Strategic Human Resource

Management
 Introduction
• 1990s there has been an increased focus on
the strategic role of human resource
management.
• The strategic approach to HRM refers to the
relationship between human
resource(HR)Practices and the strategic
objectives that is the long term goal of an
organization.
 Introduction Contd..

• Strategic human resource management (SHRM) is

tine process of linking the human resource function
with the strategic objectives of the organization in
order to improve performance.
• Strategic Human Resource Management focuses on
the overall HR strategies adopted by business units
and companies.
• It is a thought that integrates traditional human
resource management activities within a firm's
overall strategic planning and implementation, thus
called Strategic Human Resource Management.
 HRM
• Human Resource management(HRM) is concerned
with the holistic approach towards the management
of people working in an organization who contribute
to the achievement of organizational objectives
• Effective and efficient use of human talent
for accomplishing the goals of an organization
• To achieve organizational objectives each
organizations need to develop a well defined HR
strategy
 HRM contd..

• Organization has now to focus on its three core areas

• PEOPLE
• PROCESS
• PERFORMANCE
• Called the 3 Ps
• People-Known fact that the core strength of an organization lies on
its people(human resource ) all other resources can be replaced
but not people
• Process-With the fast changing world emphasis is laid on flexibility
and adaptability. In an IT enabled environment re-engineering of
process can be done
 HRM Contd..
• PERFORMANCE: the existence of an organization is primarily dependent
on its ability to create vale and continuously increase the rate of return on
investment
• The two pillars supporting the performance of an organization are PEOPLE
AND IT(technology)
• The integration of these two factors plays the pivotal role in improving the
performance of an organization at both individual and organizational
levels
• IT helps in documenting the knowledge pool in the organization and
making it available to the employees through intranet etc.
• Management of knowledge workers is different from that of conventional
employees-intelligence and maturity higher and they expect greater levels
of flexibility and freedom in their work area in the case of knowledge
workers
 Strategic HRM definition

• Some important definitions of strategic human

resource management given by various experts are as
follows:
• 1. Strategic human resource management means
formulating and executing human resource policies
and practices that produce the employees'
competencies and behavior, that companies need to
achieve its target games, says Gary Dessle,2009
• 2. Strategic human resource management is
concerned with all those activities that affect the
behavior of individuals in their efforts to formulate
and implement the strategic needs of the business, as
per R.S.Schuler,2011
• 3. Strategic Human Resource Management is a
pattern of planned human resource
deployments and activities intended to enable
the firm to attain its goals, as per G.C.
McMahan,2011
Evolution of SHRM

Personnel Human Strategic

Management Resource Human
Management Resource
(early 1970s) Management
(early 1980s)
Objectives of SHRM
 To ensure the availability of a skilled,commited, &
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 & the
individual & collective needs of its workforce are
met.
 Key features of SHRM
• The key features of SHRM are
• There is an explicit linkage between HR policy
and practices and overall organizational strategic
aims and the organizational environment.
• There are some organizing schema linking
individual HR interventions so that they are
mutually supportive.
• Much of the responsibility for the management
of human resources is devolved down the line.
 Benefits of Strategic HRM
• Contributing to the goal accomplishment and the survival of
the company,
• Supporting and successfully implementing business strategies
of the company,
• Creating and maintaining a competitive advantage for the
company,
• Improving the responsiveness and innovation potential of the
company,
• Increasing the number of feasible strategic options available
to the company,
 Benefits of HRM Contd..
• Participating in strategic planning and influencing the
strategic direction of the company as an equally
entitled member of top management,
• Improving cooperation between the HRM
department and line managers.
• The strategic HR framework aims to leverage and / or
align HR practices to build critical capabilities that
enable an organization to achieve its goals
• Strategic management offers both financial and non-
financial benefits to an organization which practices it
 Approaches

• The concern of SHRM is to ensure that:

• (1) human resource (HR) management is fully
integrated with the strategy and the strategic
needs of the firm;
• (2) HR policies cohere both across policy areas
and across hierarchies; and
• (3) HR practices are adjusted, accepted, and
used by line managers and employees as part of
their everyday work, according to Muhammad
Aminu Baw and Dr Juhary AH 2009
 Challenges
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
 Difference between SHRM and HRM
SHRM HRM
SHRM is based entirely on a soft HRM HRM is mainly based on hard HRM
approach that views employees as approach that views employees as
precious resources. important tools of production and
headcount resources.
SHRM focuses on business level outcomes HRM focuses on HR level outcomes.
SHRM is proactive in nature and sets the HRM is reactive in nature and follows the
trend in the market. trends in the market.
SHRM operate at higher levels of HRM operates at relatively lower level of
Management. organization.
Understanding the operational Understanding the operational aspects of
dimensions of organization is basic organization are not is not a priority area
necessity of SHRM. of HRM
In SHRM, business strategies and HR HRM merely accomplished the HR goals
strategies effectively supplement each and targets set by business strategy.
other in their formulation.
Gaining competitive advantage out of Managing employees is the primary aim
Human Resources is the basis of SHRM of HRM
Strategic FIT: A Conceptual
Framework
 The strategic fit proposes that if an organization
seeks to maximize its competitive advantage, it
must match its internal resources & skills with
opportunities available in the external
enviornment.
Five types of Fit-
1. Best fit approach
2. Fit as contingency
3. Best Practice approach
4. Fit getalt
5. Fit as bundles.
Strategic FIT: A Conceptual
Framework
Best Fit Approach-This linkage is reffered
as external fit or vertical integration means the
linkage of HR strategies with business
strategies.
Bases of classification of HR Strategies:
 Different types of business strategies
 Stages in the business or product cycle
 Types & number of products
HR strategy classification
 HR Practices corresponding to the
stages of an organization‟s life cycle
Life Cycle Stages HR Practices
Start-up • Flexible patterns of work
• Recruitment of highly motivated &
committed employees.
• Competitive pay
•Little formality
Growth • More sophisticated recruitment &
selection
• Training & development
• Performance Mgmt process
• Reward systems
• Developing stable employee
relations
Maturity • Attention to the control of labour
cost
• Focus on increasing productivity
• Control compensation
Decline • Emphasis on rationalization of
Linking Business Strategy HR
Strategy
Business Strategy HR Strategy
Cost Leadership Utilization HR Strategy
Differentiation Facilitation HR Strategy
Focus Accumulation HR strategy
Miles & Snow‟s Classification of
Business Strategy with HR strategy
Dominant culture of organization
(Business Strategy)
Defenders
 Find change threatening
Favour strategies which
encourage continuity & security
Prospectors
 Thrive on change
 Favour strategies of product or
market development
Analyzers
 Seek to match new ventures
with the present business set-up
 These firms are followers- the
HR strategy
 Bureaucratic approach
 Planned & regularly maintained
policies
 Build human resource
 Creative & flexible management
style
 Have high quality human resource
 Little opportunity for long term HR
planning.
 Emphasize on
recruitment,selection & performance
based compensation
 Low level of monitoring &
coordination
 „Buy‟ as well as „Make‟ key human
resources
Other frameworks
 Golden & Ramanjuman(1985)-4 types of linkage
1. Administrative Linkage
2 .One way linkage
3. Two way linkage
4. Integrated Linkage
„HR Bundles‟ Approach
 In general terms the bundles approach is also
termed as internal fit or horizontal integration. The
purpose of bundling is to bring about coherence
b/w HR practises.Coherence exist when a
mutually reinforcing set of HR practices is
developed to contribute to the strategic objectives
of the organizations so that these practices
ensure the matching of resources to the needs of
organization & bring about the performance
quality.
Best Practice Approach
 This approach focus on the view that organizations
should adopt best practice irrespective of the context.
According to this view, superior management
practices are readily identifiable & are transferable
across organizations.
It contains-
 employment security
 Selective hiring
 Team working
 High pay contingent
 Extensive training
 Reduction of status differences
 Information sharing
Distinctive Human Resources
Practices
HR
competencies

Outside Prospect
Development ors
Inside
Flexibility
selection

Outside
Business Development
Strategies

Outside
Development
Established
Markets/niches
Inside selection Defenders
Theoretical Perspectives of
SHRM

SHRM

Fit Functional Economic Typological

Perspective perspective Perspective perspective
Theoretical Perspectives of
SHRM
 Fit Perspective-match its internal resources & skills
with opportunities available in the external
environment.
 Functional Perspective-An organization performs
best when each departmental unit maximizes its
contributions limited to its unique area of expertise.
 Economic perspective- Human resources are a
unique & distinguishable source of competitive
advantage.
 Typological Perspective-Three distinct ‘types’ of
HR strategies
 Inducement
Investment
Involvement
SHRM Approaches: The Indian
Context
Three Major approaches to understanding people function developed in
India are presented-

Integrated
System Model

SHRM(Indian HRD
context) Framework

HRD as an
approach
Alternative HR Strategies
 Contract companies in manufacturing sector- The
use of contract workers has increased
significantly at the production sites in electric &
auto industries.
 Business Strategy of Contract firms-
Operation Workers’ Skill Workers’ Skill
Management Level Level
Policy (Development (Acquisition
Type) Type)
Contractor- Development/Cont Acquisition/Contra
managed type ractor-managed ctor-managed type
type

Client Managed Development/Clien Acquisition/Client

type t Managed type Managed type
Restructuring & SHRM in Healthcare
Organization
 The healthcare industry is in a growth mode & there is
high level of focus on healthcare cost. As the part of
strategy, the hospital industry is likely to engage in
downsizing & restructuring
 Steps involved in plan to restructuring of hospital
 Environmental scan prior to developing restructuring
activities.
 The environmental scan will result in defining the
business strategy
Pre-structuring
 Re- structuring
 Post-restructuring
 Competition related HRM changes in
the Retail Banking Industry
Since the mid-1990s,the retail banking divisions of
commercial banks are under pressure to change the
way they do business banks are faced with an
extremely competitive environment as well as threats
from non-banking institutions
Focus or Niche Strategy-the typical initiatives are
as follows:
 being a „one-stop‟ financial service provider.
 Aggressive selling to new customers
 Aggressive cross selling of new products to existing
customers.
Establishing a presence in chosen geographical markets
Establishing alternative channels of delivery of financial
Services.