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Uni T: Strategic Human Resource Management (SHRM)
Uni T: Strategic Human Resource Management (SHRM)
Uni
t 3
Strategic Human
Resource
Management
(SHRM)
Copyright © 2006, Dipak Kumar Bhattacharyya
3-1 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
Introduction
Planning and strategy have a long history (Mintzberg, 1994). Writing in 1916, Henri
Fayol (1916) supported the maxim that ‘managing means looking ahead’. Thus
foresight is an essential part of management. Strategic thinking can occur at a
number of levels. Chaffee (1985) considers that (academically) strategy is viewed in
three distinct but sometimes conflicting ways: linear strategy, adaptive strategy, and
interpretive strategy. The linear model focuses on planning and forecasting. The
second model is described as adaptive and most closely associated with ‘strategic
management’. This model ‘tends to focus the manager’s attention on means’ and is
largely concerned with ‘fit’. The third, interpretative model sees strategy as a
metaphor and, therefore, it is not something which can be measured but is viewed
in qualitative terms.
Cont….
3-2 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
‘A human resource system that is tailored to the demands of the business strategy’
(Miles and Snow 1984).
“All those activities affecting the behavior of individuals in their efforts to formulate
and implement the strategic needs of the business” (Schuler 1992: 30).
3-3 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
Integration of HR with Business Strategy
Reviewing various definitions of SHRM, we can classify SHRM into four different
models. The first model, pioneered by Fombrun, Trichy and Devanna (1984),
although known as ‘the human resource management cycle’, it emphasises on
strategic focus on five variables of HR, like; selection, performance, appraisal,
rewards and human resource development.
The third model of HRM by Guest (Guest, 1987, 1997) also states that HRM can
help to achieve better performance.
Of the four models discussed here the so-called Warwick model by Hendry and
Pettigrew (1990) is the one most oriented to processes of change.
3-4 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-5 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
HRM and Organisational Strategic Decisions
Integration of HR in strategic decisions may be direct or indirect, formal or informal.
The formal approach requires strategy formation and strategy implementation. The
informal approach on the contrary involves HR managers and HRM become the
initiator of strategic decisions. Yet in another way also we can interpret HR
integrated organisational strategic decisions, i.e., deliberate and emergent. If it is
deliberate, HR exerts specific influence on strategic decision makers. In emergent
cases, HR practices being influence organisational culture, HR by default become
the strategic decision maker.
3-6 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-7 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
Levels of Strategic HR Planning
Like corporate strategic plan, strategic HR planning also has three levels; corporate,
business and department (operations) levels. Corporate level HR strategic plan
deals with corporate HR staff and corporate HR management group. At this level
organisation wide HR strategies and policies are drawn to fit the corporate mission
and business portfolio plans. At Business or divisional level, divisional HR staff and
divisional HR management group are involved. Here HR strategies and policies are
drawn within the ambit of corporate HR strategies and policies to meet specific
product/market/customer segments. At department or operation level, departmental
HR staff members are involved who draw HR programmes and policies for each
functional area (e.g. recruitment, staffing, compensation, career development, etc.).
3-8 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-9 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
HR Portfolios
The term HR portfolio is used in strategic HRM and it denotes strategically relevant
HR information. Such information may be basic or critical. Basic HR portfolio
information included company, strategic business units, departments, functional
areas, work force segments, single employees, HR practices, etc. Critical HR
portfolio information includes employee performance / employee potential, strategic
relevance / HR quality of SBUs, external supply / internal stocks of skilled labour,
employee motivation / employee qualification, etc. The process of information
compilation for HR portfolios is to first select units and the criteria of analysis,
visualise the present condition, and plan for the future (in the form of targets) and
then develop HR strategies in more specific and quantifiable terms.
3-10 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
5-P Model of HR Strategy
Schuler (1992) advocated this model to highlight HR’s strategic relevance in an
organisation. His model outlines 5-P as under:
HR Processes
3-11 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-12 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-13 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-14 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-15 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
Strategic Compensation Management
The strategic use of rewards to regulate behaviour and performance has led to the
concept of ‘compensation management’ or ‘reward systems’ – terms, which belong
in the HRM, rather than the Industrial relations, framework. ‘Remuneration’ refers to
monetary rewards, which are seen as one arm of total compensation.
i. Job satisfaction
Cont….
3-16 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-17 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-18 Human Resource Management (2nd Edition) Dipak Kumar Excel Books
Block: One Introduction
Unit:3 Strategic Human Resource Management (SHRM)
3-19 Human Resource Management (2nd Edition) Dipak Kumar Excel Books