Strategic Human Resource Management LO-1 Dr.

Mythili Kolluru

LO1- Analyze key external and contextual developments which influence HR strategy

Introduction- HRM

Human resource management is concerned with all aspects of how people are employed, managed
and developed within organizations. According to (Boxall,2013) human resources include the
skills, networks and energies of people, their physical and emotional health, intellectual
capabilities, personalities and motivations. Basically HRM is a conceptual framework consisting
of philosophies from behavioral sciences and from the fields of human capital management,
industrial relations and strategic management.

In the words of (Boxall, 2003) it is defined as a strategic integrated and coherent approach to the
employment, development and well-being of the people working in organizations. In terms to all
the activities associated with the management of employment relationships in an organization.

According to (Watson, 2010), it is the managerial utilization of the efforts, knowledge, capabilities
and committed behaviors that people contribute to an authoritatively coordinated contractual
arrangement to carry out the work in way that enables them to continue in the future.

HR theories

Five different perspectives of human resource management (HRM) include the normative
perspective, critical perspective, behavioral perspective, systems perspective, and agency or
transaction cost perspective.

1.The Normative Perspective

The normative perspective of human resource management bases itself on the concepts of “hard

HRM" and “soft HRM," on which the foundations of human resource management rest. The
concept of “Hard HRM" is the basis for the traditional approach toward human resource
management. This concept traces its origins to the Harvard model that links workforce
management to organizational strategy. Hard HRM stresses the linkage of functional areas such as
manpower planning, job analysis, recruitment, compensation and benefits, performance
evaluations, contract negotiations, and labor legislations to corporate strategy. This enforces
organization interests over the employees' conflicting ambitions and interests. It views the
workforce as passive resources that the organization can use and dispose at will.

Soft HRM is synonymous with the Michigan model of human resources and is the bedrock of the
modern approach to strategic human resource management. This model considers human capital
as “assets" rather than “resources" and lays stress on organizational development, conflict
management, leadership development, organizational culture, and relationship building as a means
of increasing trust and ensuring performance through collaboration. This approach works under
the assumption that what is good for the organization is also good for the employee.

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2.The Critical Perspective of Human Resource Management

The critical perspective of human resource management is a reaction against the normative
perception. This highlights some inherent contradictions within the normative perspective. This
perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies
when they actually enforce hard HRM. A study by Hope-Hailey et al. (1997) finds that while most
organizations claim employees to be their most important assets and make many commitments for
their welfare and development, in reality employers enforce a hard HRM-based strategic control,
and the interests of the organization always take priority over the individual employee. This
perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies
when they actually enforce hard HRM.

3.Behavioral Perspective of Human Resource Management

The behavioral perspective of human resource management has its roots in the contingency theory
that considers employee behavior as the mediator between strategy and organizational
performance. This theory holds that the purpose of human resource intervention is to control
employee attitudes and behaviors to suit the various strategies adopted to attain the desired
performance. This perspective thus bases itself on the role behavior of employees instead of their
skills, knowledge, and abilities.

For instance, an organization aiming to innovate will require a workforce that demonstrates a high
degree of innovative behavior such as long-term focus, cooperation, concern for quality, creativity,
propensity for risk taking, and similar qualities. The role of human resource management in such
a context is to inculcate and reinforce such behavioral patterns in the workforce.

4. Systems Perspective of Human Resource Management

The systems perspective describes an organization in terms of input, throughput, and output, with
all these systems involved in transactions with a surrounding environment. The organized activities
of employees constitute the input, the transformation of energies within the system at throughput,
and the resulting product or service the output. A negative feedback loop provides communications
on discrepancies. The role of human resource management in the systems perspective is:

• Competence management to ensure that the workforce has the required competencies such
as skills and ability to provide the input needed by the organization.

• Behavior management through performance evaluation, pay systems, and other methods
to ensure job satisfaction, so that employees work according to the organizational strategy,
ultimately boosting productivity.

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• Facilitating interactions with the environment in open systems.

5. Agency or Transaction Cost Perspective of Human Resource Management

Among the different perspectives of human resource management is the agency or transaction cost
perspective, which holds the view that the strong natural inclination of people working in groups
is to reduce their performance and rely on the efforts of others in the group. When one person
delegates responsibility to another person, conflicts of interests invariably arise. The major role of
human resource management in such a context is to promote alternative ways of controlling
behavior to reduce the effects of such conflicts and minimize the cost to the organization. The two
major approaches include:

• Monitoring employee behavior and preventing shrink of work by establishing effective

control systems and improving productivity.

• Providing employees with incentives such as rewards, motivation, and job satisfaction to
increase their individual performance.

Strategic HRM

Strategic HRM uses strategic management approaches to develop and implement HRM policies
and practices. SHRM basically combines both the processes of human resource management and
strategic management. This concept is concerned with how the employment relationships for all
employees can be managed in such a way as to contribute optimally to the achievement of the
organizational goal. It is related to systematically linking people with the firm.

All activities affecting the behavior of individuals in their efforts to formulate and implement the
strategic needs of the business. (Salman & Storey,1998)

The pattern of planned human resource deployments and activities intended to enable an
organization to achieve its goals.

SHRM is concerned with how the employment relationships for all employees can be managed in
such a way as to contribute optimally to the organizational goal achievement. It is about
systematically linking people with the firm. It refers to the overall HR strategies adopted by
business units and companies.

The fundamental aim of SHRM is to generate strategic capabilities by ensuring that the
organization has the skilled committed and well-motivated employees to attain sustained
competitive advantage.

According to (Henry& Pettigrew 1986) SHRM can be described in four ways:

1. The use of planning

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2. A coherent approach to the design and management of HR systems based on an

employment policy and manpower strategy and often underpinned by a philosophy
3. Matching HRM activities and policies to some explicit business strategy
4. Seeing the people of the organization as a strategic resource for the achievement of It
provides idea to allocate the resources of organization to most match & capable
Employee.
5. competitive advantage.

SHRM is a concept that links the management and development of people within the organization
to the business as a whole and its environment. It is like a unifying frameworks which are broad,
contingency based and integrative.

Benefits of SHRM

New ways of the Valuation of Assets and Human Capital Measurement;

The first & at most concern of SHRM is to focus on actions that distinguish an organization/firm
from its competitors.

Strategic HR Planning

HR Processes Redesign and Rigor

HR Outsourcing of non-value added processes

Consistent Management of Functions and Skills

Human Resources Development in the organization

It design the foundation of organization to achieve efficient business benefits, structure, culture,
employees values propositions and effective communication strategic plan for HRM.

SHRM also keep track of down turns, down falls, risks and other business acquirement.

SHRM also take part in employee recruitment, hiring, training and assessments processes

Strategic Human Resource Management give emphasis to organizational codes of moral values
and manage public crash of business.

SHRM take your business to the new level, integrates HR workflow, defines new goals, aligned
employee work force for business flourishment.

SHRM provide tactic and proposal to the director of organization.

The introduction of SHRM has the benefit that organization has to start measuring the value of
human capital. It needs to assess its employees, and it has to compare its assets with the ideal

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profile of employees (more on Strategic Planning). The proper assessment of jobs, skills, and
competencies is the first step to building a better business. It has to go through many fit-gap
analyzes to ensure that all plans and initiatives are aligned with the primary goal of the strategic
Human Resources (more on HR Goals and Objectives).

The Strategic HR Planning brings many benefits for employees and managers. Human Resources
becomes predictable, and all proposals come with arguments, information, and relevant data. The
Strategic HR Planning makes a significant difference between the old, traditional Human
Resources function and the new, modern, result oriented HRM Department. SHRM combines
internal priorities of Human Resources with the requirements and needs of the business. It also
considers the ability of employees to accept the change; it demands HR Managers to design a
proper communication and change implementation plan. It allows to HR Professionals balance the
development of human capital in the organization while focusing on critical business targets.

The other benefit of Strategic HR Management is a consistent management of functions and skills
in the organization. SHRM introduces strategic workforce planning which is always a painful
change for line managers. The planning system changes significantly, and headcount allocation
does not take history into account. The promising and critical areas receive higher headcount than
they received in the old headcount planning procedures. It is a change when Human Resources has
to defend its proposal.

SHRM introduction is a great moment for Human Resources; the HR Talent Development
Programs starts to make sense. The HR Director stops solving daily issues and focuses on the
development of the team. The strategic skills become important and valued by other managers in
the firm.

The Strategic HR Management is a fundamental change in Human Resources Organization. The

HR Professionals have to change their behavior; they need to learn new skills and competencies.
The result driven culture becomes a standard, and the increased pressure creates a space for new
talents coming to Human Resources. The SHRM introduction has many benefits for the
organization, HR Function, and employees in HR.

External and internal influences on HR strategy

When formulating the HR strategy many considerations need to be taken into account. The process
of developing HR strategy involves generating options and then making the strategic choice. The
choice of strategy that the employer decides is depended on a number of factors which are both
internal and external.

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Internal

HR
Strategy

External

The HR strategy should be related to anticipate critical needs of the business and the people in it.
They should be evidence based and founded on detailed analysis and study. The decision made
should take into account the experienced and collective judgement of the top management about
the organizational requirements and also needs of the manager and employees. The decision is also
influenced by the environment in which it operates.

Approaches to development of HR strategy

Source review: adopting an outside in approach to the formulation of HRM Strategy-Wright, Snell
and Jacobsen (2004). The formulation of HR strategy involves the following steps:

1. scan the internal and external environment and analyze the implications

Employee engagement
Employee value proposition
Main drivers of success

what does our staff want Key objectives

Internal

Environment
Qualities we seek in staff organizational values

Daily utility of values

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The external factors that have an impact on the HR strategy

1. Competitive pressures
2. Business and economic trends
3. Globalization
4. Employment and demographic trends
5. Legislation and regulation
6. Availability of key skills
7. Market rates of pay
8. Technology
9. Customers

After the effective analysis of the existing HR strategy as to whether it supports the achievement
of organizational goals, provides a suitable environment for the development of the employees, its
ability to retain staff, how much it focuses on organizational performance and individual
performance and to what extent can the HR strategy enhance the levels of employee engagement

1. A key element of HRM strategy is that it needs to be integrated into the business strategy.
The changes integration should take place with the changes in the external and internal
environment.

2. Analyse the effectiveness of existing HR strategies

3. Conduct a diagnostic review of the HR strategy in light of internal and external

environmental implication

4. Consider how vertical integration of fit can be achieved by integrating business with the
HR strategy. The process of integration should start with an analysis of the business model
and continue with a more detailed analysis of the business strategy and the drivers of
business success

5. Horizontal integration takes place when the various HRM strategies cohere and are
mutually supporting. This can be achieved by bundling. Bundling is a process which is
carried out in three steps:

a) identify appropriate HR approach

b) identify how the items in the bundle can be linked

c) draw a program to develop linkages between them

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6. set out the HR strategy

After an analysis draft a detailed HR strategy and make arranges for the implementation
plan:

a) action programs
b) responsibility at each stage
c) resources required
d) proposed arrangements
e) project management arrangements
f) cost and benefit analysis

HR strategy

HR strategy sets out what the organization intends to do about its human resource management
policies, practices and how they should be integrated with the business strategy and each other.
They are known as the intentions and plans for using human resources to achieve business
objectives. For any kind of strategy there are two elements that must be satisfied: there must be a
strategic objective and there must be plan of action. They are dynamic in nature and they tell where
we are going and how to get there. HR strategies set out our intentions and provide a sense of
direction and purpose, but they are not just long term plans. They have immediate relevance and
application to organization’s present state of affairs. HR strategies are required so that the
organization and the management can perform well in the present in order to succeed in the future.

As all organizations are different, all HR strategies are different. There is no actual standard
strategy but research has revealed that there are variations. A company’s actual strategy is partly
planned and partly reactive to changing circumstances.

There are three types of strategies:

1. Broad statement of intent

2. over all HR strategies concerned with high performance working, high commitment
management or high involvement management
3. specific strategies related to different aspects of HRM such as talent management, learning
and development and reward

Broad statements of intent are an approach in which the senior management sets broad guidelines
leaving the specifics to the lower down management. Core components of the HR strategy are
building a performance culture, developing leadership capability, attracting and retaining the best
talent, providing state of art HR systems, processes and services.

High performance management aims to make an impact on organizational performance. The

objective is rigorous recruitment and selection procedures, extensive and relevant training,
management development activities, incentive pay system and performance management process.

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High involvement management involves team work, flexible job descriptions, proactivity,
collaboration, intensive training about information sharing and economic and market of business.

High commitment management is a concept that consists of people with shared values.
Commitment strategy involves giving employees broader responsibility and steering them to a
behavior which is self-regulated.

Specific HR strategies include: organizational design and development, Human capital

management, knowledge management, corporate social responsibility, diversity and inclusion,
engagement, performance, resourcing, learning and development, reward, employment
relationships and talent management.

Organizational design and development: design and modify structure to enhance organizational
functions to respond to change

Human capital management: treating people as assets to be invested through learning and
development policies. HR analytics to assess the contribution of people and to measure the
effectiveness of the HR practices used to manage them

Knowledge management: crating, acquiring, sharing and using knowledge to enhance learning and

performance.

Diversity and inclusion: acknowledging and valuing the cultural and individual differences in
work place.

Engagement: development and implementation of policies to increase employee involvement with

their work and organization

Performance: develop strategies to improve organization and individual performance

Resourcing: attracting and retaining high performance people

Talent management: manage to staff to ensure that organization meets its goals

Learning and development: providing an environment in which employees are motivated and
encouraged to learn and develop

Reward: develop and implement reward policies and practices to achieve organizational goals and
meet the needs of the stakeholders

Employment relationship: management of relationship between management and trade unions

Corporate social responsibility: a commitment to managing the business ethically in order to make
a positive impact on society and the environment

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Strategic Human Resource Management LO-1 Dr. Mythili Kolluru

Work place diversity

Demographic changes in society and the composition of the workforce are also creating a number
of challenges for management of HR. diversity has become and continues to be one of the principal
key word in both public and private organizations as recognizing and promoting diversity has
become a critical issue in organizational success. Workplace diversity refers to the variety of
differences between people in an organization. That sounds simple, but diversity encompasses
race, gender, ethnic group, age, personality, cognitive style, tenure, organizational function,
education, background and more. Diversity not only involves how people perceive themselves, but
how they perceive others. Those perceptions affect their interactions. For a wide assortment of
employees to function effectively as an organization, human resource professionals need to deal
effectively with issues such as communication, adaptability and change. Diversity will increase
significantly in the coming years. Successful organizations recognize the need for immediate
action and are ready and willing to spend resources on managing diversity in the workplace now.

Of the biggest challenges organizations face with diversity is overcoming the deep rooted
stereotype that employees have about a certain group in society. At the other end of the spectrum
are employees who have elevated diversity to the extent that they have a chief diversity officer
(CDO). Generally tasked with the responsibility of creating, maintain and developing a work
environment and culture in which all employees can develop and reach their true potential. CDO’s
or comparable level executive positions are now found in about 60% of the fortune 500 companies.

Some of the benefits of diversity

Increased adaptability

Broader service base

More effective execution

Variety view points

Some challenges of diversity

communication

Resistance to change

Implementation of diversity policies

Successful management of diversity

Some latest trends in HR practices

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Strategic Human Resource Management LO-1 Dr. Mythili Kolluru

1. employee engagement to employee experience

With the growing influence of millennials and the increasing transparency catalyzed by the
digitalization age, employees are expecting a more engaging and enjoyable work experience.
leaders are now focusing on developing the “Employee Experience”, an ecosystem that integrates
three core dimensions: engagement, culture and performance management.

This new focus will drive leaders to examine their employee journey map and optimize it much as
customer experience teams do for customer journeys. It will be an exciting time where HR will
continuously experiment with technology in the market such as pulse feedback tools, employee
wellness apps, modern communication and productivity tools that will help facilitate the
understanding and development of the employee experience.

2. Race to Digitalize HR

An important corollary to improving the employee experience through analyzing employee data is
the digitalization of the workplace itself. Artificial Intelligence and machine learning tools have
disrupted recruitment practices, effectively lowering costs and obtaining candidates with the better
fit. As this rolls out, such practices are getting high visibility in many other companies. In Asia,
where HR practices in some countries are still relatively nascent, there is a significant opportunity
for ‘leapfrogging’ - skipping legacy technologies and processes altogether and progressing directly
towards a more digital HR that would rival developments in more advanced countries.

3. People Analytics Entering Organization Structures

What was once a technical discipline owned by data specialists, people analytics is now a business,
as well as a managerial discipline. This means that in 2018, more organizations would evolve a
people analytics function, with the attendant challenges of prioritizing numerous data requests,
merging multiple data sources with disparate organizational stakeholders, and the constant tension
between centralizing the analytics function in ‘Business Intelligence’ or specializing it within
functional disciplines.

The people analytics team would be responsible for developing models and dashboards that will
bridge communication gaps between team leaders and senior management. Governance teams will
be erected to ensure the security and privacy of employee data, as well as coordinating people data.
They will be challenged to go beyond producing fancy data visualizations and reporting, to
generate real actionable insight to support people decisions.

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4. Gig Economy The BBC defines the ‘Gig Economy’ as “a labor market characterized by the
prevalence of short-term contracts or freelance work, as opposed to permanent jobs”. On-demand
hiring promises lower costs, but it also creates more competition for talent where traditional
workers’ career paths are phased out and are now replaced with temporary jobs focused on skill.
Talent sourcing practices need to build speed and agility in order to quickly identify work/projects
in need of attention, source employees with the required skills, and staff project teams that can
quickly perform the necessary task.

Also, the decoupling of location from productivity has been accelerating: research has shown that
the volume of employees who have worked by telecommuting has risen to 44%, up from 39% in
2012. Having flexible work provisions will drive a firm’s employer value proposition, expand the
candidate talent pool and is a great way of retaining highly valued employees.

5. Cloud computing: Cloud technology has transformed the way businesses use and store data.
More and more companies are actively seeking cloud-based solutions for the most crucial areas of
business – increasingly recognizing it as the key to efficiency. Ultimately, it's about repositioning
HR within the organization so that it's no longer viewed as a cost sink but rather a value contributor.
One of the biggest advantages of cloud computing is the centralization of data.

For businesses, this means flawless organization and ease of access – and admin-heavy
departments stand to benefit the most. For HR operations in particular, it is very advantages to
have all employee data in one single location. It streamlines the HR process. With a cloud-based
software solution, this can be entirely streamlined. A single, dedicated platform facilitates
participation from all sides, making it easy for managers to view candidate applications and
provide feedback – all at their own convenience. Increases employee engagement: Transparency
is only possible through open communication; however, in larger companies, maintaining an
employee-manager dialogue can be extremely difficult. This is where agile, cloud-based solutions
prove invaluable – especially when it comes to feedback.

New definition of human capital management, enables managers to easily identify individual
employees, create well-informed talent development plans and provide ongoing feedback. Rather
than waiting for scheduled reviews, employees and managers alike have a dedicated platform
through which ongoing communication can be fostered. With cloud-based solutions, HR managers
can turn company goals and values into trackable, actionable metrics whilst creating a more
collaborative environment for all.

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References

http://www.talenttalks.net/top-trends-human-resource-development-technology-talent-
management/

www.businessdictionary.com/definition/strategic-human-resource-management.html

http://www.jimsjournal.org/6%20Bhushan%20Kapoor.pdf (Research Paper)

https://www.forbes.com/sites/cheetung/2017/12/19/four-key-hr-trends-to-watch-in-
2018/#331968d19de6

http://www.multiculturaladvantage.com/recruit/diversity/diversity-in-the-workplace-benefits-
challenges-solutions.asp

https://www.computerworld.com/article/3049420/cloud-computing/how-the-cloud-is-
transforming-hr.html

http://www.information-age.com/cloud-technology-hr-big-companies-can-benefit-123466151/

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