Strategic HRM

Chapter 3 Concept Of Strategic Human Resource

Management
Learning Outlines
 HRM philosophy
 HRM-underpinning theories
HRM Models
HRM system
HR Architecture
Nature HRM
HRM as first conceived had a conceptual
framework consisting of a philosophy underpinned
by a number of theories drawn from the behavioral
sciences and from the fields of

Strategic Management
Human Capital Management
Industrial Relations
HRM Philosophy
HRM philosophy is based on ‘the guiding
principles that identify and characterize the
value and treatment of employees covered
within a particular HRM system’ (Kepes and
Delery, 2007: 390).
Underpinning Theories of
HRM
Human resource management appears to lean
heavily on theories of commitment and
motivation and other ideas derived from the field
of organizational behavior.’
Resource-based theory, expressed as ‘the
resource-based view’, is also important.
“This theory states that competitive advantage is
achieved if a firm’s resources are valuable, rare
and costly to imitate”
Models of HRM
The Harvard model of HRM (Soft HRM
Approach)

The Matching Model of HRM/ Michigan Model of

HRM (Hard HRM approach)
The Harvard model of HRM
‘Human resource management (HRM) involves
all management decisions and actions that
affect the nature of the relationship between the
organization and employees – its human
resources’ (Beer et al, 1984).

The model adopt ‘a longer-term perspective in

managing people and consideration of people as
a potential asset rather than merely a variable
cost.
The Harvard model of HRM
HRM had two characteristic features:
1) Line managers accept more responsibility for
ensuring the alignment of competitive
strategy

2) HR has the mission of setting policies that

govern how HR activities are developed and
implemented in ways that make them more
mutually reinforcing.
Matching Model of HRM
HR systems and the organization structure
should be managed in a way that is congruent
with organizational strategy.
‘The critical management task is to align the
formal structure and human resource
systems so that they drive the strategic
objectives of the organization’ (Fombrun et al,
1984: 37).
HR System
HRM in organizations is delivered by the HR
system.

A system is a set of practices or activities that

fit together and interact to achieve a purpose.

In a properly functioning HR system, its

different parts are interrelated and jointly
supportive in order to enable HR goals to be
achieved.
HR System
The HR activities carried out in the system can be
divided into two broad categories:
1) transformational activities- organization
development and the formulation and
implementation of HR strategies

2) transactional activities that cover the main

areas of HR service delivery – resourcing, learning
and development, reward, employment relations
and employee wellbeing.
 Components of HR System
HR philosophy
Internal and External Environment
HR strategy, which defines the direction that HR intends to
take in each of its main areas of activity
HR policies, which set out what HR is there to do and provide
guidelines defining how specific aspects of HR should be applied
and implemented;
HR practices, which consist of the HR activities involved in
managing and developing people and in managing the
employment relationship.
HR Architecture
The HR system operates within the framework provided
by the HR architecture.
The HR architecture is a comprehensive representation
of all that is involved in HR, not simply the structure of
the HR function.

HR architecture can be defined as the overall structure

and design of a company's human resources system. It
encompasses the policies, processes, and systems that
a company uses to manage its human capital.
State of HRM
There are plenty of new interests and
developments,
 Human capital management,
Engagement based HRM,
Talent management,
Competency-based HRM,
E-HRM,
High-performance work systems (HPWS)
Strategic Management
It is a process of strategy
making, of forming and, if
the
firm survives, reforming its
strategy as the
environment changes.

‘The process that enables

organizations to turn
strategic intent into
 Strategy
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.

Boxall and Purcell (2016: 54) suggested that:

‘Strategies are the ways in which managers of firms
understand their goals and develop resources –
both human and non-human – to reach them.
 Characteristics of strategy
Strategy has three key characteristics
1. It is forward looking- a declaration of intent
2. Second, 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). This is the resource-
based view.
3. 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
 Strategy development
Developing strategy is a matter of creating a sense of
direction and purpose and ensuring strategic fit.
Conceptually this involves the following:

1 Define the mission and the business model

2 Set objectives.
3 Conduct internal and external scans to assess internal
strengths and weaknesses and external opportunities and
threats (a SWOT analysis) and to understand the political,
economic, social, technological, legal
and environmental factors affecting the organization (a
PESTLE analysis).
Strategy development
4 Analyze existing strategies and the business model to
determine their relevance in the light of the internal and
external appraisal. This may include gap analysis,.
5. Define in the light of this analysis the distinctive
capabilities of the organization.

6 Define the key strategic issues emerging from the

previous analysis. capability, the need to change the
business model and, importantly, the wellbeing of
employees.
Strategy development
7 Determine corporate and functional strategies for
achieving goals and competitive advantage, taking into
account the key strategic issues-business strategies for
growth or diversification, business
model innovation,
8 Prepare integrated strategic plans for implementing
strategies.
9 Implement the strategies.
10 Monitor implementation and revise existing
strategies or develop new strategies as necessary.
Core Competency vs Distinctive
Competency
Strategic Human Resource
Management (SHRM)
The process of ensuring that key issues of human
resource management are dealt with strategically in
order to support the achievement of organizational goals.
SHRM identifies

what needs to be done now and

in the longer term through the integration of HR strategies with
business strategy
and with one another.
Strategic Human Resource
Management (SHRM)
In essence, SHRM is conceptual. It is
underpinned by a number of well-established
theories.
But it also deals with the practice of HRM by
emphasizing the importance of ‘strategic fit’ –
The achievement of integration or ‘fit’ between
HR and business strategies and between
individual HR strategies, and by stressing the
benefits of taking a longer-term view of where
HR should be going and how it should get there.
Aim of SHRM
The aim of strategic HRM is to
generate organizational capability
By ensuring that the organization has the
skilled, engaged, committed and well-
motivated HR/employees
to achieve sustained competitive
advantage
Process of SHRM
Horizontal vs Vertical fit
Vertical fit is aligning a firm’s HR practices
with its strategy
Horizontal fit is aligning a firm’s HR practices
with one another, thus enabling them to
mutually reinforce each other, a process that
became known as ‘bundling.