Welcome to the Strategic Class of HRM

Strategic Human Resource

Management: A Framework

Prof. Hiteshwari Jadeja

 Strategy
 A chosen course of action.
 It is a company’s long term plan for how it will balance its
internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive
advantage.

 Strategic Management
 The process of identifying and executing the organization’s
mission by matching its capabilities with the demands of its
environment.
The Strategic Management Process
Levels of strategy
 Corporate level strategy

Corporate level strategy -Topmost level of strategy-

making: it focuses on the value creation for the entire
organization.
Eg: Pepsi Co runs Pepsi, Frito-lay, and others

Its three components are:

 Growth strategy focuses on the development and
accomplishment of growth objectives.
Corporate level strategy (contd.)

 Portfolio strategy focuses on the determination of the

portfolio of business units for the organization.

 Parenting strategy focuses on the allocation of resources

and development of organizational capabilities across
the business units.
 Business level strategy
Business level strategy focuses mostly on creating and
sustaining competitive advantage for products through one or
more of distinguishing factors like price/cost leadership and
product differentiation.

Eg: DELL, Volvo, Ferrari.

Functional level strategy

At the functional level, specific strategies are made for the

functional activities of the organization.

This strategy may encompass production, marketing, purchase,

finance, HR, research and development, and other similar
activities of the firm.
Strategic human resource management:
meaning

Strategic human resource management is a

process of aligning HR strategies with the
business strategy to accomplish the
performance goals through the employees’
competency and commitment.
 SHRM vs HRM
SHRM HRM

1. Its based on soft 1. Its based on hard

HRM(employees as HRM(employess as tools of
precious resources) production)
2. Focuses on HR- level
2. Focuses on business- outcomes
level outcomes
3. Reactive in nature
3. Proactive in nature
4. Aims at developing
4. Aims at developing functional competencies
overall strategic 5. HR managers functions at
competencies relatively lower levels of
5. Strategic HR managers org.
operates at higher level
of mgt.
SHRM vs HRM (cont.)

SHRM HRM

6. In SHRM, HR 6. HRM accomplishes the

strategies and business HR goals and targets
strategies suppliment set by business
each other. strategy.
7. Gaining competitive 7. Managing employees
advantage is basis of is the primary aim of
SHRM HRM.
Models of strategic human resource
management
 Models of strategic human resource
management (contd.)

 Business-oriented model
 Strategic fit model
 Strategic Labour Allocation Model (SLAP) model
Business-oriented model
 Focuses on the factors contributing to the
competitive advantage of the firm.
 This model aims at value creation by developing a
HR system that creates and sustains the competitive
advantage through human resources.
 SHRM under this model covers the decisions and
actions of managing employees at every level of
business.
 Strategic fit model
This model focuses on matching the HR capabilities
and resources with the external opportunities.
It also focuses on developing HR practices in such
a way that they complement one another.
Two types of strategic fits are:
 Vertical fit (deals with the extent of alignment
between the HR strategies and business strategy).
 Horizontal fit (deals with the extent of alignment
among the components of the HR strategy).
 SLAP model
SLAP(Strategic labour allocation process) was
advocated by E.H.Bax
This method focuses on the interdependences among
HR strategies, business strategies and organizational
changes.
 This model acknowledges HRM as a continuous

process of balancing the demand for and the supply

of labour.
Models of strategic formulation
 High involvement management model
 High commitment management model
 High performance management model
High involvement management model

This model aims at creating an environment that

facilitates the continuous exchange of information
between the superiors and the subordinates.
High commitment management model

This model aims at obtaining voluntary commitment

from employees by adopting mutually beneficial HR
practices.
High performance management model

This model aims at constantly improving the

performance of individuals and the organization.
A high-performance management is achieved by
continuously educating the employees and improving
their skills.
Benefits of strategic HRM
 Achieves cost-effective engagement of labour.
 Meets the changing needs and expectations of the
customers effectively.
 Necessities the development of clear-cut goals,
direction and future focus to the entire organization.
 Facilitates the planning and execution of
organizational changes in a timely and effective
manner.
 Ensure the optimum utilization of organizational
resources.
Benefits of strategic HRM (contd.)
 Helps in developing, managing and sustaining the
skills and knowledge of its human resources.
 Enhances the coordination among the various functional
centres and the top management.
 Facilitates the continuous scanning of external
environment.
Barriers to an effective SHRM
 Absence of long-term orientation.
 Lack of strategic reasoning.
 Lack of adequate support from top management.
 Resistance from labour unions.
 Fear of failure.
 Rigidity of HR practices.
 Fear of attrition.
 Absence of measurement techniques.
Strategic Role of HRM
 Strategy Execution
 Strategy Formulation
Measuring HR’s Contribution
 The HR Scorecard
 Shows the quantitative standards, or
“metrics” the firm uses to measure HR
activities.
 Measures the employee behaviors
resulting from these activities.
 Measures the strategically relevant
organizational outcomes of those
employee behaviors.

3–26
Creating an HR Scorecard

The 10-Step HR Scorecard Process

Identify required HR policies

1 Define the business strategy 6
and activities

Choose HR Scorecard
2 Outline value chain activities 7
measures

3 Outline a strategy map 8 Summarize Scorecard measures

on digital dashboard and
monitor, predict, and evaluate
Identify strategically required
4
outcomes
Identify required workforce
5
competencies and behaviors

3–27
Thank You