What is HRM?

 HRM
- is concerned with the people dimension in
management. Since every organisation is made up
of people, acquiring their services, developing
their skills, motivating them to higher levels of
performance and ensuring that they continue to
maintain their commitment to the organisation are
essential to achieving organisational objectives.
This is true, regardless of the type of organisation
– government, business, education, health,
recreation, or social action.

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Def. Cont…

 HRM – functional definition

– “Is a set of interrelated functions and processes whose
goal is to attract, socialize, motivate, maintain, and
retain an organization’s employees” (Belcourt et al.,
2002)

 HRM – goal-based definition

– “aims to improve the productive contribution of
individuals while simultaneously attempting to attain
other societal and individual employee objectives”
(Schwind et al., 2002)

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HRM serves 3 primary constituencies:

 The organization
 Society
 Individual employees

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 HRM Organizational
Objectives
 Primary objective of HRM is to contribute to
organizational effectiveness

 HRM is not an end in itself

– Its role is to help the organization achieve its primary
objectives
– E.g., through selection, training, managing H&S

 Influenced by many factors

– Industry characteristics, organization’s product or service,
organization’s competitive strategy, etc.

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 HRM Societal Objectives
 HRM must be socially responsible
– Meet the needs and challenges of society
– Narrowly - legal compliance
– Broadly - concern with human rights, social
responsibility, etc.

 Can be challenging when social concerns

conflict with organizational goals

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 HRM Employee Objectives
 Assist employees in achieving personal goals
– Short-term performance goals and long-term career
goals

 Can be challenging to balance individual and

organizational goals
– E.g., when training results in employees developing
skills that are attractive to other organizations

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The HRM Professional
 Major competencies:
– Business mastery
 Strategy, financial realities, customer orientation

– Mastery of HRM tools

 Staffing, training, compensation, etc.
– Change mastery
– Personal credibility

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Strategic HRM

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 Common Misconceptions about
HR
 HR is primarily an administrative function

 HR has little strategic importance and does

not represent a potential source of an
organization’s competitive advantage

 HR is a “cost centre” – its activities add to

an organization’s expenses/costs but not to
revenue generation
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 Overcoming these
Misconceptions
 HR can – and indeed should – play a key role in
an organization’s strategy

 There is increasing evidence that HR activities are

associated with various indicators of
organizational performance (e.g., ROI,
profitability, stock prices)

 $ put toward HR systems and activities should be

viewed as investment rather than simply cost

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 What is Strategic HRM?
 Strategic HRM
– Integration of HRM systems to the overall
mission, strategy, and success of the firm,
while meeting the needs of employees and
other stakeholders

– The intentional use of HR systems to help

an organization gain competitive advantage

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 Guiding Logic of SHRM
 “HRM practices must develop employees’ skills,
knowledge, and motivation such that employees
behave in ways that are instrumental to the
implementation of a particular strategy” (Bowen &
Ostroff, 2004)

 Contingency Perspective
– Effectiveness of HRM system depends on contextual
factors such as industry type, firm size, etc.

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 Steps in Strategic HRM
1. Environmental Analysis
2. Organizational Mission and Goals Analysis
3. Analysis of Organizational Strengths and Culture
4. Analysis of Organizational Strategies
5. Choice and Implementation of HR Strategies
6. Review and Evaluation of HR Strategies

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 Aligning HR and Organizational
Strategy
 Use Porter’s strategies for illustration

 Cost Leadership
– Tight cost control, production efficiency, products designed for ease
of manufacture, intense supervision of labour

 Differentiation
– Emphasis on marketing, product engineering, R&D, quality,
technological innovation

 Focus
– Combination of cost leadership and differentiation directed a market
segment

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 Example of Aligning HR
and Organizational Strategy
 Cost Leadership  HR Strategies
– Tight cost control
– Production efficiency
– Products designed for
ease of manufacture
– Intense supervision of
labour
– Clear job descriptions
– Detailed work planning
– Emphasis on technical
skills
– Job-specific training
– Job-based pay
– Performance
evaluations for control
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 Example of Aligning HR
and Organizational Strategy
 Differentiation  HR Strategies
– Emphasis on marketing
– Product engineering
– R&D
– Focus on quality
– Technological
innovation
– Highly skilled labour
– Emphasis on innovation
and flexibility
– Broad job classes
– Loose work planning
– Focus on recruitment,
careful selection
– Team-based training
– Individual (skill)-based pay
– Performance evaluations
for development
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 Outcomes of Strategic HRM
 “When you align HR with organizational
strategy, you’ll see growth in commitment,
improved financial results, and find yourself
better able to attract and retain the right
people.”

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