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STRATEGIC HRM

Why Is Managing Human


Resources So Important?
• Rapid Change
• Uncertainty About Basic Business Conditions
• Rising Costs
• Rapid Technological Change
• More Limited Supplies of Highly Trained Labor
• Rapidly Changing Government Legislation and
Regulations
• Increased Globalization of Industries
HRM - The Traditional View
HRM -- The Strategic View
SHRM:MEANING
According to Wright & McMahan, “SHRM is the pattern of
human resource developments and activities to enable an
organization to achieve its goals.”

According to Walker, “SHRM is the means of aligning the


management of human resources with the strategic
content of the business. This is based on the concept of
strategic Fit, which states that to maximize competitive
advantage, a firm must match its capabilities and
resources to the opportunities available in the external
environment. This is called the strategic fit model.
SHRM OBJECTIVES
• To ensure the availability of a skilled,
committed, and highly motivated workforce
in the organization to achieve sustained
competitive advantage.
• To provide direction to the organization so
that both the business needs of the
organization and the individual and collective
needs of its workforce are met.This is
achieved by developing and implementing
HR practices that are strategically aligned.
Traditional HR Versus Strategic HR
Model of Strategic HR Management
(Ulrich, 1997)
Possible Roles Assumed by HR Function
SHRM Critical Competencies
• HR’s success as true strategic business partner dependent on five
specific competencies:
– Strategic contribution - development of strategy
– Business knowledge - understanding nuts and bolts of
organization
– Personal credibility - measurable value demonstrated in
programs and policies
– HR delivery - serving internal customers through effective and
efficient programs
– HR technology - using technology to improve organization’s
management of people
The Strategic Planning Process
• Mission, Goals, and Values Statements
• Environmental Threats & Opportunities
• Organizational Strengths & Weaknesses
• Goals and Objectives
• Formulation of Strategies
Fitting HR Practices to Business
Strategy and One Another
• Vertical Fit = the match between HR
practices and overall business strategy
• Horizontal fit = the consistency and
interrelationship among HR activities
• External fit = how well HR activities match
the demands of the external environment
Potential relationships between
organisational strategy and HR strategy:
Separation

Org. Str. HR Str.


Potential relationships between
organisational strategy and HR
strategy:
Fit

Org. Str. HR Str.


Potential relationships between
organisational strategy and HR
strategy:
Dialogue

Org. Str. HR Str.


Potential relationships between
organisational strategy and HR
strategy:
Holistic

Org. Str. HR Str.


Potential relationships between organisational
strategy and HR strategy:
HR driven

Org. Str. HR Str.


Barriers to Strategic HR
• Short-term mentality/focus on current
performance
• Inability of HR to think strategically
• Lack of appreciation for what HR can
contribute
• Failure to understand line managers’ role as
an HR manager
• Difficulty in quantifying many HR outcomes
• Perception of human assets as higher-risk
investments
• “Incentives” for changes that might arise
Outcomes of Strategic HR