CONCEPTS OF STRATEGIC

HUMAN RESOURCE
MANAGEMENT
LECTURE 3

DEFINITION OF STRATEGIC HRM

Business objectives are achieved when a

strategic perspective of human resource
management is adopted.
So, a clear concept of and implementation of
strategic human resource management is
pivotal for successful utilization of human
resources and to attain the objectives of the
organization as a whole.

DEFINITION OF STRATEGIC HRM

Strategic Human Resource Management

(SHRM) is a set of processes and activities
jointly shared by human resources and line
managers to solve people related business
problems.- Schuler and Walker (1990).
Strategic HRM focuses on actions that
differentiate the firm from its competitors.Purcell (1999).

DEFINITION OF STRATEGIC HRM

Strategic HRM is a close fit or alignment

between business and human resource
strategy.- Batt (2007).
Strategic HRM is an approach that defines
how the organization's goals will be achieved
through people by means of human resource
strategies and integrated human resource
policies and practices. Armstrong (2008).

STRATEGIC APPROACHES TO
HRM

1. Recognition of the impact of external

environment upon HRM.
2. Recognition of the impact of competition
and the dynamic of the labour market upon
HRM.
3. Long term focus.
4. Choice and decision making focus.
5. Whole concept taking all employees into
consideration.
6. Integration with corporate strategy.

BASIC PROPOSITION OF
STRATEGIC HRM

1. HR or HC plays a strategic role for the

success of an organization and human
resources (HRs)are a major source of
competitive advantage.
2. HR strategies should be integrated with
business plans and other functions of the
organization.
3. Individual HR strategies should cohere by
being linked to each other to provide mutual
support.

BASIC PROPOSITION OF
STRATEGIC HRM

4. SHRM is holistic. It is concerned with the

organization as a total system and addresses
what needs to be done across the
organization as a whole.
5. SHRM aligns with organizational
strategies.

STRATEGIC HRM
Vision , Mission and Objectives
Corporate Strategies

Strategic HRM
Strategic role of HR, strategic
choices and analysis

Hiring
strategies

Retention and
Maintenance strategies

Separation
Strategies

PRINCIPLES OF STRATEGIC HRM (REF.

ONDRACK AND NININGER ,1984)

1. Human resource dimensions are evident

in the overall purpose of the organization.
2. Human resource dimensions are explicitly
considered in process of developing strategy
within the organization .
3. . Effective linkages exist on a continuing
basis to ensure the integration of human
resource
considerations
with
the
organizational decision making process.

PRINCIPLES OF STRATEGIC HRM

4. The office of chief executive provides the

challenge for integrating human resource
considerations to meet the needs of the
business.
5.The organization of all levels establishes
responsibility and accountability for human
resource management.

PRINCIPLES OF STRATEGIC HRM

6. Initiatives in the management of human

resources are relevant to the needs of the
business.
7. It includes the responsibility to identify and
interact in the social, political, technological
and economic environments in which the
organization is and will be doing business.

AIMS OF STRATEGIC HRM

1. To generate strategic capability by

ensuring skilled, engaged and well-motivated
employees to achieve sustained competitive
advantage.
2. To create firm which are more intelligent
and flexible than that of competitors.
3. To provide a unifying frameworks which
are broad, contingency based and
integrative.

AIMS OF STRATEGIC HRM

4. To achieve a balance between the hard

strategic HRM and soft strategic HRM .
5. To ensure ethical considerations for all
involved parties.
6. To exercise corporate social responsibility.
7. To make the firm an attractive place to
work by developing capability to find,
assimilate , compensate and retain the most
talented best-fit individuals.

CONCEPTS OF STRATEGIC HRM

The

resource-based view.
Strategic fit in both
vertically and
horizontally.
Strategic flexibility

THE RESOURCE BASED VIEW

Developed by Penrose (1957) and expanded

by Wernerfelt (1984).
Resources
creates organization's unique
character and competitive advantage.
It is a durable basis for and it provides a
unifying framework for strategic HRM.
Sustained competitive advantages arises
from heterogeneity of strategic resource ,
that is, resources are (i) valuable; (ii) rare ;
(iii) imperfectly imitable; and (iv) nonsubstitutable ( Barney , 1991).

STRATEGIC FIT VIEW

Strategic human resource management

should fit with the strategic management
processes and with various human resource
management practices of the organization
so that there shall be a congruence among
corporate and functional activities of the
organization.

STRATEGIC FLEXIBILITY

It refers to the ability of the firm to respond

and adapt to changes in its competitive
environment.
Organizations should develop organic HR
systems that produce a human capital pool
with people possessing a wide range of skills
and capable of behaving widely with
increased amount of discretionary behaviour
appropriate in different roles.

PERSPECTIVES OF STRATEGIC
HRM
1.

Universalistic
perspective.unanimously agreed HR best
practices.
2. Contingency perspective.-with
firms strategy and consistent with
other aspects of org.
3. Configurational perspective.
A holistic approach that emphasizes
on pattern of HR practices.

PERSPECTIVES OF STRATEGIC
HRM

Organizational configuration is any multidimensional constellation of conceptually

distinct characteristics that commonly occur
together ( Meyer et al , 1993).
It may be association with two things
(i) the degree of fit between a total HR
system and an organizational type, and
(ii) the extent to which HR practices are
linked together into a total system.

APPROACHES OF STRATEGIC
HRM
1.

The best-practice
approach.

2.

The best fit approach.

3.

The Bundling approach.

THE BEST-PRACTICE APPROACH

The approach believes that there is a set of

best HRM practices adopting of which will
obviously lead to superior organizational
performance.
They are universal as they are best in any
situation.
Such as employment security, selection and its
tests, training and it is a ongoing activity, job
design,
commitment
and
motivation,
promotion,
communication,
compensation
contingent
on
performance,
sharing
information, self-managing team.

PROBLEMS WITH THE BESTPRACTICE MODEL

The best practice should not be taken as

guaranteed for all the time and situation.
Organizational high performance work
system is highly idiosyncratic and must be
tailored carefully to each firms individual
situation to achieve optimum results.
Therefore, these may be good practices
instead of best practices.

THE BEST-FIT APPROACH

The best fit approach emphasizes that HR

strategies should be contingent on the
context, circumstances of the organization
and its type.
Best fit means
vertical integration or
alignment
between
the
organization's
business and HR strategies.
The choices of models are life cycle model,
competitive
model
and
strategic
configuration model.

BEST-FIT MODELS

1. The Life Cycle Model.

The model tells that human resource
managements effectiveness depends on its fit
with the organization's stage of development.
The stages are : Start-up stage, Growth stage,
Maturity stage, and Decline stage. Each stage
will have distinct needs and situations that
must be met by the HRM strategies and
practices.

BEST-FIT MODELS

Such as
Start up stage --- HR function is loose and
informal and may performed by owner
manager.
Growth stage --- Making formal structure
and employment of HR expert to attract
talented persons to the organization. High
growth stage calls for innovation and
development of talent management ,
performance management, reward policies
and practices.

BEST-FIT MODELS

Decline stage --- downsizing, merger,

restructuring etc decisions are to be taken
with the HR.

BEST-FIT MODELS

2. Competitive Strategy Model (Porter,

1985)
The model tells that effectiveness of human
resource management can be increased by
systematically melding HR practices with the
selected competitive strategies innovation
strategy, quality strategy, and cost leadership
strategy.

IMPACT OF COMPETITIVE
STRATEGY ON HR PRACTICES
Innovative strategy

Quality strategy

Cost Leadership
strategy

Jobs with close

interaction and
coordination.

Relatively fixed and

explicit job.

Relatively fixed and

explicit job.

Performance
appraisal aimed at
longer term and
group-based
achievement.

High level of
employee
participation.

Jobs encouraging
specialization, shortterm and resultoriented appraisals.

Compensation
systems ensuring
internal equity.

Relatively egalitarian
treatment of
employees with
moderate security.

Minimal levels of T &

D.

BEST-FIT MODELS

3. Strategic Configuration Model

The model tells that organization will be more
effective if it adopt a policy of strategic
configuration, that is, establish internal
consistency or fit between the patterns of
relevant contextual, structural and strategic
factors.
Organizations may be four types (Miles and
Snow (1978) of which first three types are
ideal:

TYPES OF ORGANIZATION

1) Prospectors. Operate in a rapid and

unpredictable changing environment. They
create change in their market.
2) Defenders. Operate in a more stable and
predictable environment and emphasize on
defending their markets. They focus on
routine technology, long term planning,
mechanistic structures.

TYPES OF ORGANIZATION

3) Analyzers . They work on both

prospectors and defenders by following
changes rapidly through R&D.
4)
Reactors.
These
are
unstable
organizations having lack of consistency,
well-articulated strategies and do not
undertake long rang planning.

WHAT ORGANISATIONS WILL DO

Organizations should align HR systems with the

strategy linked with their configuration ( Delery
and Doty, 1996).
The systems are
1. Market-type system follows hiring from
external sources, little internal career ladder,
no formal training, result-oriented performance
appraisal, unclear job description.
2. Internal type system goes for internal
hiring, tightly defined jobs, extensive use of
career ladder etc.

COMMENTS OF BEST-FIT
PRACTICES

All practices depends on the situation to be

best fit.
It is a static model and does not work in an
volatile and changing environment.

BUNDLING MODEL

The bundle model focuses that a firm with

bundles of associated HR practices should
achieve a higher level of performance and
should have higher levels of fit with its
competitive strategy.
It combines vertical or external fit and
horizontal or internal fit to achieve high
performance through coherence among
elements of HRM.

BUNDLING MODEL

Bundle refers to the idea that practices

within bundles are interrelated and
internally consistent (MacDuffie , 1995).
Bundle involves with the practices aimed at
enhancing both employee performance and
motivation.
Bundling of several interrelated HR practices
together will make those complementary to
each other and will reinforce each other
too.

BUNDLING MODEL

Bundling model introduces complementary

HR practices and thus, produce an
incremental improvement in performance.
Ways of Bundling
1. Setting
overriding
strategic
imperatives or driving forces such as high
performance, customer service, quality,
talent management etc that linked together
various process and policies and operate in
concert to deliver results.

BUNDLING MODEL

2. Development of high commitment or high

involvement systems by grouping HR
practices together to produce synergy.
3. Development of competency frameworks
to be used as assessment and development
centers which will be used as the basis for
human resource planning , performance
management to identify development needs.
The problem of bundling is to decide what
is the best way to relate different practices
together.

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