SHRM vs.

Conventional HRM,
Barriers to strategic HRM,

U1L3
 Learning Objectives
• To differentiate the characteristics of HRM and
SHRM
• To understand various challenges faced in the
alignment between strategy of an org and HR
function
 Traditional HRM vs. Strategic HRM
Traditional HRM Strategic HRM
Responsibility for
Staff specialists Line managers
HRM
Partnership with internal
Focus Employee relations
and external customers
Transactional, change follower Transformational, change
Role of HR
and respondent leader and initiator

Initiatives Slow, reactive, fragmented Fast, proactive, integrated

Time horizon Short term Short, medium, long

Bureaucratic roles, policies, Organic-flexible, whatever is

Control
procedures necessary to succeed
Tight division of labour, Broad, flexible, cross-training
Job design
independence, specialisation teams

Key investments Capital, products People, knowledge

Accountability Cost centre Investment centre

Strategic Management Process

Five Phases in SHRM Process

 Strategic Management Process (Contd.)
• Scan the Environment
• Identify Sources of Competitive Advantage
• Identify HRM Strategies

Resource Development, Oxford,

Source: David Mankin, Human
HRM Strategy Choices

2010, P.90
Strategic Management Process (Contd.)

❖ Identify HRM Strategies

▪ Learning as Socialisation
▪ Devolved Informal Learning
▪ Engineering
▪ Empowered Informal Learning

❖ Implementing HR Strategies
▪ Policies are critical in implementation of HR
strategies
▪ HR practices should follow HR plans
▪ Strategy implementation is more challenging than its
formulation
Strategic Management Process (Contd.)
• Implementing HR
Strategies

Source: Cynthia D. Fisher, et. al., op. cit., p. 60

HR Practice Choices
Related to Strategic
Outcomes
 Strategic Management Process
(Contd.)
• Implementing HR Strategies

Difference between Strategy Formulation and Implementation

 Strategic Management Process (Contd.)

• Monitor and Evaluation

– Basic activities involved in strategy monitoring and
evaluation are:
• Establishing performance targets, standards and tolerance limits
for the objectives, strategies and implementation plans
• Measuring the performance in relation to the targets at a given
time. If outcomes are outside the limits, inform managers to take
action
• Analyse deviations from acceptable tolerance limits
• Execute modifications where necessary and are feasible
 Strategic Management Process
• Monitor and Evaluation (Contd.)
– From strategic HR perspective, evaluation may demand
answers to the following questions:
• Are HR professionals present at M&A’s planning and
implementation?
• Does HR provide an annual report on its ROI?
• Is HR rated by firm’s customers?
• Is there an ROI process to evaluate HR initiatives connected to the
business strategy?
• Is HR role leveraged in change initiatives such as systems
implementations and re-organisations?
• Are line managers made responsible for people’s issues?
• Do HR people go beyond and enter such domains as marketing,
finance and production?
Identify HRM Strategies

SHR Practices
 Benefits of SHRM
❖ The greatest benefit of SHRM is that it elevates the status of
HRM in organisations
❖ HR leader is now accorded equal status along
❖ with other functional heads, is a member of the core
committee to make strategic decisions, earns big
compensation, and is given all privileges
❖ Being a strategic partner, HR manager plays key role in
making a merger or an acquisition a success
❖ Being part of the strategic management process, HR
professionals seek to answer the fundamental question:
How to create an organisation to accomplish business
objectives?
 Benefits of SHRM (Contd.)
❖ Organisations can be categorised into three depending on
whether they are first in the market (prospectors), defending the
present market share (defenders), or enter once it is created,
with an improved product moving to become low cost produce
themselves (analysers)
❖ The most significant benefit from SHRM relates to the creation
of organisational capability by ensuring that the firm has skilled,
engaged, committed and motivated employees who can render
competitive advantage to it
❖ Strategic HRM provides a sense of direction to an organisation in
a turbulent environment so that the business needs of the firm
and the collective and individual needs of its employees can be
met by the development and implementation of coherent and
practical HR policies and programmes
 Barriers to Strategic HRM
❖ The tendency of most organisations adopt a short-term
mentality and focus on current performance
❖ The inability of HR leaders to think strategically
❖ Most senior managers lack appreciation for the value of
HR and its ability to contribute to the organisation from a
strategic perspective
❖ Some functional managers see themselves as HR
managers as well and are concerned more with technical
aspects of their areas of responsibility than the human
aspects
❖ Problem of quantifying many of the outcomes and
benefits of HR programmes
 Barriers to Strategic HRM (Contd.)
❖ Human assets are not owned by organisations and,
therefore, are perceived as a higher risk investment than
capital assets
❖ Strategic HR may be resisted because of the insensitivity
towards change that might arise
❖ Concern arising from non-availability of HR professionals
to staff themselves in HR departments, consequent to
integration of HR function with business strategy
❖ Failure to understand the strategic needs of the business,
inadequate assessment of the environmental and cultural
factors that affect the contents of the strategies and the
development of ill-conceived and irrelevant initiatives
Example:
Wal-Mart retains its cost leadership position by maintaining the most efficient
operations in the retail industry. As a result, Wal-Mart is able to offer lower prices
for its products than competing firms while remaining profitable. Indeed, many
smaller and midsize stores are facing financial difficulties trying to compete
directly with Wal-Mart stores intheir area because of significantly lower prices at
Wal-Mart.
Company with a differentiation strategy focused on innovation would not likely
succeed if employees were required to perform narrow tasks and rigidly defined
jobs. Instead, in companies like Google and Mircrosoft, innovation often requires
cooperation, creativity, and knowledge sharing among employees, which call for
broad job responsibilities. To foster creativity, managers may recruit employees
who bring new skills or new perspectives to the company.
Assessment – Discussion

When HR activities are closely linked to a key business

strategy, it becomes SHRM. True or false? Discuss.
References:

HRM (K Aswathappa, 8th ed) page no 90