Unit 1

HRM
 Definition of HRD
The term Human Resource Development or HRD  refers to the
development of people working in an organisation. It is a part of
HRM; that aims at improving skills, knowledge, competencies,
attitude and behaviour of employees of the organisation.
The purpose of the HRD is to empower and strengthen the
abilities of the employees so that their performance will get
better than before.
Human Resource Development involves providing such
opportunities to the employees that will prove beneficial in their
all around development. Such opportunities include training &
development, career development, performance management,
talent management, coaching & mentoring, key employee
identification, succession planning and so on. 
 Definition of HRM
Human Resource Management, shortly known as HRM refers to a systematic
branch of management that is concerned with managing people at work so that
they can give best results to the organisation. It is the application of
management principles to the people working in the organisation. It aims at
improving the performance and productivity of the organisation by finding out
the effectiveness of its human capital. Therefore, HRM is an art of placing the
right person at the right job, to ensure the best possible use of organisation’s
manpower.
The process involves an array of activities that begins with the recruitment,
selection, orientation, & induction, training & development, performance
appraisal, incentives & compensation, motivation, maintaining workplace safety,
health & welfare policies, managing relationship with the organisation, managing
change.
 Difference Between HRM and HRD
BASIS FOR
HRM HRD
COMPARISON

Meaning Human Resource Human Resource

Management refers to Development means a
the application of continuous development
principles of function that intends to
management to manage improve the performance
the people working in the of people working in the
organization. organization.

What is it? Management function. Subset of Human

Resource Management.

Function Reactive Proactive

Objective To improve the To develop the skills,
performance of the knowledge and
employees. competency of
employees.

Process Routine Ongoing

Dependency Independent It is a subsystem.

Concerned with People only Development of the

entire organization.
 HRM differs with HRD in a sense that HRM is associated with
management of human resources while HRD is related to the
development of employees.
 Human Resource Management is a bigger concept than Human
Resource Development. The former encompasses a range of
organisational activities like planning, staffing, developing,
monitoring, maintaining, managing relationship and evaluating
whereas the latter covers in itself the development part i.e. training,
learning, career development, talent management, performance
appraisal, employee engagement and empowerment.
 SHRM
(Strategic Human Resource Management )
According to Prof. Gary Dessler, “strategic human resource

management means formulating and executing HR systems i.e. HR

policies and activities that produce the employee competencies and

behaviours the organisation needs so as to achieve its strategic aims”

This implies that various HR programmes, activities, policies etc.

should be integrated within a larger framework for achieving the

strategic goals of an organisation. This is what exactly is

accomplished under strategic human resource management.

 Characteristics of Strategic Human
Resource Management(SHRM)
1. Recognition of the outside Environment: Outside
environment presents some opportunities and threats
to the organization in the form of-
 Laws
 Economic conditions
 Social and demographic change
 Domestic and international political forces
 Technology and so on. Strategic human resource
strategy explicitly recognizes the threats and
opportunities in each area and attempts to capitalize
on the opportunities while minimizing or deflecting the
effect of threats
2.The impact of Competition: The forces of competition in
attracting, rewarding, and using employees have a major effect on
corporate human resource strategy. Forces play out in local,
regional and national labor markets. Labor market dynamics of
wage rates, unemployment rates, working conditions, benefits
levels minimum wages legislation and competition reputation all
have an impact on and are affected by strategic human resource
decisions.

3. Long-Range Focus: A strategic human resource management

should be long-range focus cause this is not easy to change the
strategic human resource policy.
4.Choice and Decision-making focus: In other words, the strategy has a
problem solving or problem preventing focus. Strategy concentrates on
the question, “what should the organization do and why?” this action
orientation requires that decisions be made and carried out.
5. Consideration of all Personnel: A strategic approach to human
resources is concerned with all of the firm’s employees, not just its
hourly or operational personnel. Traditionally, human resource
management focuses on hourly employees, with most clerical exempt
employees also included.
6. Integration with the Corporate Strategy: Human resource strategy
adopted by a firm should be integrated with the firm’s corporate strategy.
 Scope
The scope of SHRM is much beyond HRM that primarily deals

with every aspect of a business that affects employees, such as

– manpower planning recruitment and selection, induction,

training and development, performance management and

appraisal, promotion or removal, employee retention,

compensation management, safety management, grievance

redressal, management of unions, negotiation and personnel

administration.
Basic objectives of SHRM are given
here:
1. To focus the HR policies, programmes and practices
as the means through which the people can be
deployed to gain better and competitive advantages;
2. To manage and maintain human capital resources,
skill, knowledge, efficiency and intelligence of the
employees;
3. To find out the ways and means for effective and
efficient utilisation of human resources;
4. To emphasise that human resources treated as the
primary source of competitive advantages of the
organisation;
5. To integrate the HR strategies with the Business
strategies for the betterment of organisation;
6. To make an appropriate direction for people, practices and
performance towards the achievements of the goals of the organisation;
7. To develop stable employee relations by way of effective resource
utilisation, optimizing remuneration, better productivity and better work
culture; etc.
8. To recognise the needs and customised services of different market
segments and try to fulfil them properly;
9. To make an appropriate ‘cost optimisation’ with increase the
efficiency of resources; and
10. To make an appropriate and feasible plan for change environment.
SHRM Vs Conventional HRM
 Definition of HRM
Human Resource Management or HRM is simply the process of managing human
resources, in a systematic way. It is a practice devised to maximize the performance
of employees, i.e. to make them more efficient and productive. It is concerned with the
application of principles of management to manage organisation personnel while
paying attention to the policies and systems of the entity. It entails the best possible
use of limited skilled workforce of the organisation.
HRM consist of human-oriented activities like recruiting, training and development,
performance appraisal, safety and health, industrial relations and so on. It facilitates
adjusting human resource policies and practices with the strategies of the
organization, whether corporate or functional.
The functions of a human resource manager include planning, staffing, developing,
maintaining, monitoring, managing relationships, evaluating, managing change, etc.
 Definition of SHRM
Strategic Human Resource Management, shortly known as SHRM is
a function of management which entails development of policies,
programmers and practices related to human resources, which are
then aligned with business strategy, so as to achieve strategic
objectives of the organisation.
Its primary purpose is to improve the performance of the business
and maintain a culture that encourages innovation and works
continuously to gain competitive advantage.
The aim of SHRM is that companies must adjust their HR strategy
within the periphery of overall business objectives, thus ensuring
that HR practices are in tune with the strategic objectives of the
organization. It lays down a clear corporate strategy and vision for
future.
A major pro of strategic human resource management is that it
ascertains and analyses external opportunities and threats to the
business organisation.
 Comparison Chart
BASIS FOR
HRM SHRM 
COMPARISON
SHRM is a managerial
Human resource
function which implies
management (HRM)
framing of HR
implies the governance
strategies in such a way
Meaning of manpower of the
to direct employees
organization in a
efforts towards the
thorough and structured
goals of the
manner.
organization.
Nature  Reactive  Proactive 
Responsibility lies with   Staff specialist  Line manager
Approach   Fragmented   Integrated
Concerned with Concerned with internal
Scope 
employee relations  and external relations 
Time horizon  Short term  Long term 
Basic factor   Capital and products  People and knowledge 

Change  Follows change  Initiates change

Accountability   Cost center  Investment center

Stringent control over

Control  It exhibits leniency. 
employees 
 Differences Between HRM and SHRM
The governance of manpower of the organisation in a thorough and structured
manner is called Human Resource Management or HRM. A managerial function
which implies framing of HR strategies in such a way to direct employees
efforts towards the goals of an organisation is known as SHRM.
The process of HRM is reactive in nature. On the other hand, SHRM is a
proactive management function.
In human resource management, the responsibility of manpower lies with the
staff specialists, whereas in strategic human resource management, the task of
managing the workforce, is vested in the line managers.
HRM follows fragmented approach, which stresses on applying management
principles while managing people in an organisation. As against this, SHRM
follows an integrated approach, which involves lining up of business strategy
with the company’s HR practices.
Human resource management emphasises on employee relations,
ensuring employees motivation, and also the firm conforms to the
necessary employment laws. Conversely, SHRM focuses on a
partnership with internal and external constituent groups.
HRM supports short-term business goals and outcomes, but SHRM
supports long-term goals and results of business.
In human resource management, the human resource manager plays
the role of change follower, i.e. he/she responses to change, hence
pursues transactional leadership style. As opposed to SHRM, the
human resource manager is a change leader, i.e. an imitator, thus seeks
transformational leadership.
The primary element in HRM is the capital and products, but people and
their knowledge are the building blocks of SHRM.
If we talk about accountability, a conventional HRM is a cost
centre. Unlike a strategic HRM which is an investment centre.
In human resource management, stringent control over
employees is exercised. As against this, in strategic human
resource management, no such control is imposed, rather the
rules for managing manpower is lenient.
Barriers to Strategic Human Resource
Management
1. Short term mentality:-Short-term mentality and focus on the current
performance of SFIRM is the first barrier. Every manager act, long-term focus,
because the organization has been established with long-term objectives/focus.
2. Strategic inability:-Very often SHRM does not think strategically and he cannot
think it to due in capability. This type of inability may arise for many reasons as a
lack of technical knowledge, insufficient training, and the like.
3. Lack of appreciation:-Sometimes top managers do not recognize the activities
of strategic human resource management. So SHR manager does not get
interested in doing any innovative venture. A few appreciations may get them a
substantial mental boost up.
4. Failure understands the role:-General managerial roles may not be fully
understood by be managers. This failure is due to a lack of knowledge about the
specialty of a degree of responsibility. This failure may create distance between
these managers.
5. Difficulty in quantifying outcomes:-Many outcomes may not be quantified. But
SHRM   tries to enjoy the contribution. This is not always possible. Participation,
work, etc. type function cannot be quantified because of their intangibility.
6. Wong perception of human assets:-Investment in human assets may be regarded
as high risk than that of technology and information. Though these technologies are
run by human resources. This wrong perception may inhibit progress.
7. Resistance:-SHR Managers may be resisted because of the incentives for change
that might arise. The change implemented demand some incentives for efforts to
execute the changed program. If these incentives are not given reasonable, they may
create barriers to SHRM.
In addition to these barriers, there may be other points also. For example, a lack of
union support, government backing, and weak financial position of the company
can act as bathers to SHR management.
Strategy Formulation – Meaning and Modes

Strategy formulation is the process of offering proper direction to a

firm. It seeks to set the long-term goals that help a firm exploit its
strengths fully and encash the opportunities that are present in the
environment. There is a conscious and deliberate attempt to focus
attention on what the firm can do better than its rivals. To achieve
this, a firm seeks to find out what it can do best. Once the strengths
are known, opportunities to be exploited are identified; a long-term
plan is chalked out for concentrating resources and effort.
 Modes include
1. Entrepreneurial Mode:Strategy is formulated by one
powerful individual. The focus is on opportunities rather than
on problems. Strategy is guided by the founder’s own visions
of direction.
2. Adaptive Mode:This strategy formulation mode is
characterised by reactive solutions to existing problems rather
than a proactive search for new opportunities.
3. Planning Mode: Analysts assume main responsibility for
strategy formulation. Strategic planning includes both the
proactive search for new opportunities and the reactive
solution of existing problems.
In short, strategic planning concerns itself with the
formulation of strategic alternatives to obtain
sanctions for one of the alternatives which is to be
ultimately interpreted and communicated in
operational terms. Thus, strategic planning is a forward-
looking exercise which determines the future posture
of the enterprise with special reference to its products-
market posture, profitability, size, rate of innovation and
external institutions.
 Strategy Formulation Process
Setting Organizations’ objectives
Evaluating the Organizational Environment
Setting Quantitative Targets
Aiming in context with the divisional plans
Performance Analysis
Choice of Strategy
 Process
Strategy formulation refers to the process of choosing the most appropriate course of action for
the realization of organizational goals and objectives and thereby achieving the organizational
vision. The process of strategy formulation basically involves six main steps. Though these steps
do not follow a rigid chronological order, however they are very rational and can be easily followed
in this order.
Setting Organizations’ objectives - The key component of any strategy statement is to set the
long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives. Objectives stress the state of being there whereas
Strategy stresses upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider term
which believes in the manner of deployment of resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.
Evaluating the Organizational Environment - The next step is to evaluate the
general economic and industrial environment in which the organization operates.

This includes a review of the organizations competitive position. It is essential to

conduct a qualitative and quantitative review of an organizations existing product

line. The purpose of such a review is to make sure that the factors important for

competitive success in the market can be discovered so that the management can

identify their own strengths and weaknesses as well as their competitors’ strengths

and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track

of competitors’ moves and actions so as to discover probable opportunities of

threats to its market or supply sources.

Setting Quantitative Targets - In this step, an organization must practically fix the
quantitative target values for some of the organizational objectives. The idea

behind this is to compare with long term customers, so as to evaluate the

contribution that might be made by various product zones or operating

Aiming in context with the divisional plans - In this step, the contributions
made by each department or division or product category within the
organization is identified and accordingly strategic planning is done for
each sub-unit. This requires a careful analysis of macroeconomic trends.
Performance Analysis - Performance analysis includes discovering and
analyzing the gap between the planned or desired performance. A critical
evaluation of the organizations past performance, present condition and
the desired future conditions must be done by the organization. This
critical evaluation identifies the degree of gap that persists between the
actual reality and the long-term aspirations of the organization. An
attempt is made by the organization to estimate its probable future
condition if the current trends persist.
Choice of Strategy - This is the ultimate step in Strategy Formulation. The
best course of action is actually chosen after considering organizational
goals, organizational strengths, potential and limitations as well 
 Strategy Formulation
Understand the three levels of strategy for an organization
Strategy can be formulated at three levels, namely, the corporate
level, the business level, and the functional level.
At the corporate level, strategy is formulated for your organization as a whole.
Corporate strategy deals with decisions related to various business areas in
which the firm operates and competes.
At the business unit level, strategy is formulated to convert the corporate vision
into reality.
At the functional level, strategy is formulated to realize the business unit level
goals and objectives using the strengths and capabilities of your organization.
There is a clear hierarchy in levels of strategy, with corporate level
strategy at the top, business level strategy being derived from the
corporate level, and the functional level strategy being formulated
out of the business level strategy.

In a single business scenario, the corporate and business level

responsibilities are clubbed together and undertaken by a single
group, that is, the top management, whereas in a multi business
scenario, there are three fully operative levels.
 Levels of Strategy
Corporate Level
Corporate level strategy defines the business areas in which your firm will
operate. It deals with aligning the resource deployments across a diverse set of
business areas, related or unrelated. Strategy formulation at this level involves
integrating and managing the diverse businesses and realizing synergy at the
corporate level. The top management team is responsible for formulating the
corporate strategy. The corporate strategy reflects the path toward attaining
the vision of your organization. For example, your firm may have four distinct
lines of business operations, namely, automobiles, steel, tea, and telecom. The
corporate level strategy will outline whether the organization should compete in
or withdraw from each of these lines of businesses, and in which business unit,
investments should be increased, in line with the vision of your firm.
 Business Level
Business level strategies are formulated for specific strategic
business units and relate to a distinct product-market area. It
involves defining the competitive position of a strategic business
unit. The business level strategy formulation is based upon the
generic strategies of overall cost leadership, differentiation, and
focus. For example, your firm may choose overall cost leadership
as a strategy to be pursued in its steel business, differentiation in
its tea business, and focus in its automobile business. The
business level strategies are decided upon by the heads of
strategic business units and their teams in light of the specific
nature of the industry in which they operate.
 Functional Level
Functional level strategies relate to the different
functional areas which a strategic business unit has,
such as marketing, production and operations, finance,
and human resources. These strategies are
formulated by the functional heads along with their
teams and are aligned with the business level
strategies. The strategies at the functional level
involve setting up short-term functional objectives, the
attainment of which will lead to the realization of the
business level strategy.
 Example
For example, the marketing strategy for a tea business which
is following the differentiation strategy may translate into
launching and selling a wide variety of tea variants through
company-owned retail outlets. This may result in the
distribution objective of opening 25 retail outlets in a city; and
producing 15 varieties of tea may be the objective for the
production department. The realization of the functional
strategies in the form of quantifiable and measurable
objectives will result in the achievement of business level
strategies as well.
Link HR Strategies with Business Strategies
Understand the business strategy and current state challenges. Consider the goals and
expected outcomes for the organization. Is the organization pursuing a growth strategy? Or,
is it trying to turnaround underperforming business lines?
Identify how people contribute to organizational growth and success. Seek to understand
what you are asking your workforce to do in service of the goals. What new or different
skills, competencies, and behaviors are needed? What are the best functions and positions
needed to deliver on these expectations?
Design and implement your HR talent strategy. Once you know where the organization is
headed and what it requires of its people to get there, HR must determine the gaps
between its current workforce and what is required to accomplish the organization’s
business goals. Define strategies needed to acquire, train, develop, performance manage,
and reward the very high-performing talent that will carry your organization into the future.
Measure your HR strategy. Whether you use an HR
scorecard or other metrics, these measures indicate if
your HR talent strategy is successful or when a course
correction is necessary.
As a business leader, it's important that you empowering
and expect your HR function to make a strategic
contribution. An organization's greatest competitive
advantage is its people. Partner with your existing HR or
consider finding a strategic HR leader who can help your
organizational goals.
Thank YOU