STRATEGIC HUMAN RESOURCE

MANAGEMENT
 MODULE - I
INTRODUCTION:
Global business is characterized by the free flow of human and financial
resources. These developments are opening up new markets in a way
that has never been seen before. This accentuates the need to manage
human resources effectively to gain competitive advantage in the global
market place. To achieve this, organizations require an understanding of
the factors that can determine the effectiveness of various HR practices
and approaches.
The field of SHRM has grown up alongside the field of strategic management
in recent years. It represents attempts by HRM researchers to relate the
world of HRM and strategic management to each other. Nowadays most
companies believe that HR rather than financial or technological
resources can offer a competitive advantage. To gain a competitive
advantage from the human capital, there is a growing importance to think
HRM from strategic point of view and to relate HR strategy with the
overall corporate and business strategies.
 DEFINITION OF SHRM
SHRM has been defined as “the linking of HRM
with strategic goals and objectives in order to
improve business performance and develop
organizational cultures that foster innovation
and flexibility”.
 NEED AND IMPORTANCE OF SHRM
It helps in maintaining a competitive advantage by becoming a low cost leader or a differentiator.
Competitive advantage lies in management’s ability to consolidate corporate-wide technologies and
production skills into competencies that empower individual business to adapt quickly to changing
opportunities.
Strategic HR means accepting the HR function as a strategic partner in the formulation of the company’s
strategies as well as in the implementation of those strategies through HR activities such as recruiting,
selecting, training and rewarding personnel. Strategic managers have to change their mindset from
seeing themselves as relationship managers to resource managers knowing how to utilize the full
potential of their human resources.
The strategic HR managers needs to understood and know-how to measure the monetary impact of their
actions, so as to be able to demonstrate the value-added contributions of their functions.
Translating business strategies into HR practices helps a business in three ways. First, the business can
adapt to change because the time from the conception to the execution of a strategy shortened.
Second, the business can better meet customer demands because its customer service strategies have
been translated into specific policies and practices. Third, the business can achieve financial
performance through its more effective execution of strategy.
SHRM involves a set of internally consistent policies and practices designed and implemented to ensure
that a firm’s human capital contribute to the achievement of its business objectives.
SHRM practices are macro-oriented, pro-active and long-term focused in nature; views human resources
as assets or investments not expenses; implementation of SHRM practices bears linkage to
organizational performance; and focusing on the alignment of human resources with firm strategy as
a means of gaining competitive advantage.
 VIEWS ON SHRM
HR strategy is the set of ideas, policies and practices which
management adopt in order to achieve a people-
management objective. Some authors conceptualize HR
strategy as an outcome: ‘from this point of view, there can
be as many HR strategies as many as HR functions are
there.
Schuler and jackson mention six HR practices, namely,
planning, staffing, appraising, compensating, training and
development.
Heneman classified the functions of HRM into five
categories namely, external staffing, internal staffing and
development, compensation, labor relations and work
 LINKING HR STRATEGY WITH BUSINESS
STRATEGY
HRM alignment means to integrate decisions about people with decisions about the
results an organization is trying to obtain. Research indicates that organizations that
successfully align HRM with organization mission accomplishment do so by integrating
HRM into the organization planning process, emphasizing HR activities that support
mission goals, and building strong HR/management relationships.
In order to formulate and implement business strategies, appropriate type of HRM
strategies are required. The desirability of a close relationship between a firm’s
business strategy and HR strategy has been well established. Once the business
strategy has been determined, a HR strategy is implemented to support the chosen
competitive strategy. In this sense, an HR strategy is concerned with the challenge of
matching philosophy, policies, programs, practices and processes– the ‘five Ps’– in a
way that will stimulate and reinforce the different employee role behaviors
appropriate for each competitive strategy. Some authors opine that there is reciprocal
interdependence between a firm’s business strategy and HR strategy. Others argue
that the HRM system must be tailored to the demands of business strategy. The idea
here is that “for any particular organizational strategy, there is purportedly a matching
HR strategy.” several models have been developed which prescribe how business
strategy and HRM should be linked.
SHRM involves three steps:
STEPS IN SHRM
Forecasting, Strategy formulation and Implementation.
Forecasting: Forecasting is the attempt to predict future events that will impact the organization and its needs through
the analysis of the organization’s internal and external environments(e.g., mission statement, goals, labor markets,
opportunities and threats). Predictability and control increase the precision of forecasting . Predictability is the
degree to which one can estimate the occurrence of an event, and control is the ability to orchestrate the likelihood
of an event occurring. Greater control implies great predictability, although some events over which one has little or
no control are predictable. Predictability and control have important implications for how forecasting should be
approached. Forecasting is more effective when forecasting techniques are compatible with levels of predictability
and control.

HR Strategy Formulation: It involves the development of initiatives that are aligned with the organization’s, mission
statement, strategic objectives, strengths and weaknesses and opportunities and threats. The HR strategy
formulation phase is a complex process that involves making decisions about HR activities based on forecasts,
organizational strategy and the anticipated effects of HR programs on strategic objectives. An important process in
SHRM is linking HR functions to other processes in the organization. The goal of linking is to establish a closer
relationship between management and HR, and therefore increasing the likelihood of developing HR between
management and HR, and therefore increasing the likelihood of developing HR policies that are in line with the
organization's strategic objectives. Linkage is related to the amount of contact among the organization’s strategic
planners, the HR department and the managers who will be responsible for executing the plans.
Implementation: It involves putting the HR plan into action with HR programs that support the organization’s overall
strategy and it is arguably as – or more – complex than strategy formulation. Employee recruitment and selection,
training and development, performance management, and labor and employee relations may all have to be altered
by HR in order to integrate with the organizational strategy. Unfortunately, resistance to the planning process and to
the strategic HR plan is a common outcome of planning, and therefore it must be managed appropriately. Resistance
 ROLE OF HR DURING ORGANIZATIONAL
GROWTH
• Strategies HR need to adopt:
• Force a set of clear choices—connect the people priorities
to business priorities.
• Clarify line ownership for HR outcomes and reach a
contract for the responsibility, HR people will have.
• Guide the allocation of people investments to the most
important activities.
• Drive energy up stream– toward the things that produce
more impact.
• Define the organizational and systems framework for the
HR function across its business units.
 ROLE OF HR DURING ORGANIZATIONAL
TURNAROUND
Organizational turnaround is actions taken to bring about a recovery in performance in a failing organization. This
might include substantial and rapid performance improvements involving reducing/redeploying assets,
reconfiguring internal arrangements, and restoring external confidence and The organizational failure occurs due
to many reasons. They may be – poor leadership, inadequate management systems and procedures etc.
HRM is a strategic and systematic approach to managing people in a way that would maximize their motivation and
contribution towards meeting the organization’s objectives.
Steps developing a HRM plan:
• Conduct a departmental strategic analysis: The results of this step are an understanding of the department’s
vision, mission, values; a strategic review of the department; and understanding of the challenges facing the
department.
• Identify strategic HR issues arising from the strategic analysis: Building on the result of step one. The outcome of
this step is an analysis of the strategic HR issues facing the department.
• Identify ongoing HR issues: In addition to the strategic HR issues identified in step two. The ongoing HR issues
impacting the department’s effectiveness must also be identified.
• Prioritize the strategic and ongoing HR issues and determine actions: Once all the HR issues have been identified
through steps two and three, they should be prioritized and key actions required in respect of each issue
identified with input from the department’s top management.
• Draw up the HRM plan: Once the department’s top management has given input into the HR priority issues an key
actions to be taken in step four, the HRM plan and its associated programs are ready to be formulated.

Upon finalization of the plan, departments may like to consider identifying a “driver program” in implementing
proposals in the plan. A “driver program” is one of the HRM programs that, if implemented, will have a major
impact on helping the department achieve its strategic objectives. The program may also serve as the platform for
 ROLE OF HR DURING RETRENCHMENT
One of the most negative corporate acts from a humanistic
point of view, is the decision to make reduction in the
workforce, better known as downsizing, rightsizing,
layoffs, retrenchment or “Trimming the organizational
fat”.
Compassionate Downsizing,
Severance Pay,
Re skilling and Retraining,
Personal Counseling
Reverting Layoffs,
Mandatory shutdowns, unpaid vacations,
Reducing salaries,