Strategic Human Resource Management (SHRM)

Strategic human resource management is the process of linking the human resource
function with the organization’s strategic objectives to improve performance.

Attracting and keeping talented and skilled employees is one of the most important
challenges organizations face in today’s dynamic business world.

No matter how well designed, no strategy will work unless the organization has the
right people, with the right skills and behaviors, in the right roles, motivated in the
right way, and supported by the right leaders.

A company can develop a competitive advantage through the skills and competencies
of its people.

So to be successful more value must be given to people.

Strategic human resource management is the proactive management of people to the

desired value to them. It is designed to help companies better meet the needs of their
employees while promoting company goals.

Several commentators have argued that the concept of Strategic Human Resource
Management (SHRM) has evolved as a bridge between business strategy and the
management of human resources.

SHRM is a philosophy of people management based on the belief that human

resources are uniquely important to sustain business success.

An organization gains a competitive advantage by using its people effectively,

drawing on their expertise and ingenuity to meet clearly defined objectives.

SHRM aims to ensure that the organization’s culture, style, and structure and the
quality, commitment, and motivation of its employees contribute fully to the
achievement of business objectives.

HR strategies combine all people management activities into an organized and

integrated program to meet the strategic objectives.
 Definition of Strategic Human Resource Management

Experts define SHRM from a different perspective. Some of the important definitions
are listed below:

“Strategic human resource management means formulating and executing human

resource policies and practices that produce the employee competencies and
behaviors that the company needs to achieve its strategic aims.”- Gary Dessler.

“Strategic human resource management is an approach to making decisions on the

intentions and plans of the organization concerning the employment relationship and
the organization’s recruitment, training, development, performance management, and
the organization’s strategies, policies, and practices.” – Armstrong.

Strategic human resource management (SHRM) is defined as “the pattern of planned

human resource deployments and activities intended to enable an organization to
achieve its goals.” – Wright & McMahan.

Strategic HRM focuses on actions that differentiate the firm from its competitors
(Purcell, 1999). It is suggested by Hendry and Pettigrew (1986) that has these
meanings:

1. The use of planning,

2. A coherent approach to the design and management of personnel,
3. Systems based on an employment policy and workforce strategy and often
underpinned by a ‘philosophy,’
4. Matching HRM activities and policies to some explicit business strategy, structure,
and culture, organizational effectiveness and performance, matching resources to
future requirements, developing distinctive capabilities, knowledge management,
and the management of change. It is concerned with human capital requirements
and the development of process capabilities, that is, the ability to get things done
effectively. Overall, it deals with any major people issues that affect or are affected
by the organization’s strategic plans. As Boxall (1996) remarks: The critical
concerns of HRM, such as choice of executive leadership and formation of
positive patterns of labor relations, are strategic in any firm.’

Given the increasingly significant role of human resources in an organization, HRM

has become strategic. Strategic human resource management (SHRM) is concerned
with the relationship between HRM and strategic management in an organization.
Strategic human resource management is an approach that relates to decisions about
the nature of employment relationships, recruitment, training, development,
performance management, reward, and employee relations.

Wright and McMahan (1992) defined SHRM as ‘the pattern of planned human
resource deployment and activities intended to enable the firm to achieve its goals.

4 Components of Strategic Human Resource Management

This definition implies the following four components of SHRM:

1. It focuses on an organization’s human resources (people) as the primary source of

the organization’s competitive advantage.

2. The activities highlight the HR programs, policies, and practices as the means
through which the organization’s people can be deployed to gain a competitive
advantage.
3. The pattern and plan imply a fit between HR strategy and the organization’s
business strategy (vertical fit) and between all HR activities (horizontal fit).
4. The people, practices, and planned patterns are all purposeful, directed towards the
achievement of the organization’s goals.
 On the whole, SHRM is concerned with people’s issues and practices that affect or are
affected by the organization’s strategic plan.

The critical issues facing an organization in the contemporary environment are mainly
human issues, such as ensuring the availability of people, retaining, motivating, and
developing these resources.

To stay ahead of its competitors, an organization will continuously look for ways to
gain an edge over others. Today, an organization competes for less on products or
markets and more on people.

In the 21st century, there is increasing recognition among management thinkers and
practitioners of the potential of human capital resources in providing a competitive
advantage.

Two organizations using the same technology may show different levels of
performance.

What leads to this difference?

The quality of human resources and their contribution to the organization determine
the performance, and therefore, the organization’s success.

An organization uses a combination of several resources—tangible and intangible—in

the pursuit of its objectives.

These resources can be grouped into three basic types:

1. physical capital resources—the plant, equipment, and finances.

2. Organizational capital resources—the organization’s structure planning, HR systems,
history, and organizational culture.
3. Human capital resources—the skills, knowledge, judgment, and intelligence of the
organization’s employees.

An organization may have huge capital and the most advanced machinery, but if it
does not have capable, motivated, and high-performing employees, the organization is
not likely to demonstrate sustained levels of high performance.
Since all physical and capital resources depend on people for their efficient use,
maintenance, and management, the quality of an organization’s people is important in
attaining a competitive advantage.
Traditional HRM versus SHRM

Strategic human resource management and the traditional HR function differ from
each other in several ways. The major points of differences between the two are;

Example of Major
Nomenclature of
Contributors to the Suggested Approach
Approach
Approach
Mathis & Jackson (1985)
Strategy-focused HRM is Strategy-focused, i.e., by itself, it is strategic.
and Beer et. (1984)
There are three levels of decisions, namely, strategic,
Decision-focused Tichy era. (1981) administrative or managerial, and operational. HRM at a strategic
level is SHRM.
In the model of the HRM process, there are some elements, and
Content-focused Torrington & Hall (1995) in every such element, there are some strategic aspects called
SHRM.
To formulate and implement the strategies, an appropriate type of
Implementation- focused Miles & Snow (1984) HRM system is required, and such a blending of business
strategies with an HRM system is called SHRM.

Strategy-focused Approach

Authors like Mathis& Jackson and Beer et al. view HRM and SHRM to be identical.

They define that HRM by its nature itself as strategic. The elements of HRM like
training, recruitment, selection all operate as derivatives of strategy requirements
within the organization.

Strategic planning suggests HRM planning. This view is not accepted by many
scholars and views that HRM is strategic to some extent but not in all aspects.

Several authors view HRM and SHRM as identical. According to them, HRM is a
strategy focussed and contains certain elements. This means that HRM, by its very
nature, is strategic.

The elements of HRM such as recruitment and selection or compensation do not

strictly operate in isolation but are derivatives of the requirements of the strategy that
an organization employs.
Strategic planning dictates HRM planning. Though desirable and idealistic, this view
does not seem to be fully accepted by thinkers. There is a feeling that HR planning is,
to some extent, strategic but not in all its aspects.

On the other hand, recruitment and selection are primarily administrative and
operational functions, yet there are some strategic issues in these functions.

Decision-focused Approach

Tichy defines that there are three management levels, namely: strategic (long-term),
managerial (medium-term), and operational (short-term). The author views that the
HR functions performed at the strategic management level are SHRM.

The managerial and operational level HR functions do not come under SHRM and
would rather be considered functional HRM activities.

According to some authors, Tichy et al. (1984)., there are three management levels-
strategic (long-term), management (medium-term), and operational (short-term), and
HR functions performed at the strategic management level are SHRM.

It is implied in their writings that managerial- and operational-management level

activities that deal with medium and short-term HR functions do not come under
SHRM. Rather, these are functional HRM activities.

It can also be inferred that the strategic management level activities are directed to
achieve strategic goals. This approach is similar to the blending strategies requiring
the creation of a fit between HRM and strategy from this angle.

Content-focused Approach

Torrington & Hall identify that there are always some elements in the model of the
HRM process, and in every such element, there are some strategic aspects referred to
as SHRM.

According to this approach, the functional aspects of HRM elements can also be
included with the organization’s strategy leading to the emergence of SHRM.

Torrington & Hall (1995) opine that there are some elements in the model of the
HRM process, and in every such element, there are certain strategic aspects. These
strategic aspects are collectively referred to as SHRM.
 In other words, in every element of HRM, there are two aspects: the strategic and the
functional. This view of defining SHRM is contradictory to the idea of blending
strategies. In this, when HRM elements match with the organization’s strategy,
SHRM emerges.

In the content-focused approach, the functional aspects of HRM elements can also be
blended with the organization’s strategy, which leads to the emergence of SHRM.

Implementation-focused Approach

Miles & Snow view that organizations do have some competitive objectives that are
achieved through some business strategies. To formulate and implement such
strategies, appropriate HRM systems are necessary, and those HR systems are
strategic so-called SHRM.

Miles & Snow (1984) express the view that organizations have some competitive
objectives achieved by some business strategies. To formulate and implement these
business strategies, appropriate types of HRM systems are required.

Such HRM systems are strategic, and this approach can be termed as SHRM.

Dimensions of Strategic HRM

Organizational performance – examines the HRM-firm performance link and prepares

some of the methodological challenges of measuring the impact of HRM.

1. Organizational architecture: It is claimed that the process leads to

flatter organizational structures, ‘reengineering,’ redesigned work teams, use of IT,
senior management commitment.
2. Leadership: Considered important in the ‘soft’ HRM model to develop a high level
of employee commitment and cooperation.
3. Workplace learning: Posited to be a central building block in the resource-based
SHRM model and the ‘learning organization.’
4. Trade unions: Draws attention to the contradictions between the normative HRM
model and trade unions and introduces the debate on ‘partnership’ between
management and unions.

The field of strategic HRM is still evolving, and there is little agreement among
scholars regarding an acceptable definition.
Broadly speaking, SHRM is about systematically linking people with the
organization; more specifically, it is about integrating HRM strategies into corporate
strategies.

HR strategies are essentially the plans and programs that address and solve
fundamental strategic issues related to managing human resources in an organization.

Their focus is on aligning the organization’s HR practices, policies, and programs

with corporate and strategic business unit plans. Strategic HRM thus links corporate
strategy and HRM and emphasizes the integration of HR with the business and its
environment.

It is believed that integration between HRM and business strategy contributes to the
effective management of human resources, improvement in organizational
performance, and finally, the success of a particular business.

It can also help organizations achieve competitive advantage by creating unique HRM
systems that others cannot imitate.

For this to happen, HR departments should be forward-thinking (future-oriented), and

the HR strategies should operate consistently as an integral part of the overall business
plan (Stroh and Caligiuri, 1998).

The HR-related future-orientation approach of organizations forces them to regularly

analyze the kind of HR competencies needed in the future. Accordingly, core HR
functions (of procurement, development, and compensation) are activated to meet
such needs.

Lengnick-Hall (1999) summarizes the variety of topics that have been the focus of
strategic HRM writers over the past couple of decades.

These include HR, accounting (which attempts to assign value to human resources to
quantify the organizational capacity); HR planning; responses of HRM to strategic
changes in the business environment; matching human resources to strategic or
organizational conditions; and the broader scope of HR strategies.

Strategic HRM is a multidimensional process with multiple effects.

Such writing also highlights the growing proactive nature of the HR function, its
increased potential contribution to the success of organizations, and the mutual
relationships (integration) between business strategy and HRM.
Conclusion

Effective strategic management requires effective human resource management.

Strategic Human Resource Management implies how HRM is crucial to

organizational effectiveness.

Hence, organizations must carefully design strategies and relate to human resources
for effective utilization in achieving greater organizational performance. The human
capital practice, which includes the kind of strategy, company, has to follow the
greater performance. The pattern should be taken care of in maintaining strategic
human resource management (SHRM).

The emerging discipline of SHRM offers interesting and insightful variants so far as
the views and approaches are concerned.

An ongoing effort is required to unravel the mysteries of SHRM that hold the promise
of being a powerful tool to manage human resources in the environment of fast-paced
changes that organizations are experiencing today.