Strategic HR Management

HRM 633

Content:

 Strategic HRM & HRM Strategies

 Importance of Strategy to an organization
 Characteristics of the Strategic decisions
 Approaches to Strategic HRM:

Strategic HRM & HR Strategies

The 2 terminologies are often used interchangeably.

Strategic HRM refers to the general approach to strategic management of Human resources in
accordance with the intentions of the organization on the future direction it wants to take. It is
concerned with the long term people issues as part of its strategic management processes of the
organization. It deals with macro concerns on performance, competence, commitment, quality,
culture structure, values, management and development.
HR Strategies focus on specific (Micro) intentions of the organization as to what needs to be done
and what needs to be changed. These intentions include Training, motivation, hiring the right number

HRM 633_Strategic HRM

of people with right skills, reward, motivation, team working, employee relations etc. They facilitate
achievement of the business/Corporate strategy.
Strategic HRM decisions are built in strategic plan while the HR strategies are derived from it (the
strategic plan). Relationship between the Strategic HRM & HR Strategies is that both are connected
with strategic Management and corporate strategy.

Comparing Human Resource Management and Strategic Human Resource Management

Difference between HRM and SHRM is that HRM is about managing the human resource within the
organization and SHRM is about aligning the human resources with the strategic objectives of the
organization.

BASIS FOR COMPARISON HRM SHRM

Meaning Human resource management (HRM) SHR
implies the governance of manpower of the M is a managerial function which implies
organization in a thorough and structured framing of HR strategies in such a way to direct
manner. employees’ efforts towards the goals of
organization.
Nature Reactive Proactive
Responsibility lies with Staff specialist Line manager
Approach Fragmented Integrated
Scope Concerned with employee relations Concerned with internal and external relations

Time horizon Short term Long term

Basic factor Capital and products People and knowledge
Change Follows change Initiates change
Accountability Cost center Investment center
Control Stringent control over employees It exhibits leniency

Comparing Human Resource Management (HRM) & Personnel Management (PM):

BASIS FOR COMPARISON PM HRM

Administration Practical/ utilitarian/ hands on…& mostly Strategic approach and tends to integrate
concerned with administration and Personnel and other HRM considerations in
implementation of Policies planning for the company

Line Management Influences the Line Management More integrated with the Line Management
Focus Focuses on the effects of changes to the Focuses on the wider implication of the
working practices management of change
Approach It is a practice that is reactive and HRM focuses on employees’ commitment and
diagnostic /analytical in nature and loyalty through persuasion and motivation
responds to changes in its environment e.g.
Labour Laws, labour Market Conditions
Time Span PM has short term perspectives HRM has its eyes fixed on Long term
perspectives seeking to achieve integration of
all human aspects of the organization
Area of concern Focuses more on the processes than people *Has its eyes fixed on People management
*Treats employees as Assets not costs

HRM 633_Strategic HRM

Similarities

 Both PM & HRM derive their strategies from the Business strategy.
 Both recognize that the Line Managers are responsible for managing people.
 Both agree to that people have to be matched with the ever changing organizational
requirements.
 Both use the technique of selection, performance management, training, management
development etc.
 Both attach value to the soft version of managing people through communication and employee
participation.

Importance of Strategy to an organization:

Strategy plays such an important role in any company’s success.

1. Planning
Helps in creating and tracking progress against an annual operating plan thus an essential
management tool for any company. The missing link is usually the relationship of these plans to the
future.
A clear picture of what you want the future to look like, will always be a more proactive approach
than being reactive. A well-articulated 3 to 5-year long term view of the company should serve to
inform the annual operating plan. The annual plan then becomes the stepping stone toward the
achievement of the long-term goals.

2. Helps in SWOT Analysis- Strengths, Weaknesses, Opportunities & Threats

Leveraging on the strengths (competitive advantages) and having plans to close capability gaps in
the organization (weaknesses) is paramount.
Strategy creates a higher level of awareness and provides a much greater focus on activities that will
make the organization more successful.

3. Skills & Knowledge

Knowing where you want to take the business over the long term, will help have a much focused view
of the kinds of capabilities required to achieve the goals.
Strategy defines and drives decisions in organizational design. Therefore, by proactively pursuing
new skills and knowledge, you prepare the organization for the intended future state.

4. Resource allocation
Resources in any company, large and small resources are finite, hardly will they be infinite.
Strategy is about making choices. What products, services and markets will be a part of the future
and what should be done? These types of decisions are critical in ensuring that the limited resources
are being deployed to the most promising opportunities that will provide the greatest return.

5. Environmental Scan
Obtaining knowledge on the external environment can have a positive or negative impact on
performance. Being in tune with customers and markets is paramount.

HRM 633_Strategic HRM

Being aware and prepared for potential shifts in your market or industry provides the opportunity to
take action before it happens.

Characteristics of the Strategic decisions

 It’s a top Management responsibility involvement in decision making.

At the top level there is a perspective to understand and anticipate broad implications of the strategy
and power to authorize the resources necessary for implementation.

 Involves allocation of large amounts of company resources.

The people, the physical assets or money needed must either be directed from internal sources or
secured from external sources.
 Long term with clear timeframes
Has a significant impact over a prolonged period of time normally 5 years and it is future oriented
and based on what managers anticipate or focus rather than what they know. The emphasis is to
develop plans that will enable the firm to select the most promising strategic option.

 Affects the whole organization

Have a multi-functional consequence. This means a strategic decision normally affects other
divisions/departments of the organization.

 Necessitates considering factors in the firm’s external environment e.g. Competition,

customer demand.
 Critical to survival of organization
 Drives Team work, Cooperation within the organization
Approaches to Strategic HRM:
The following models prescribes for strategic HRM which is pegged on 3 drivers namely:

1) The high performance management

2) The high commitment management model
3) The high involvement management
1. The high-performance management

High-performance working involves the development of a number of interrelated processes which

together make an impact on the performance of the firm through its people in such areas as
productivity, quality, levels of customer service, growth, profits and ultimately, the delivery of
increased shareholder value. This is achieved by ‟enhancing the skills and engaging the enthusiasm
of employees.

Main drivers of High-performance management:

 Decentralized, devolved decision-making made by those closest to the customer – so as constantly

renew and improve the offer to customers;
 Development of people capabilities through learning at all levels, with particular emphasis on
self-management and team capabilities – to enable and support performance improvement and
organizational potential;

HRM 633_Strategic HRM

 Performance, operational and people management processes aligned to organizational objectives
– to build trust, enthusiasm and commitment to the direction taken by the organization;
 Fair treatment for the employees who leave the organization as it changes, and also engagement
with the needs of the community outside the organization.

2. The high-commitment management

One of the characteristics of HRM is that it emphasis on the importance of enhancing mutual
commitment. It is aimed at eliciting a commitment so that the behaviour is primarily self-regulated
rather than controlled and relations within the organization are based on high levels of trust.
The approaches of achieving high-commitment involves: -

 The development of career ladders and emphasis on trainability and commitment as highly
valued employees at all levels in the organization;
 High level of functional flexibility with the abandonment of potentially rigid job
descriptions;
 Reduction of hierarchies.
 Heavy reliance on team structure for disseminating information structuring work (team
working) and problem solving
 A policy of no compulsory lay-offs or redundancies and permanent employment guarantees
with the possible use of temporary workers to cushion fluctuations in the demand for labor
 New forms of assessment and payment systems and more specifically, merit pay and profit
sharing.
 High involvement of employees in the management of quality
 Job design which consciously provides jobs that have a considerable level of intrinsic
satisfaction

3. High-involvement management:

This approach involves treating employees as partners in the enterprise whose interests are respected
and who have a voice on matters that concern them. It is concerned with communication and
involvement.
The aim is to create a climate in which a continuing dialogue between managers and the members
of their teams take place to define expectations and share information on the organization’s mission,
values and objectives. This establishes mutual understanding of what is to be achieved and a
framework for managing and developing people to ensure that it will be achieved.

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HRM 633_Strategic HRM