2

STRATEGIC HUMAN RESOURCE

MANAGEMENT
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OBJECTIVES
• Understand the Scope of SHRM

• Factors Influencing SHRM

• Linking of Corporate Strategies to HR Functions
• Understand the New Role of HR
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Strategic management is drafting, implementing and evaluating

cross-functional decisions that will enable an organization to
achieve its long-term objectives. (David, 1989)
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Two Views of Strategy

Mainstream view- Strategy as a plan

(i) Strategies are plans made by top managers and their
corporate strategy advisors

(ii) Strategy is a matter of policy and it precedes action

(iii) Strategy and implementation are separate

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Two Views of Strategy

Processual view- Strategy as a

pattern
(i) Strategies are more usefully seen as the outcome of both
planned and unplanned activities

(ii) Policies often emerge out of actions that have already

been taken

(iii) Strategy and implementation tend to happen simultaneously

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Table 2.1 Defining Human Resources and Strategic Human

Resource Management
Human Resources
The efforts, skills or capabilities that
people contribute to an employing
organization to enable it to continue
its existence.
Strategic Human Resource
Management
The general direction followed by an
organization in how it secures,
develops and from time to time
dispenses with human resources to
help it continue in the long-term.
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Exhibit 2.1 The Scope of SHRM

Scope Ranges of SHRM

From such matters as:
The overall organizational structure
Merger & acquisition
Recruitment policies
To:
Employees’ punching cards
The smoking/non-smoking policy
Casuals on Saturdays
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Figure 2.1 HR Strategy: Strategic Fit

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Table 2.2 Two Key and Alternative Human Resourcing

Principles

Direct control/low commitment Indirect control/high

commitment
Employees given little discretion, closely Employees ‘empowered’ encouraged
supervised to use discretion and monitored
Limited ‘psychological’ commitment High ‘psychological’ commitment
sought from employees sought from employees
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Key factors influence the HR system

• External environment
• Changing workforce
• Organization culture
• Organization structure
• Technology
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STRATEGIC HRM MODELS

(i) Life Cycle Model

(ii) Competitive Advantage Model

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Life Cycle Model

• Introductory stage

• Growth stage

• Maturity stage

• Decline stage
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Competitive Advantage Model (Porter,1985)

Three Major Parameters:

(i) Cost leadership,

(ii) Differentiation, and

(iii) Focus.
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Table 2.3 Best Practice Approaches to SHRM

Arthur(1992) Broadly Defi ne Jobs, Employee Participation, Formal Dispute Resolution, Information
Sharing, Highly Skilled Workers, Self-Managed Teams, Extensive Skills Training, High
Wages, Salaried Workers, Stock Ownership1

Pfeffer(1995) Employment Security, Selectivity in Recruiting, High Wages, Incentive Pay, Employee
Ownership, Information Sharing Participation and Empowerment, Self Managed Teams
Training and Skill Development, Cross- Utilization and Cross Training, Symbolic
Egalitarianism, Wage Compression, Promotion from Within2

Huselid(1995) Personnel Selection, Performance Appraisal, Incentive Procedures, Information Sharing,

Attitude Assessment, Labor/Management Participation, Recruiting Intensity, Training
Hours, Promotion Criteria (Seniority Vs. Merit)3

Mac Duffie (1995) Work Leaves, Problem Solving Groups, Employee Suggestions, Job Orientation,
Decentralization, Recruitment and Hiring, Contingent Compensation, Status
Differentiation, Training of New Employees, Training of Experienced Employees4

Pfeffer & Veiga Employment Security, Selective Hiring, Self-Managed Teams and Decentralization.
(1999) Comparatively High Compensation, Contingent on Organizational Performance,
Extensive Training, Reduction of Status Differences, Sharing Information5
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SHRM AND FUNCTIONS OF HRM

• Human Resource Planning

• Recruitment Selection

• Performance Appraisal and Management

• Training & Development

• Compensation
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Role of Strategic HRM

• Strategic Partner

• Administrative Expert

• Employee Champion

• Company Champion

• Change Agent
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The Top Ten Trends:

1. Rise in health care costs
2. Focus on domestic safety and security
3. Use of technology to communicate with employees
4. Growing complexity of legal compliance
5. Use of technology to perform transactional HR functions
6. Focus on global security
7. Preparing for the next wave of retirement/labour shortage
8. Use and development of e-learning
9. Exporting US manufacturing jobs to developing countries
10. Changing definition of family