““HR professionals play a strategic partner role when they have

the ability to translate business strategy into action.”

- David Ulrich

Concept of SHRM

By:
Muhammad Ali
Malik
 Subjects in Modules
 Concept of HRM
 Concept of Strategy
 Concept of SHRM
 HR Strategies (Nature,
Purpose, Development &
Implementation)
 Strategic Role of HR
 The impact of SHRM
 SHRM in Action
 HR Strategies
 Construct
Today’s Lecture

 Definitions

 Basis of Strategic HRM

 Aims of Strategic HRM

 Concept of SHRM

 Perspectives on Strategic HRM

 Principles of Strategic HRM

 Strategic HRM
Definition
Strategic HRM is an approach that defines how
the organization’s goals will be achieved through
people by means of:
HR strategies

Integrated HR policies and practices

 Strategic HRM
Definitions
• Strategic HRM is concerned with ‘seeing the people of
the organization as a strategic resource for the
achievement of competitive advantage’
(Hendry and Pettigrew, 1986)
• ‘A set of processes and activities jointly shared by
human resources and line managers to solve people-
related business problems’
(Schuler and Walker, 1990)
• ‘The macro-organizational approach of viewing the
role and function of HRM in the larger organization’
(Butler et al, 1991)
 Strategic HRM
Definitions
• ‘The pattern of planned human resource deployments
and activities intended to enable an organization to
achieve its goals.’ Wright and McMahan, 1992)
• ‘Strategic HRM focuses on actions that differentiate
the firm from its competitors.’ (Purcell, 1999)
• ‘The central premise of strategic human resource
management theory is that successful organizational
performance depends on a close fit or alignment
between business and human resource strategy’ (Batt,
2007)
 Basis of Strategic HRM
Strategic HRM is based on three propositions:
• Proposition 1. The human resources or human capital of
an organization play a strategic role in its success and
are a major source of competitive advantage
• Proposition 2. HR strategies should be integrated with
business plans (vertical integration). Boxall et al (2007)
also believe that ‘The major focus of strategic HRM
should be aligning HR with firm strategies.’
• Proposition 3. Individual HR strategies should cohere
by being linked to each other to provide mutual support
(horizontal integration)
SHRM
 Aims of Strategic HRM
• The fundamental aim of strategic HRM is to generate
strategic capability by ensuring that the organization
has the skilled, engaged and well motivated employees it
needs to achieve sustained competitive advantage
• In accordance with the resource-based view as described
later, the strategic goal will be to ‘create firms which
are more intelligent and flexible than their
competitors’ (Boxall, 1996) by hiring and developing
more talented staff and by extending their skills base
 Aims of Strategic HRM
Schuler (1992) states that: Strategic human resource
management is largely about integration and adaptation.
Its concern is to ensure that:

• HRM is fully integrated with the strategy and strategic

needs of the firm;
• HR policies cohere both across policy areas and across
hierarchies; and
• HR practices are adjusted, accepted and used by line
managers and employees as part of their everyday work
 Aims of Strategic HRM

• As per Dyer and Holder (1988), strategic HRM

provides ‘unifying framework’

• The rationale for strategic HRM is the perceived

advantage of having an agreed and understood basis

for developing and implementing approaches to
people management that take into account the
changing context in which the firm operates and its
longer-term requirements
 Aims of Strategic HRM
• As per Storey’s (1989) ‘soft strategic HRM’ will place
greater emphasis on the human-relations aspect of
people management, stressing:-
o Continuous development

o Communication

o Involvement

o Security of employment

o The quality of working life

o Work–life balance
 Aims of Strategic HRM
• ‘Hard strategic HRM’ on the other hand will emphasize
the yield to be obtained by investing in human resources
in the interests of the business
• Strategic HRM should attempt to
achieve a proper balance between the hard and soft
elements
• All organizations exist to achieve a purpose, and they
must ensure that they have the resources required to do so
and that they use them effectively
 Concepts of Strategic HRM

Strategic HRM is underpinned by three concepts

namely:

• Resource-based view (RBV)

• Strategic fit

• Strategic flexibility
 Concepts of Strategic HRM
The Resource-Based View (RBV)
• To a large extent, the philosophy of strategic HRM is
based on the resource-based view
• The resource-based view as developed by Penrose
(1959) and expanded by Wernerfelt (1984) provides ‘a
durable basis for strategy’ (Grant, 1991) and ‘builds on
and provides a unifying framework for the field of
strategic human resource management’ (Kamoche,
1996)
 Concepts of Strategic HRM
• This states that it is the range of resources in an
organization, including its human resources, that
produces its unique character and creates competitive
advantage (Hamel and Prahalad, 1989)
• Jay Barney (1991, 1995) states that competitive
advantage arises:
o first when firms within an industry are
heterogeneous with respect to the strategic
resources they control and,
o second, when these resources are not perfectly
mobile across firms and thus heterogeneity can be
long-lasting.
 Concepts of Strategic HRM
• These resources include all the experience, knowledge,
judgment, risk-taking propensity and wisdom of
individuals associated with a firm
• For a firm resource to have the potential for creating
sustained competitive advantage it should have four
attributes:

[
 Concepts of Strategic HRM
•Wright and McMahan (1992) also argue that
competitive advantage through people resources
arises because :
o There is heterogeneity in their availability in the
sense of the differences that exist between them
across firms in an industry
o They are immobile in the sense that competing
firms may be unable to recruit them
[
 Concepts of Strategic HRM
• Boxall and Purcell (2003) refer RBV as human resource
advantage. The aim is to develop strategic capability.
• This means strategic fit between resources and
opportunities, obtaining added value from:
o the effective deployment of resources
o developing people who can think and plan
strategically in the sense that they understand the key
strategic issues and
o ensure that what they do supports the achievement of
the business’s strategic goals.
 Concepts of Strategic HRM

Strategic fit
• As explained by Wright and McMahan (1992)
strategic fit refers to the two dimensions that distinguish
strategic HRM:
o ‘First, vertically, it entails the linking of HRM
practices with the strategic management processes of
the organization.
o Second, horizontally, it emphasizes the coordination
or congruence among the various HRM practices.’
 CONCEPTS OF STRATEGIC HRM
Strategic flexibility
• Strategic flexibility is defined as the ability of the firm to
respond and adapt to changes in its competitive
environment
• Environmental differences will affect a flexibility
strategy.
• As indicated by Wright and Snell (1998), in a stable,
predictable environment the strategy could be to
develop people with a narrow range of skills (or not to
develop multiskilled people) and to elicit a narrow range
of behaviour (eg tight job descriptions
 Perspectives on Strategic HRM
According to Delery and Doty (1996), there are three
HRM perspectives:
• 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.
• The contingency perspective – in order 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’
*Contingency. A future event or circumstance, which is possible but cannot be predicted with certainty
 Perspectives on Strategic HRM
• The configurational perspective (bundling) – this is a
holistic approach that reflect an understanding that
organizations are a cluster of interconnected structures,
linked processes, and mutually dependent practices that are
best viewed in a systemic or holistic manner
• As Richardson and Thompson (1999) comment, ‘A
strategy’s success turns on combining “vertical” or
external fit and “horizontal” or internal fit.’ They
conclude that a firm with bundles of HR practices should
have a higher level of performance, provided it also
achieves high levels of fit with its competitive strategy

[
 Richardson & Thompson Approach
Richardson and Thompson (1999) proposed adopting the
commonly used terms of best-practice and best-fit
approaches for the universalistic and contingency
perspectives and ‘bundling’ as the third approach
The Best Practice Approach
o This approach is based on the assumption that there is
a set of best HRM practices and that adopting them
will inevitably lead to superior organizational
performance. They are universal in the sense that they
are best in any situation.

[
 The Best-Practice Approach
Lists of best practices
A number of lists of ‘best practices’ have been produced,
the best known of which was produced by Pfeffer (1994),
namely:
• Employment security
• Selective hiring
• Self-managed teams
• High compensation contingent on performance
• Training to provide a skilled and motivated workforce
• Reduction of status differentials
• Sharing information
 The Best-Practice Approach
The following list was drawn up by Guest (1999):
• Selection and the careful use of selection tests
• Training, and in particular a recognition that training is
an ongoing activity;
• Job design to ensure flexibility, commitment and
motivation
• Communication to ensure that a two-way process keeps
everyone fully informed;
• Employee share ownership programs to increase
employees’ awareness
 The Best-Practice Approach
Delery and Doty (1996) identified seven strategic HR
practices, i.e; related to overall organizational
performance:
o Use of internal career ladders
o Formal training systems
o Results-orientated appraisal
o Performance based compensation
o Employment security
o Employee voice
o Broadly defined jobs
 The Best-Fit Approach
There is a choice of models, namely life cycle model,
competitive strategy, and strategic configuration
• The life cycle model
The life cycle model is based on the theory that the
development of a firm takes place in four stages: start-up,
growth, maturity and decline. This is in line with product
life cycle theory
The basic premise of this model was expressed by Baird
and Meshoulam (1988) as follows:
o ‘HRM’s effectiveness depends on its fit with the
organization’s stage of development
 The Best-Fit Approach
o As the organization grows and develops, HRM
programs, practices and procedures must change to
meet its needs
o Consistent with growth and development models it can
be suggested that HRM develops through a series of
stages as the organization becomes more complex.’
 The Best-Fit Approach

•Competitive Strategy

Three strategies aimed at achieving competitive advantage have

been identified by Porter (1985):

oInnovation – being the unique producer
oQuality – delivering high-quality goods and services to

customers
oCost leadership – the planned result of policies aimed at

‘managing away’ expense

COMPETETIVE STRATEGIES OF HRM
 The Best-Fit Approach

• Strategic configuration
o Organizations will be more effective if they adopt a
policy of strategic configuration (Delery and Doty,
1996) by matching their strategy to one of the ideal
types defined by theories such as those produced by
Mintzberg (1979) and Miles and Snow (1978)
o This increased effectiveness is attributed to the
internal consistency or fit between the patterns of
relevant contextual, structural and strategic factors
 The Best-Fit Approach

• Strategic configuration
o The typology of organizations produced by
Mintzberg (1979) classified them into five ideal
types: simple structure, machine bureaucracy,
professional bureaucracy, divisionalized form and
adhocracy.
 Bundling
As Richardson and Thompson (1999) comment, ‘A
strategy’s success turns on combining “vertical” or
external fit and “horizontal” or internal fit
They conclude that a firm with bundles of associated HR
practices should have a higher level of performance,
providing it also achieves high levels of fit with its
competitive strategy
Bundling’ is the development and implementation of
several HR practices together so that they are interrelated
and therefore complement and reinforce each other
 Bundling

The aim of bundling is to achieve high performance

through coherence
Coherence exists when a mutually reinforcing set of HR
policies and practices have been developed that jointly
contribute to the attainment of the organization’s
strategies for matching resources to organizational
needs, improving performance and quality and, in
commercial enterprises, achieving competitive
advantage
 Principles of Strategic HRM
 Strategic decisions have a major and long-term impact on the
behavior and success of the organization. It is not just concerned
with ‘mirroring current conditions or past practices’ (Smith,
1982).
 In Strategic HRM, following seven principles set out by Ondrack
and Nininger (1984):
o There is an overall purpose and the human resource dimensions
of that purpose are evident
o A process of developing strategy within the organization exists
and is understood, and there is explicit consideration of human
resource dimensions
o 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
o The office of the chief executive provides the challenge for
integrating human resource considerations to meet the needs of
the business
o The organization of all levels establishes responsibility and
accountability for human resource management
o Initiatives in the management of human resources are relevant
to the needs of the business
o 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