent and opportunity within the human
resources department to make other departments stronger and more effective.

Strategic HRM gives direction on how to build the foundation for strategic advantage by
creating an effective organizational structure and design, culture, employee value proposition,
systems thinking, an appropriate communication strategy
and preparing an organization for a changing landscape,
which includes downturns and mergers & acquisitions.

Strategic human resource management includes


typical human resource components such as hiring,
discipline, and payroll, and also involves working with
employees in a collaborative manner to boost retention,
improve the quality of the work experience, and maximize
the mutual benefit of employment for both the employee
and the employer.

Strategic HRM, therefore, is concerned with the following:

1. Analyze the opportunities and threats existing in the external environment.


2. Formulate strategies that will match the organization’s (internal) strengths and
weaknesses with environmental (external) threats and opportunities. In other words,
make a SWOT analysis of organization.
3. Implement the strategies so formulated.
4. Evaluate and control activities to ensure that organization’s objectives are duly
achieved.

Significance of strategic HRM:


a) Helps Organization in achieving cost-effective engagement of labour
b) Enables Organization to meet changing needs
c) Provides clear-cut goals, direction, and future focus
d) Helps Organization in Planning and Executing Organizational Changes
e) Ensures Optimum Utilization of Organizational Resources
f) Develops, Manages and Sustains Skills and Knowledge.
Evolution of SHRM:

Period Time HR Factor/ Issues


Pre World War II 1700 – Emergence of Scientific Management Theory as
1900 management philosophy of the time; start of industrial
revolution that led to replacement of cottage industries
by large factories; rise of large workforce occasioned
by immigrant workers; introduction of personnel
function mainly for keeping workers records; rise of
middle level supervisors; maximum exploitation of
workers; increase in child labour; widened gap
between workers and supervisors; poor working
conditions; rise of labour unions to agitate for workers
rights; expansion of personnel function to include
welfare and administration mainly in UK and USA.
Pre World War II 1920 – Rise of motivation practices occasioned by the
1930 Hawthone studies, various attempts at employee
satisfaction begin to be implemented such as better
wages and good working
conditions.
Post World War II 1945- The Human Relations Movement shaped the
1960 management ethos of the time; emphasis on employee
productivity through various motivation techniques;
emphasis on welfare issues; emergence of job
description which improved recruitment and
selection; emergence of compensation and evaluation
strategies; official recognition of trade unions in
various countries mainly in UK and USA; emergence
of collective bargaining for increased employee
welfare; enactment of a significant number of
employment laws; emergence of computer technology
and use in record keeping; emergence of job analysis;
expansion of the personnel function to include
recruitment, labour relations, training, benefits and
government relations divisions; first HRM software
Comprehensive Occupational Data Analysis Program
(CODAP) developed in the USA mainly for job
descriptions and assigning roles; advancement of
computer technology to include payroll, inventory and
accounts.
Social Issues Era 1963 - The Civil Rights Movement shaped the management
1980 thinking of the time; the civil rights act (1964) brought
in affirmative action, abolished all forms of
discrimination and ushered in equal employment
opportunity; transition from personnel management to
human resources management; increased
computerization of the HR function for accuracy,
speed, storage and reporting of HR data; development
of Human Resource Information System (HRIS);
increased trade unionism led to better working
conditions and terms of employment; adoption of
various laws on occupational health and safety,
retirement benefits and tax regulation; emergence
of employee participation in management decision
making, increased employee training and
empowerment;
Cost–Effectiveness 1980- Increased automation of the workplace to boost
Era early production; shift from employee administration to
1990s employee development and involvement; emphasis on
efficiency and effectiveness through adoption of
technology; emergence of hard and soft HR
approaches.
Technological 1990 – This era is shaped by increasing forces of
Advancement present globalization, rapid change occasioned by tremendous
Era technological breakthroughs and pressure for increased
efficiency; cut throat competition characterize all
industries; emergence of Strategic HRM; emergence of
business process reengineering strategies; recognition
of intellectual capital; increased strategies for
recognition, rewards, motivation, greater
awareness of the HR role as a strategic business
partner; emergence of improved strategies for
attracting, retaining, development and engagement of
talent; emergence of workforce evaluation methods
such as balanced scorecard, performance appraisal
techniques ; emphasis on contribution of HRM to
competitive advantage; Human resource planning
techniques; diversity management; talent management;
emergence of e-HR; e-training, e-recruitment,
telecommuting,
Difference between traditional HRM & strategic HRM

The term HRM expands to Human Resource Management; it implies the implementation
of management principles for managing the workforce of an organization. It is concerned with
the process of hiring, developing and retaining the manpower, with a view to making them more
efficient. When conventional HRM is compared and contrasted with the strategic HRM or
SHRM, it becomes easier to understand.
SHRM is the process of aligning the business strategy with the company’s human
resource practices, so as to attain strategic goals of an organization. In SHRM, the workforce of
the company is managed proactively.

Basis For Comparison HRM SHRM


Human resource management (HRM) SHRM is a managerial function which
implies the governance of manpower implies framing of HR strategies in such a
Meaning
of the organization in a thorough and way to direct employees efforts towards the
structured manner. goals of the organization.
Nature Reactive Proactive
Responsibility lies with Staff specialist Line manager
Approach Fragmented Integrated
Concerned with internal and external
Scope Concerned with employee relations
relations
Time horizon Short term Long term
Basic factor Capital and products People and knowledge
Change Follows change Initiates change
Accountability Cost center Investment center
Control Stringent control over employees It exhibits leniency.

5- P model of strategic HRM

The 5 Ps model of strategic human resource management (SHRM) is a new model in the
area of study. This model is proposed by Randal Schuler.
This model melds five human resource activities with strategic highlight just how
significant, the strategy activity link can be.
The proposed model incorporates the 5 Ps of strategic human resource management
which stand for:

1. Philosophy of Human resources


2. Policies human resources
3. Programme of human resources
4. Practices of human resources
5. Processes of human resources

1. Philosophy: Expressed in statements defining business values and culture. It expresses how to
treat and value people.
2. Policies: Expressed as shared values and guidelines. Policies establish guidelines for action on
people related business issues and HR programs.
3. Programs: Articulated as human resource strategy. These coordinate efforts to facilitate
change to address major people related business issues.
4. Practices: For leadership managerial and operational role practices motivate needed role
behaviours.
5. Processes: For the formulation and implementation of other activities these define how
activities are carried out.

Outcome of strategic HRM:

Outcomes of SHRM are manifold. Outcomes may be both satisfactory and unsatisfactory.
SHRM outcomes may be satisfactory if all activities are done properly and as per desire of the
organization. On the other hand, outcomes may not be satisfactory if various barriers are created
on the path of SHRM activities.
However, outcomes of SHRM are mentioned in the following points:
1. Increased performance: If SHRM works well staring from making and effective human
resource planning to maintain labor management relations. Thus performance at all levels may
increase.
2. Customer and employee satisfaction: The broad mission of SHRM is to ensure customer
and employee satisfaction. By ensuring successful and fair recruitment, selection, training, career
development and so on, employees may be satisfied and they will try to satisfy customers.
3. Enhance Shareholder value: On the basis of increased performance and customer as well as
employee satisfaction shareholder values are enhanced. At the sometimes, organizational image
may also be increased.
According to the outcome model of SHRM, with the achievement of three objectives,
efficient management, cost effectiveness, integrated HR programs, facilitation of change and
adaptation and lastly focus on customer needs may be obtained.

Strategic HR Tools

Strategic Human Resource Management Tools, Managers use several tools to translate
the company’s strategic goals into human resource management policies and practices. These
tools include the strategy map, the HR scorecard, and the digital dashboard.

Strategy Map:
A strategic planning tool that shows the “big picture” of how each department’s
performance contributes to achieving the company’s overall
strategic goals.
The strategy map summarizes how each department’s
performance contributes to achieving the company’s overall
strategic goals. It helps the manager and each employee
visualize and understand the role his or her department plays
in achieving the company’s strategic plan. Management
gurus sometimes say that the map clarifies employees’ “line
of sight.” It does this by visually linking their efforts with
the company’s ultimate goals.

A strategy-map example for Southwest Airlines. The


top level target is to achieve its profitability, costs, and
revenue goals. Then the strategy map shows the chain of
activities that help Southwest Airlines achieve these goals. Like Wal-Mart, Southwest has a low-
cost-leader strategy.
So, for example, to boost revenues and profitability Southwest must fly fewer planes (to
keep costs down), maintain low prices, and maintain on-time flights. In turn (further down the
strategy map), on-time flights and low prices require fast turnaround. This, in turn, requires
motivated ground and flight crews. The resulting strategy map helps each department understand
what it needs to do to support Southwest’s low-cost strategy.

HR Scorecard:
It is a process for assigning financial and non-financial goals or metrics to the human
resource management–related chain of activities required for achieving the company’s strategic aims and
for monitoring results.Many employers quantify and computerize the strategy map’s activities. The HR
scorecard helps them to do so. The HR scorecard is not a scorecard.It refers to a process for assigning
financial and non-financial goals or metrics to the human resource management–related strategy-map
chain of activities required for achieving the company’s strategic aims.24 (Metrics for Southwest might
include airplane turnaround time, percent of on-time flights, and ground crew productivity.) The idea is to
take the strategy map and to quantify it.
Managers use special scorecard software to facilitate this. The computerized scorecard
process helps the manager quantify the relationships between
(1) the HR activities (amount of testing, training, and so forth),
(2) the resulting employee behaviors (customer service, for instance), and
(3) the resulting firm-wide strategic outcomes and performance (such as customer satisfaction and
profitability).
The HR scorecard derives from the “balanced scorecard” planning approach, which aims to
balance hard data such as financial measures with soft data such as customer satisfaction in assessing a
company’s performance.
Digital Dashboard:
Presents the manager with desktop graphs and
charts, and so a computerized picture of where
the company stands on all those metrics from the
HR scorecard process. The saying “a picture is
worth a thousand words” explains the purpose of
the digital dashboard. A digital dashboard
presents the manager with desktop graphs and
charts, showing a computerized picture of how
the company is doing on all the metrics from the
HR scorecard process. As in the accompanying
illustration, a top Southwest Airlines manager’s
dashboard might display real-time trends for
various strategy-map activities, such as fast
turnarounds and on-time flights. This enables the
manager to take corrective action. For example, if
ground crews are turning planes around slower
today, financial results tomorrow may decline
unless the manager takes action