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What is HRM & what is SHRM?

Human resource management (HRM) is the term used to describe formal

systems devised for the management of people within an organization. It focuses
on recruiting and hiring the best employees and providing them with the
compensation, benefits, training, and development they need to be successful
within an organization.

Strategic human resource management (SHRM) is :

• a proactive approach which takes HR activities one step further by aligning
them with the goals of other departments & overall organizational goals. 
• is a function of management which entails development of policies,
programmes and practices related to human resources, which are then
aligned with business strategy, so as to achieve strategic objectives of the
• Its primary purpose is to improve the performance of the business and
maintain a culture that encourages innovation and works continuously to
gain competitive advantage.

Dr. Isa Mishra

What is HRM & what is SHRM?

HR New
with Strategic
Vision busine HRM

Dr. Isa Mishra

Traditional HR vs. Strategic HR…


Responsibility Staff Managers Line Managers
Emphasis Employee Relations Partnerships with Internal &
External Customers
Type of HR Transactional, Change Follower & Transformational, Change
Respondent Leader & Initiator
Role of HR Custodian of HR Policy Implementation Custodian but amenable to
& Compliance needed change

Initiatives Slow, Reactive, Fragmented Fast, Proactive, Integrated

Time Horizon / Short term Short, Medium, Long (as reqd.)
Control Bureaucratic – rules, policies, Organic – flexible, whatever is
procedures necessary to succeed
Job Design Tight Division of Labor, Specialization Broad, Flexible, Cross training,

Dr. Isa Mishra

Traditional HR vs. Strategic HR


Critical Skills Organization, Administration, Strategic, Planning, Diagnostic,
Compliance, Transactional, Tactical Analytical (Metrics),

HR Systems & Routine, Traditional, Reactive, Adaptive, Innovative,

Practices Responds to stated needs Proactive, Recognizes unstated

View of Head Count, Cost Based, Exploitable Contributors, Asset based,

Employees resource Critical resource
Key Investments Capital, Products People, Knowledge
Accountability Cost Centre Investment Centre

Dr. Isa Mishra

Strategic Planning starts with Environmental
Analysis / Scanning – study of the environment
dynamics so as to understand their impact on
plans. This helps to understand the strengths,
weaknesses, opportunities & threats that an
organization may face during planning.

Dr. Isa Mishra

Strategic Challenges during Planning…
A. Proper Internal Environmental Analysis

• Intellectual Strengths
capital Weaknesses
• Intellectual capital • Lack of skilled employees
• Loyal, committed employees • Lack of skilled employees
• Loyal, committed employees • Lack of leadership pipeline
• Innovative, Adaptive employees • Lack of leadership pipeline
• • Innovative, Adaptive employees • Lack of proper HR practices
High performance practices • Lack of proper HR practices
• High performance practices

Opportunities Threats
• Opportunities
Market position • Threats
Legal mandates & restrictions
• • Market position • • Legal mandates & restrictions
Advent of technology Competitor power
• • Advent of technology • • Competitor power
Unexplored markets Internal economic uncertainty
• • Unexplored markets • • Internal economic uncertainty
Global expansion Talent shortage
• Global expansion • Talent shortage

Dr. Isa Mishra

B. Proper External Environmental Analysis
By External Scan / Study

Economic Conditions
(State of economy, inflation, consumer prices
leading to downsizing, compensation cuts, etc.)

Legislative & Political

(Legislations on tax, safety & health, emplyt.)

Demographic Changes
(Workforce demographics – increase in medical
services with increase in age of workforce)

Geographic & Competitive

Dr. Isa Mishra

C. Managing Talent Supply Imbalance


Reduce employee work hours or reduce Increase employee work hours through
compensation (less pay more benefits, overtime
etc.) to avoid layoffs
Attrition followed by Hiring Freezes, no Outsource to a third party
retention of separating employees, no
hiring of replacements
Voluntary Separation Programs Use contingent workers (consultants,
temporary workers, contractual workers)
Downsizing / Reduction in force Implement alternative work
(severance benefits, outplacement arrangements (re-hiring retiring
support) employees, telecommuting, moofers)
Reduce employee turnover

Dr. Isa Mishra

D. Technology Challenges

1. Effect on Organization – reduction in costs, improvement in work process & flow

through BPR (Business Process Re-engineering) but increase in Employee Relations

2. Effect on Communication – Faster communication through social networking,

intranet portals, watsapp, etc.

3. Effect on Work Processes – Monitoring of work processes, employees’ actions &

performance (through video surveillance, etc.) has become easier & faster. But,
excessive monitoring can lead to distrust.

4. Effect on HR Activities – Recruitment through web-based job boards, online

interviewing; Training with competitive edge through videos, podcasts, webinars,
etc.; easier career & succession planning

Dr. Isa Mishra

E. Measuring Effectiveness of HR Initiatives
1. HR Metrics – measures tied to HR performance indicators. They are used
to assess HR function & results within the organization over time. Analysis
& interpretation of the data leads to improvement in human capital
utilization. Some key HR Metrics :

HR Staff & Expenses Compensation

HR Staff
• Absenteeism rate & Expenses • PayrollCompensation
as % of operating
• •
• HrAbsenteeism
to employeerate ratio expensesas % of operating
• • HRHrexpenses
to employee expenses
per ratio • Annual salary increases
• HR expenses per • Annual salary increases
employee Training
Retention • Training hrs Training
per employee
• Average tenure of •
• Total costs forper
Training hrs employee
• Average tenure of
employees • • %Total costs for training
of employees participating
employees •
• % of new hires retained in%some
of employees
program participating
• % of new hires retained in some program
• No. of positions Development
• • Time
No. to
of fill
positions filled
vacancies • PositionsDevelopment
filled internally
• Positions filled with
• • Cost
fill vacancies • % of employees
• % of employees
with career
• Cost per hire
• Annual turnover rate plan
• Annual turnover rate plan
https://www.youtube.com/watch?v=xfGUnYyQYL4 Dr. Isa Mishra
E. Measuring Effectiveness of HR Initiatives
2. HR & Benchmarking / Ranking with other similar organizations

3. HR & the Balanced Scorecard

4. Measuring Human Capital effectiveness :

a. Revenue per employee : If revenue increases with constant

headcount, productivity increases.

b. ROI = C
where; C = Value of gains from productivity improvements
B = One time cost of acquisition & implementation
A = Operating costs for a new / enhanced system

Dr. Isa Mishra