In Colloboration with

6518YPCBSC
STRATEGIC HRM

Lecture 2:
Strategic HRM Theories and Models.
 Learning Outcomes

By the end of this session, you should be able to:

❑ Review the practice of SHRM.

❑ Interpret the role of theory in SHRM.

❑ Identify and explain strategic HR models.

 SHRM Practices
Delery and Doty (1996) identified seven practices that have been consistently considered SHRM practices.
These practices are outlined below. They have become the “best practices” or universalistic approach.

1) Internal career
opportunities
(promotions…)
7) Job descriptions 2) Formal training systems
(JD-specific job task) (training, retraining &new
skills…)

SHRM 3) Results-oriented
6) Participation
Practices appraisals
(involvement of employees in the
(KPI,….)
management's decision making

5) Profit sharing 4) Employment security

(owner shares up to 25%
(fluctuation against
of profit with
income…)
employees..)
 Strategic HRM – HR practice & business strategy

▪ Strategic HRM (SHRM) is viewed as a process, “the process of linking HR practices to business
strategy” (Ulrich, 1997, p.89).

▪ Similarly, Bamberger and Meshoulam (2000, p.6) described SHRM as ‘the process by which
organisations seek to link the human, social, and intellectual capital of their members to the strategic
needs of the firm’.

▪ Numerous models of SHRM has been proposed (e.g., Miles and Snow, 1978; Hofer and Schendel,
1978). However, Wright and McMahan (1992) argued that, theory plays a significant role in SHRM.

▪ According to Dublin (1976, p.26), theory is “the attempt to…model some aspect of the empirical
world”. Put simply, theories are predictions of the empirical world.
 Theories in strategic HRM
• If a theory is accurate, it fulfils the objectives of predictions (knowledge of the outcome) and
understanding (knowledge of the process) (Wright and McMahan, 1992).
• Below are two theoretical perspectives widely cited in SHRM literature – resource-based view and
behavioural perspective.

Resource-based view Behavioural perspective

• This perspective has its root in contingency

• This view extends the traditional management theory (Fisher, 1989).
paradigm on competitive advantage.
• It argues that role behaviours differ for
• It sees resources (i.e. human resources) as different strategies in order for those
key to high organisational performance. strategies to be successful.
• This view is further discussed when • Role behaviours contributes to organisational
evaluating the VRIO model by Barney (1991; effectiveness also referred to as “desired” or
1997; 2006; 2011). “needed” employee behaviours.
 Strategic issues in organisations

▪ It is vital that we examine SHRM models and theories in order to develop effective strategies that
address both strategic and operational issues.
▪ Strategic issues are medium and long term process factors that impact the organisation. For
example, material impact, geographical factors, scope of activities. On the other hand, operational
issues are compliance, climate change (waste management), risk management, people
management etc.
▪ SHRM issues are ever dynamic. Stokes et al. (2016) interpretive study on the economic and
behavioural factors of HR practices in advanced economy revealed that, there are expatriate and
inpatriate issues with talent management practices between SMEs and MNCs.

▪ Other SHRM issues are noted in literature as technological innovation, globalisation and
catastrophic risks.

Note. SMEs = Small Medium Enterprises; MNCs = Multinational Corporations

 Strategic HRM Models

Model Particulars Reference

1 Organisational Dynamics (5P’s) Schuler (1992)

2 Styles of Strategy Making Boxall and Purcell (2011)

3 10cs of Effective HRM Price (2011)

4 Harvard Approach to HRM Beer et al. (1984)

5 Michigan Approach to HRM Fombrun et al. (1984)

6 Environment and HR Strategies Bamberger and Phillips (1991)

7 VRIO Barney and Hesterley (2006;2011)

8 The HRM Roles Ulrich (1998)

Why do we use strategic models?

• Because they help us to shape our thinking and

to remind us of the complexity of analysing
situations.
• Models are ideas, set in time which can be
updated or adapted
Model 1 : Organisational Dynamics: The 5Ps
(Schuler, 1992)
Guidelines on people
Statement of intent, how
related matters to
the organisation views its
INTRODUCTION: people and their support strategic
contribution business needs.
(1) (2)
• Organisational dynamics is Philosophy/ Policies
the interrelatedness of Purpose
activities to improve
organisational and
employee performance. The 5Ps
(Schuler, 1992) Co-ordinated
• It is a process of Procedures and
(5)
Processes
(3) practices to
Programmes promote
developing resources methods
organisational
and enhancing employee change
performances.
(4)
• The process enables
Practices
organisational learning
and develop best
practices for SHRM. Operational activities e.g.
resourcing, reward
Model 2 : Styles Of Strategy Making
Hart (1992) ; Adapted by Boxall and Purcell (2011)

COMMUNICATE AND CONSULT

COMMAND SYMBOLIC RATIONAL PARTICIPATIVE ORGANIC

Driven by the Driven by the mission / Formal structure Internal process and Developed by individual
leader, top team – vision – coaching to planning processes to ‘mutual adjustment’ – initiatives – sponsoring
direction and motivate and inspire to monitor and evaluate – facilitate to empower and ideas, supporting and
obedience respond to challenge follow the rules enable – self evaluation endorsing encouraging
against agreed criteria experimentation and risk
taking

MONITOR AND REVIEW

Model 3 : Effective HRM, The 10-Cs (Price (2011)
10Cs Details
Comprehensive 1. Comprehensive Include all parts of people
Cost- management
effectiveness Coherence 2. Coherence All HRM activities must form a
meaningful whole
1 3. Control Ensuring that performance is
10 2 consistent with the business’s
objectives
Control The objectives of the
Creativity 4. Communication
9 3 organisation must be understood
by all employees
Effective HRM,
5. Credibility Trust must be built to encourage
The 10-Cs employee’s belief in HRM
8 Price (2011) 4 strategies
6. Commitment Motivated employees to achieve
Competence Communication organisational goals
7 5 7. Change Continuous improvement and
6 development
8. Competence Individuals have relevant
knowledge and skills to achieve
Change Credibility objectives
9. Creativity Unique HRM stratergies to
Commitment achieve competitive advantage
10.Cost- Fair promotion and reward
effectiveness system
Model 4 : Harvard (Soft) Approach to HRM (Beer et al. (1984))

Stakeholder
Interest
SOFT
▪ Human side of HR
▪ Effective communication HRM Policy HR Long-Term
Consequences
▪ Concern for individual Choices Outcomes
Situational
motivation Factors
▪ Individual growth
▪ People are led not
managed
▪ Involvement
Model 5 : Michigan (Hard) Approach to HRM (Fombrun et al. 1984)

HARD
▪ Harsher understanding and interpretation
of strategies associated to cost
minimisation.
▪ It recognises low wages, minimal training,
close supervision and monitoring,
appraisal and reward.
▪ Work downsizing and intensifications
(Beardwell and Claydon, 2007).

People need to be managed like equipment and

raw materials, and obtained as cheaply as
possible; used sparingly developed and
exploited as much as possible.
Model 6 : Environment and HR strategies (Bamberger and Phillips, 1991)

The importance of the environment as a

determinant of HR strategy has been
Human Resource incorporated into some models.
Strategy

The model depicts links between three poles:

▪ The environment,
▪ Human resource strategy, and
▪ The Business strategy .

The purpose is to understand the

importance of the external environment
as a determinant of HR strategy.

Environmental Business
Influence Strategy
 Model 7: Value, Rarity, Inimitability and Organisation (VRIO)
(Barney & Hesterley, 2006;2011)

VRIO High
Value
Value Resources to exploit an opportunity
Rarity Is the resource controlled by only a small number of
competing firms
Inimitability Cost of copying or developing
Organisation Processes to support exploitation of an opportunity

Low

Rarity
Model 7 : VRIO (cont…)

VRIO
(Barney & Hesterley,
2006;2011)
Model 7 : Using VRIO Analysis for Strategic Planning
 Model 8 : The HRM Roles - The Ulrich Model (Ulrich,1998)

Strategic orientation
(long-term)
Ulrich (1998) argued that in order to face
the external market challenges, the HRM
function should be able to cover different
Strategic roles, in some cases, even contradictory.
Change
partner agent
This can be defined to two main variables:
Focuses on Focuses
processes ▪ Strategic/long term or operational/short
on people
term.
Functional Employees’ ▪ Managing processes or people.
expert advocate

Operational orientation
(short-term)
 Model 8 : The HRM Roles - The Ulrich Model (Ulrich,1998)

1. STRATEGIC PARTNER (OR BUSINESS PARTNER)

▪ The main role of the strategic partner is to align the contributions of
HR with the organisations business strategy. Strategic
orientation
▪ Typically, the role consists of multiple dimensions: strategic HR (long-term)
planner, knowledge manager and consultant.
▪ The combinations of these dimensions in alignment with HR
systems helps the organisation to accomplish its vision and (1)
mission. Strategic Change
partner agent
▪ In addition, it assist managers to get things done, and disseminate
learning across the organisation. Focuses on Focuses
processes on people
2. FUNCTIONAL EXPERT (2)
Employees’
▪ Concerned with the HR practices which are central to HR value. Functional
advocate
expert
▪ The main task of the functional expert is to design and manage
effective and efficient hr systems (methods, procedures).
▪ This expert should act with insight on the basis of the body of Operational
knowledge they possess. orientation
(short-term)
 Model 8 : The HRM Roles - The Ulrich Model (Ulrich,1998)

3. CHANGE AGENT
Strategic ▪ This role requires the agents involvement in
orientation
(long-term) change management process.
▪ Also, the agent has to identify and overcome
resistance to change, and to generate
(1) (3) flexibility and adaptability among the
Strategic Change personnel.
partner agent
Focuses on Focuses
processes on people
4. Employee advocate
(2) (4) ▪ An employee advocate manages employee
Functional Employees’ needs, contribution and commitment.
expert advocate
▪ This means monitoring employees satisfaction
with the working environment on a daily basis.
Operational ▪ The convention is that employee satisfaction
orientation has a positive impact on both productivity and
(short-term)
the organisation.
References
Bamberger, P. and Meshoulam, I. (2000) Human resource strategy. Newbury Park, CA: Sage.
Bamberger, P. and Phillips, B. (1991) Organizational environment and business strategy: Parallel versus conflicting influences on human resource strategy in the pharmaceutical
industry. Human Resource Management, 30(2), pp.152-183.
Barney, J. B. and Hesterly, W.S. (2011) VRIO Framework. In Strategic Management and Competitive Advantage (pp. 68–86). New Jersey: Pearson.
Beer, M, Spector, B, Lawrence, P, Quinn Mills, D and Walton, R (1984) Managing Human Assets, The Free Press, New York.
Boxall, P.F. (1992) Strategic HRM: a beginning, a new theoretical direction. Human Resource Management Journal, 2(3), pp.61-79.
Delery, J. E. and Doty, D. H. (1996) Modes of theorizing in strategic human resource management: Tests of universalistic, contingency and configurational performance. The
Academy of Management Journal, 39(4), pp.802-835.
Fombrun, C.J, Noel M.T. and Devanna, M.A. (1984) Strategic human resource management. New York. John Wiley & Sons.
Hofer, C. and Schendel, D. (1978) Strategy formulation: Analytical concepts. St. Paul, MN: West Publishing.
Miles, R. and Snow, C. (1978) Organisational strategy, structure, and process. New York: McGraw-Hill.
Price, A. (2011) Human resource management. 4th Edition. Cengage Learning EMEA.
Schuler. (1992) Strategic human resources management: Linking the people with the strategic needs of the business, Organizational Dynamics, 21, pp.18-31.
Stokes, P., Liu, Y., Smith, S., Leidner, S., Moore, N. and Rowland, C. (2016) Managing talent across advanced and emerging economies: HR issues and challenges in a Sino-
German strategic collaboration. The International Journal of Human Resource Management, 27(20), pp.2310-2338.
Ulrich, D. (1997) HR of the future: Conclusions and observations. Human Resource Management, 36(1), pp.175–179.
Wright, P.M. and McMahan, G.C. (1992) Theoretical perspectives for strategic human resource management. Journal of Management, 18(2), pp.295-320.
 Strategic HR Dialogue
There is a debate about whether strategy
precedes structure (or vice versa), has been in Group A
existence for over half a century.
You believe that strategy precedes structure.
This dialogue aims to extend this debate.
Strategy precedes structure means that
Instruction for the debate: the organisational strategy informs the
❑ Choose a speaker in your group. The speaker structure of the organisation.
should give an opening and closing remark.
❑ You have 5 minutes to put together your
findings. Group B
❑ All members in each group should engage in
the dialogue. You argue that structure precedes
❑ Use real-life cases to give context to your strategy.
discussion.
Structure precedes strategy means that
an organisation structure is created to
Time frame: 15 minutes meet its strategic goals.