Strategic Human Resource Management (SHRM)

Fesseha Afewerk (A/Professor)

Certified Management educator and trainer

Addis Ababa University

College of Business and Economics
School of Commerce Graduate Program
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Module outline…
Chapter Six
Principles of SHRM
6.1. Introduction
6.2. Integration of HR to Strategy
6.3. Consistency of HRM Practices
6.4. Devolvement of HRM to Line Management
6.5. High Employee Commitment
6.5.1. Types of Commitment
6.5.2. Antecedents of Commitment
6.6. High Quality Employees and Internal Practices
6.7. Management-Employee Relation
6.8. People as a Strategic Resource . 2
 Chapter Objective

•Upon the completion of this chapter, you will be able to:

1. Contrast the different aspects of HR integration.

2. Identify the different types of HRM consistency
3. Discuss the rationale for devolving HR responsibility
4. to line management
Justify the need for high employee commitment
5. Identify the contribution of high-quality staff to quality
product
6. Appreciate the benefit of direct management- employee
relation
7. Justify how the people of the organization can be
strategic resources 3
 6.1. Introduction

• SHRM is such a complex, and multi-faceted

phenomenon that is not easy.
• It is helpful to arrive at a neat all-
encompassing definition of the term. This
section tries to clarify some of the major
principles fundamental to SHRM.
• The intention is not to paint a black and
white portrait of SHRM but to give an
overview of the main strands of SHRM
thinking. 4
 Introduction…

• Seven major principles taken from the

literature :
– integration of HR to strategy,
– consistency of HRM practices,
– devolvement of HRM to line management,
– high employee-commitment,
– high-quality staff and internal practices,
– management-employee relation, and
– people as a strategic resource.
• SHRM is largely about these concepts.
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 6.2. Integration of HR to Strategy

• Integration of HR to business/corporate strategy

is perhaps the most fundamental principle of
SHRM.
• Indeed, the management of people becomes a
critical element in the strategic management of
the businesses.
• SHRM derives its ‘strategic’ facet from the link
to wider business strategy and integration
between the various HR policies, procedures and
practices: the first termed vertical integration and
the second horizontal integration 6
 Integration of HR to Strategy…

• The following definitions of SHRM reveal that SHRM is

about integrating HR to the business strategy:
(1) SHRM is a discipline that integrates HRM with the process
of strategic management;
(2) SHRM is a management activity which involves integration
of human factors to strategic goals of the organization;
(3) SHRM is a management process requiring HR policies and
practices to be linked with the strategic objectives of the
organization;
(4) SHRM is the process of linking HR practices to business
strategy; and is the process by which organizations seek to
link the human, social, and intellectual capital of their
members to the strategic needs of the firm.
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 Integration of HR to Strategy…

• Integration is the degree to which the HRM

issues are considered as part of the
formulation of business strategies.
• Strategic integration refers to that part of
the best-fit school that assumes a necessary
alignment between the overall business
strategy and the HR strategy.
• This is based on the idea that a given business
strategy requires a specific type of HR system
so that the organization’s performance is
improved. 8
 Integration of HR to Strategy…

• Golden and Ramanujam (1985) identified four

types of linkages between strategy and HRM:
– administrative,
– one-way,
– two-way, and
– integrative linkages.
• An administrative linkage between strategy and
HRM represents the lowest level of integration.
• The HRM department is merely engaged in
administrative work such as salary administration. 9
 Integration of HR to Strategy…

• A one-way linkage can be found in

organizations where the HR strategy is
derived from the overall business strategy.
• The HR strategy is affected by the overall
business strategy, but the relationship is
only one way.
• A cost reduction strategy might result in
certain HR interventions for goal
achievement, for example, minimum
training expenses. 10
 Integration of HR to Strategy…

• A two-way linkage represents a potential model in which

HR experts determine certain external (or internal)
developments that are put on the table of the board of
directors.
• These two way HR issues can become part of the overall
business strategy.
• The new business strategy in return pushes the HR
strategy towards certain HR interventions that help the
organization to achieve its goals.
• An integrative linkage represents full alignment of HRM
and strategy. Part of an integrative linkage is the position
of the HR director, who has a seat in the board of
directors. 11
 Integration of HR to Strategy…

• According to Thornhill and Saunders (1998), the

concept of integration composed of four aspects.
First, HR policy making should be integrated
with the corporate strategic planning process,
rather than being arrived at as a reaction to this.
Second, HR policies should be integrated with
one another and other business strategies such as
finance, marketing and production.
Third, the attitudes and practices of line
managers should be integrated with the
organization’s HR policies. 12
 Integration of HR to Strategy…

• The fourth aspect of integration relates to employees being

integrated with the interests of the organization, with the
result that they will demonstrate a high level of
organizational commitment.
• The first two aspects of integration are unlikely to be
achieved unless they are actively managed by top and
middle managers within an organization.
• Equally, the third aspect of integration emphasizes the
importance of line managers in potentially transforming the
espoused policies of an organization into “theory in use”.
• Any resistance on the part of an organization’s line
managers will dilute, if not undermine, attempts to translate
policy into practice. 13
 Integration of HR to Strategy…

• Purcell (1995) presents a two-level integration of

HRM into the business strategy – ‘upstream or first-
order decisions’ and ‘downstream or second-order
decisions’:
• First-order decisions, as the name suggests, mainly
address issues at the organizational mission level and
vision statement; these emphasize where the business
is going, what sort of actions are needed to guide a
future course, and broad HR-oriented issues that will
have an impact in the long term.
• Second-order decisions deal with scenario planning at
both strategic and divisional levels. 14
 6.3. Consistency of HRM Practices

• HRM practices’ internal consistency is

a key concept in the SHRM theory.
• The field of SHRM focuses on
developing internally consistent HRM
practices to build employees’
knowledge, skills, and abilities in an
effort to support competitive strategies
and achieve business objectives.
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 Consistency of HRM Practices…
• Internal consistency of HR practices refers to
the degree to which all HR practices of a SHRM
system are consistent and complementary.
• To put it differently, it means that HR practices
of an organization fit together so that they make
a coherent whole; are mutually reinforcing; and
are applied consistently.
• Consistency is aimed at achieving a coherent
approach to managing HR, in a manner that the
various practices are mutually supportive.
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 Consistency of HRM Practices…
• The idea of internal consistency of HR is built in
the “HRM system approach’ of the HRM theory.
An HR system is defined as a coherent and
consistent set of HR practices that combined
together results in higher organizational
performance than the sum of the effects of using
each HR practice separately.
• The underlying idea of the HR system approach
is that linking HR practices to each other
strengthens the HR strategy and philosophy of an
organization. 17
 6.4. Devolvement of HRM to Line Management

• Although line managers’ involvement in HRM is not

new, devolving HR responsibilities to line managers has
recently captured the attention of both practitioners and
academicians.
• HRM researchers have recognized devolution as an
effective strategy for enabling an organization to make
immediate and localized HR decisions (Gilbert, De
Winne, & Sels, 2011).
• The literature on HRM has addressed empowering line
managers in HR, using terms such as devolution or
devolvement of HR responsibilities to the line (Rimi &
Yusliza, 2014).
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 Devolvement of HRM to Line Management…
• The core idea behind empowerment is the
understanding that no one knows a job better than
the person who does the specific task; therefore,
allowing employees to make relevant decisions
makes an organization more efficient (Ergeneli,
Ari, & Metin, 2007).
• As line managers are in a position to know their
subordinates, devolution empowers them to make
HR decisions that affect those they supervise.

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 Devolvement of HRM to Line Management…
• In other words, they have control over people
and their work lives. Aligned with that concept,
devolution of HRM gives HR responsibilities to
the line managers who are employees’ primary
authority figures, charged with achieving
organizational objectives.
• As an empowerment strategy, devolution gives
line managers the power to address people-
related problems and make day-to-day decisions
regarding their subordinates.
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 Devolvement of HRM to Line Management…
• Collaboration between HR and line management
Although the HR department is typically considered
to be solely responsible for HRM, in practice, line
managers often are in the best position to take primary
responsibility for effectively adopting and delivering
HR policies and practices (Gilbert et al., 2011).
Line managers have been found to have a greater
influence on improving employee job satisfaction,
commitment, and extra-role behaviors than HRM
managers (Harney & Jordan, 2008). Thus, both HR
managers and line managers are important to the
success of an organization's HRM efforts. 21
 Devolvement of HRM to Line Management…
• The value of effective HRM
• At its best, HRM fosters organizational success by
aligning employee programs with business
objectives. Increasingly, researchers are paying
attention to the role that effective HRM plays in
securing competitive advantage (Suttapong,
Srimai, & Pitchayadol, 2014).
• To that end, HRM managers need to
simultaneously satisfy multiple constituents
throughout the organization. I
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Devolvement of HRM to Line Management…
• In line with such a multiple constituency
approach, Kim and Ryu (2011) measured
HRM effectiveness as perceived by non-HR
managing staff members engaged in a strategic
planning function.
• Although HR-line collaboration has been
shown to facilitate HRM efforts,
• Azmi and Mushtaq (2015) note that the role of
devolution remains a path worth exploring.

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 Devolvement of HRM to Line Management…
• To that end, we examine the relationship among
HR-line collaboration, devolution, and HRM
effectiveness within private commercial banking
(PCB) organizations in Bangladesh. Our study
investigates the success of HRM efforts by
examining the effect of collaboration between
HR managers and line managers to delegate
HRM policies to line managers. More
specifically, it examines both the independent
and joint impacts of HR-line collaboration and
devolution on HRM effectiveness. 24
 6.5 High employee-commitment
• The concept of a ‘high commitment work
system’, which is aimed at eliciting a
commitment so that behavior is primarily self-
regulated rather than controlled by sanctions and
pressures external to the individual and relations
within the organization are based on high levels
of trust.
• Commitment is the strength of an individual's
identification with, and involvement in, a
particular organization.
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 High employee-commitment…
• SHRM seeks employees’ commitment to organizational
goals.
• It is about gaining the ‘hearts and minds’ of employees
through involvement, communications and other methods
of developing a high-commitment, high-trust
organization.
• Employee commitment is sought with the expectation that
effectiveness will follow as second-order consequences.
• A model that assumes low employee commitment and that
is designed to produce reliable if not outstanding
performance simply cannot match the standards of
excellence set by world-class competitors.
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 High employee-commitment…
• Thus, managers have a choice between
a strategy based on imposing control
and a strategy based on eliciting
commitment.
• This commitment will be generated if
employees are trusted, if they are
trained and developed, and if they are
allowed to work autonomously and
have control over their work. 27
 High employee-commitment…
• Employee commitment is important because high levels of
commitment lead to several favorable organizational
outcomes.
• It reflects the extent to which employee’s identify with an
organization and is committed to its goals.
• The commitment of employees is an important issue
because it may be used to predict employee’s
performance, absenteeism and other behaviors.
• The organizational commitment is the subset of employee
commitment, which comprised to work commitment,
career commitment and organizational commitment and
also added greater the organizational commitment can aid
higher productivity. 28
 High employee-commitment…
• Organizational commitment leads to positive
organizational outcomes.
• Job satisfaction has the highest impact on high
employees’ commitment and productivity. There is a
positive correlation between organizational
commitment and job performance.
• Low commitment has also been associated with low
levels of morale non-committed employees may
depict the organization in negative terms to outsiders
thereby inhibiting the organization’s ability to recruit
high-quality employees and decreased measures of
altruism and compliance. 29
 High employee-commitment…
Types of Commitment
(1) Affiliative Commitment: An organization’s interests and
values are compatible with those of the employee, and the
employee feels accepted by the social environment of the
organization.
(2) Associative Commitment: Organizational membership
increases employees’ self-esteem and status. The employee feels
privileged to be associated with the organization.
(3) Moral Commitment: Employees perceive the organization to
be on their side and the organization evokes a sense of mutual
obligation in which both the organization and the employee feel
a sense of responsibility to each other. This type of commitment
is also frequently referred to in the literature as Normative
Commitment.
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 High employee-commitment…
(4) Affective commitment: Employees derive satisfaction
from their work and their colleagues, and their work
environment is supportive of that satisfaction. Some
researchers suggest that this is the most important form of
commitment as it has the most potential benefits for
organizations. Employees who have high affective
commitment are those who will go beyond the call of duty
for the good of the organization. In recent literature this
form of commitment has also been referred to as
‘engagement’ and is the form of commitment that is most
usually measured by organizations.
(5) Structural commitment: Employees believe they are
involved in a fair economic exchange in which they benefit
from the relationship in material ways. 31
 High employee-commitment…
• Antecedents of Commitment
– Demographics,
– recruitment procedures,
– met expectations,
– induction and training,
– relationships with managers, relationships
with colleagues, group membership, and
organizational justice and trust are the
major antecedents of commitment.
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 6.6. High quality Employees and Internal Practices

• “High-quality employees” refers to

issues of workplace learning and the
need for the organization to have an
able, qualified and skillful workforce to
produce high-quality services and
products.

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 High quality Employees and Internal
Practices…
• HR is conceptualized as the total
knowledge, skills, creative abilities,
talents, and aptitudes of an organization’s
workforce as well as the values, attitudes,
and beliefs of the individuals involved,
and HRM is the art of procuring,
developing, and maintaining competent
workforce to achieve organizational goals
in an effective and efficient manner. 34
 High quality Employees and Internal Practices…

• Therefore, organizations with high quality staff in

these aspects of HR and that manage them in the
most efficient and effective manner are strategic.
• Thus, the principle of SHRM is not only hiring
and maintaining shire number of people rather
acquiring, developing, and maintaining highly
skilled and qualified people and developing
internal processing in such a way that best
satisfies the customers’/clients’ needs.
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 6.7. Management-Employee Relation

• The focus in SHRM shifts from management–

trade union relations to management–employee
relations, from collectivism to individualism.
• It emphasizes the importance of maintaining
links between the organization and individual
employees in preference to operating through
group and representative systems.
• This has changed from a concentration upon the
relationship between management and trade
unions to that between management and
individual employees. 36
 Management-Employee Relation…
• A commitment strategy attempts to forge a
commonality of interest between the organization
(often symbolized by the management) and the
employees.
• To develop that commonality of interest, there is
heavy emphasis on employee training and
development, internal staffing and career
development, and compensation levels
formulated on the basis of internal equity norms
rather than market rates.
37
 Management-Employee Relation…
• This principle is composed of policies that promote
mutuality:
• Mutual goals, mutual influence, mutual respect, mutual
rewards, and mutual responsibility.
• The theory is that policies of mutuality will elicit
commitment, which in turn will yield both better
economic performance and greater human development.
• It can be noted that one of the HRM policy goals was
the achievement of high commitment – ‘behavioral
commitment to pursue agreed goals, and attitudinal
commitment reflected in a strong identification with the
enterprise’.
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 Management-Employee Relation…
• At the heart of the concept is the
complete identification of employees
with the aims and values of the business.
• In addition, SHRM is individualistic in
that it emphasizes the importance of
maintaining links between the
organization and individual employees
in preference to operating through group
and representative systems. 39
 6.8. People As a strategic Resource

• Seeing the people of the organization as a

‘strategic resource’ for achieving
competitive advantage is one of the major
principles of SHRM.
• This principle implies two important values.
• The first is employee recognition to be
prevalent among the organizations.
• It is the focus on customers in order to gain
competitive advantage.
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 People As a strategic Resource…
• The second value enshrined in this
principle is that of seeing the people of
the organization as a ‘strategic
resource’.
• This strikes at the heart of some of the
earliest writing on HRM. It prompts the
question of whether employees are to be
seen as human resources or resourceful
humans. 41
 People As a strategic Resource…
• when employees are treated as
‘resourceful humans’, the emphasis
is upon training and development,
employee involvement and all the
other HR practices which are
designed to optimize the potential
of employees.
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People As a strategic Resource…

• The nature of the capabilities

which do and differentiate
them from those that do not
and emphasize how people can
be a strategic resource of the
organization.
43
People As a strategic Resource…
• Resource-based theory sees
resources and capabilities as
the principal source of
competitive advantage, it may
be seen as placing human
resources in a central position
to realize this 44
 Activity
• Identify the major principles to
SHRM.
• How do organizations transform
their employees to competitive
advantage

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 Major principles to SHRM
– integration of HR to strategy,
– consistency of HRM practices,
– devolvement of HRM to line management,
– high employee-commitment,
– high-quality staff and internal practices,
– management-employee relation, and
– people as a strategic resource.

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 Transforming employees to
competitive advantage
• Recognizing employees as strategic
asset
• Training and development
• Offering competitive salaries and
benefits
• Creating a supportive and inclusive
organizational culture 47
 Transforming employees to
competitive advantage…
• Leadership training and open
communication
• Foster a culture of open, honest
feedback.

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Chapter Six Ends

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