2. The concept of strategic human
resource management (SHRM):
At the end of this topic, students should be able to understand:
Meaning of Human Resource Management/introduction
Meaning of Strategy
Meaning of Strategic Management
Aims of SHRM
Strategic HRM Model
Strategy Formulation Process
Perspectives of SHRM
3. Introduction
The term HRM has largely taken over that of personnel management’,
which took over that of ‘labour management’ in the 1940s.
Human resource management can be defined as a strategic, integrated
and coherent approach to the employment, development and well-being
of the people working in organizations.
It was defined by Boxall and Purcell (2003) as ‘all those activities associated
with the management of employment relationships in the firm’.
4. Meaning of Strategy
Strategy is the approach selected to achieve specified
goals in the future.
It is the determination of the long-term goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of resources necessary for carrying out
those goals.
The formulation and implementation of corporate strategy is a process for developing a
sense of direction, making the best use of resources and ensuring
strategic fit.
Strategy has three fundamental characteristics.
First, it is forward looking. It is about deciding where you want to go and how you mean to
get there.
Second, The second characteristic of strategy is the recognition that the organizational
capability of a firm (its capacity to function effectively) depends on its resource capability
(the quality and quantity of its resources and their potential to deliver results).
5. Meaning of strategy …….
The third characteristic of strategy is that it aims to achieve strategic fit –
the need when developing functional strategies such as HR to achieve
congruence between them and the organization’s business strategies
within the context of its external and internal environment.
6. Strategic management
According to Boxall and Purcell (2003), strategic management is best
defined as a process. It is a process of strategy making, of forming and, if
the firm survives, reforming its strategy over time.
Strategic management was described by Johnson et al (2005) as
understanding the strategic position of an organization, making strategic
choices for the future, and turning strategy into action.
7. SHRM defined
Strategic human resource management (strategic HRM or SHRM) is an
approach to the development and implementation of HR
strategies(Human capital management, reward, learning and development,
knowledge management, corporate social responsibility, engagement,
organizational development, talent management, resourcing – attracting
and retaining high-quality people) that are integrated with business
strategies and support their achievement.
SHRM is the interface between HRM and strategic management (Boxall,
1996).
Schuler and Jackson (2007: 5) stated that SHRM is fundamentally about
‘systematically linking people with the firm’.
8. Aims of SHRM
The fundamental aim of strategic HRM is to generate organizational capability by ensuring that
the organization has the skilled, engaged, committed and well-motivated employees it needs to
achieve sustained competitive advantage.
SHRM has three main objectives:
First to achieve integration – the vertical alignment of HR strategies with business strategies and
the horizontal integration
of HR strategies.
The second objective is to provide a sense of direction in an often turbulent environment so that
the business needs of the organization and the individual and the collective needs of its
employees can be met by the development and implementation of coherent and practical HR
policies and programmes.
The third objective is to contribute to the formulation of business strategy by drawing attention to
ways in which the business can capitalize on the advantages provided
by the strengths of its human resources.
9. Strategic fit
The concept of strategic fit stresses that when developing HR strategies it
is necessary to achieve congruence between them and the organization’s
business strategies within the context of its external and internal
environment.
This notion is fundamental to SHRM, as was stressed by Wright and
Snell (1998: 758) who wrote: ‘The primary role of strategic HRM should
be to promote a fit with the demands of the competitive environment.
11. Strategy formulation process
A logical sequence of strategy formulation steps are as follows:
(i) Environmental Analysis and Diagnosis:
This step is common to both-corporate planning and strategy formulation. It can be done
using SWOT analysis
(ii) Gap Analysis: simply refers to the gap that exists between the existing position of
the company and its intended position in future. Strategy designers then, accordingly,
plan to formulate appropriate strategies to fill in such gap.
(iii) Identification of Mission and Long-Range Objectives of the Enterprise:
The real starting point in strategy formulation is an identification of the mission and long-
range objectives of the enterprise. Mission explains the most fundamental purpose of an
enterprise. It, so to say, explains the raison d’eter (i.e. reason for existence) of an enterprise.
For example, mission of a manufacturing organization maybe production of high quality
goods at affordable prices, for the common men of society. Long-range objectives may
relate to specific aims in areas of e.g. production, marketing, research, public relations,
profitability, market standing etc
12. Strategy formulation process……
(iv) Development of Strategy Alternatives:
As a next step in strategy formulation, strategic (or strategy) alternatives are developed.
Such alternatives are developed in the light of:
1. The mission of the enterprise
2. Long-range goals of the enterprise.
3. Outcomes of SWOT analysis.
4. Extent of gap, as shown by gap analysis
5. Past strategies of the company with their record of success or failure.
6. Strategies of competitors similarly situated.
13. Strategy formulation process..…..
(v) Evaluation of Strategy Alternatives:
After development of strategy alternatives, each alternative is critically evaluated from
the following perspectives:
1. Risk and resource implications
2. Contribution to mission and long-range objectives
3. The extent to which each alternative helps in filling the gap between present position and
future intended position of the enterprise.
(vi) Choice of Strategy:
Selection of the best strategy alternative, after critical evaluation of each alternative,
amounts to choice of strategy for implementation purposes. Choice of strategy is a very
crucial step in strategy formulation; as a wrong choice in this regard might even be fatal for
the organisation.
14. Strategy formulation process……
(vii) Development of Tactics:
Strategies are converted into tactics or operational plans, for implementation purposes.
For example, if the strategy of a business enterprise is to launch an aggressive
advertising campaign; the tactics may include action programmes like:
Preparation of advertising budget
Deciding about media of advertising
Designing of advertising message
Deciding about the frequency of repetition of advertising through various media
15. Strategy formulation process……
(viii) Implementation of Tactics:
A practical step here is to put the tactics or operational plans into practice. For this
purpose, management must ensure that necessary resources are made available to
those, charged with the responsibility for the implementation of tactical plans.
Moreover, such personnel must be duly motivated to undertake their jobs, in a
committed manner.
(ix) Review of Strategy:
After the tactics are put into practice to realize the intentions behind strategy formulation;
a progressive management must review the success or results shown by strategy on a
regular and constant basis; so that –
1. Strategy may be revised suitably and
2. Better strategy formulation may be done in future
16. Summary of strategy formulation
process
9. Review of strategy
8. Implementation of tactics
7. Development of tactics
6. Choice of strategy
5. Evaluation of alternatives
4. Development of strategy alternatives
3. Identification of mission and long-range objecgives
2. Gap analysis
1. Environmental analysis and diagnostic
17. Perspectives on SHRM
Taking into account the concepts of the resource-based view and strategic fit,
Delery and Doty (1996) contended that organizations adopting a particular
strategy require HR practices that are different from those required by
organizations adopting different strategies and that organizations with ‘greater
congruence between their HR strategies and their (business) strategies should
enjoy superior performance.
There exists three HRM perspectives:
First, the universalistic perspective – some HR practices are better than others
and all organizations should adopt these best practices. There is a universal
relationship between individual ‘best’ practices and firm performance.
18. Perspectives on SHRM
Second, the contingency perspective – to be effective, an organization’s
HR policies must be consistent with other aspects of the organization. The
primary contingency factor is the organization’s strategy. This can be
described as ‘vertical fit’
Third, the configurational perspective – this is a holistic approach that
emphasizes the importance of the pattern of HR practices and is
concerned with how this pattern of independent variables is related to the
dependent variable of organizational performance.
19. Class activity/Assignment
Explain any five underpinning theories of HRM
Hints: Human resource management appears to lean heavily on theories of
commitment and motivation and other ideas derived from the field of
organizational behaviour.
A number of theories are relevant in explaining HRM. Such theories
include; the resource-based view, organizational behaviour theory,
contingency theory, human capital theory, resource dependence theory,
AMO theory, social exchange theory, agency theory and so on.
20. Thank you for listening
Thanks for your time
