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Defining Strategy…

Strategy refers to basic directional decisions, that is, to purposes and

missions.

Strategy consists of the important actions necessary to realize these

directions.

Strategy answers the question: What should the organization be doing?

Strategy answers the question: What are the ends we seek and how
should we achieve them?

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 • A bridge between policy or high-
order goals on the one hand and
tactics or concrete actions on the
other.

• Strategy & tactics straddle the gap

between ends and means.
4 P’s of Strategy
• A term that refers to a complex web
of thoughts, ideas, insights,
experiences, goals, expertise,
memories, perceptions, and
expectations that provides general
Perspective Position guidance for specific actions in
pursuit of particular ends.

Plan Pattern

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 Defining Strategic HRM…
• 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.

• Goals of a human resource department reflect and support the goals of the rest of the
organization.

• HR departments do not work independently within a silo; they interact with other
departments in order to understand their goals and then create strategies that align with
those objectives, as well as those of the organization.

• SHRM links HR with strategic goals and objectives to improve business performance, develop
organizational culture that foster innovation, flexibility and competitive advantage. It involves
HR function as a strategic partner in the formulation/implementation of the company's
strategies through HR activities such as recruiting, selecting, training and rewarding personnel.

• Strategic HRM is seen as a partner in organizational success, as opposed to a necessity for

legal compliance or compensation.

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 Strategic HRM is therefore…

 Analysing the opportunities and threats existing in the external

environment.

 Formulating strategies that will match the organisation’s (internal)

strengths and weaknesses with environmental (external) threats and
opportunities. In other words, make a SWOT analysis of organisation.

 Implementing the strategies so formulated.

 Evaluating and control activities to ensure that organisation’s objectives are

duly achieved.

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 Organizational Considerations for SHRM Investment

 Management Values & Philosophies, view of HR as cost center, value-add

made by HR.

 Risk return on Investment – returns must be great enough to overcome

the risks, difficult to quantify Human capital ROI, Flexible & Committed
workforce.

 Economic rationale for investment in training vs development of

expertise, cost of mobility, relocation, salary.

 Utility Theory – determine & evaluate economic value, utility and returns
of each HR activity.

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 Nature of SHRM
• Long-term Focus: As business have a long-term orientation, therefore, focus of SHRM
is also long-term for more than one year.

• Associated with Goal-Setting: SHRM is highly related with setting of objectives,

formulation of policy and allocation of resources and it is carried out at all levels of top
management.

• Interrelated with Business Strategies: There is an interrelation between business

strategies and SHRM. E.g. it gives significant inputs when business strategy is
formulated, and human resource strategies (like recruitment, staffing, training and
performance appraisal).

• Fosters Corporate Excellence Skills: SHRM considers employees as the strategic

potential of the organization and on that basis makes effort to differentiate the
organization from its competitors present in the markets. It also promotes learning of
modern skills.

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For Study Only
 Evolution of SHRM

• Strategic human resource management (SHRM) is a relatively new field, which has evolved out of the
parent discipline of human resource management. Traditionally, the notion of HRM was treated as
purely as an operational matter.

• Staff Management has undergone many changes since industrial revolution of the mid18th century,
however since the beginning of 1990s, it has been accepted that in order to improve business
performance and develop organizational culture that foster innovation and flexibility, there should be a
linking of HRM with strategic goals and objectives of an organization.

• The field of SHRM has been mainly developed in USA and Western Europe countries. Historians trace
the origins of this field to the medieval times (~ 1870), an era dominated by foreman-oriented
personnel. Craftspeople formed groups to improve their working conditions and first line supervisors
handled most personnel problems.

• After industrial revolution, substitution of steam power and machinery for time consuming hand labor
lead to establishment of factories where large number of people are employed resulted into a
tremendous increase in job specification and ‘division of labor’. Organized trade unions spread rapidly
during the latter half of 19th century.

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 Evolution of SHRM
• After 1870s, early personnel administrators replaced the foreman-oriented systems coupled
with the rise of the scientific management. Fredrick Winslow Taylor pioneered time-and-
motion studies of jobs as per his belief that techniques used by scientists in the laboratory can
be used to increase efficiency in the workplace. Taylor put forward three concepts, a)
Matching b) Training c) Incentives, which provided foundation for modern HR Profession.
Firms began to employ social or welfare secretaries with early personnel administrators given
the task to bridge the employer-employee gap.

• 1909 onwards was an era of personnel management wherein more and more employee
related responsibilities were being assigned to the personnel departments. By 1920s, various
titles of personnel specialist jobs began to emerge. Departments like Safety, Hygiene and
Welfare; Industrial Relations Department were established by various firms. Terms like
recruitment, insurance benefits, safety program, and medical division were also being used.
Hawthorne behavioural studies in 1923 gave birth to human relations movement.

• 1990s observed a transition from Personnel Mgmt (a record keeping unit, file clerk, a social
worker, a fire fighter and a head of a union trouble) to HRM (knowledge to which was imbibed
from behavioral Science research (based on disciplines like (industrial/organizational
psychology, organizational theory, organizational behavior, and sociology)

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 Evolution of SHRM
• It was also in the 90s, the importance of linking HRM with the strategic goals and
objectives laid its foundation leading to further transition of HRM towards SHRM.

• According to Golden & Ramanujam (1985) - Four HR strategy linkages, form the basis
of numerous studies in 90s onward that examines the relationship between HR’s
integration with the business strategy and actual business performance:

– Administrative linkage
– One-way linkage
– Two-way linkage
– Integrated linkage

• SHRM evolved as a ‘bridge’ between business strategy and the management of

human resources.

• SHRM adopts a ‘macro’ or firm level prospective rather than the knowledge held
within each of the HR functions.

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For Study Only
Differential Approach – SHRM Vs Traditional HR

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 Benefits of SHRM

 To ensure that people development issues are addressed systematically.

 To supply competitive intelligence that may be useful in the strategic
planning process.
 To supply information regarding the company's internal strengths and
weaknesses.
 To meet the expectations of the customers effectively.
 To ensure high productivity.
 To ensure business surplus thorough competency.
 Identifying and analysing external opportunities and threats that may be
crucial to the company's success.
 Provides a clear business strategy and vision for the future.
 To recruit, retain and motivate people.
 To develop and retain of highly competent people.

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 Barriers to SHRM

 Short Term “Mentality” – focus on the current only!

 Strategic Inability – failure to link HR to business strategy, lack of
growth strategy and failure to implement it!
 Lack of HR’s credibility – lack of appreciation on what HR can
contribute!
 Failure to quantify HR outcomes
 Perception of human assets as high risk investment
 “Status Quo approach” - Resistance to Change
 Lack of union support
 Lack of Government backing
 Weak financial position of the company

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 Role of HR in Strategic Planning
• Strategic Planning involves 4 steps:
– Strategy Formulation
– Strategy Developmentt
– Strategy Implementation
– Strategy Evaluation

• HR Strategy is driven by vision,

mission and values of the
organization.

• HR contribution includes devising

recruitment & retention plans,
Performance management system
and Change Management/Re-
engineering or Restructuring
initiatives.
Credits: SHRM HR Summit Expo

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For Study Only