SHRM: A New Way of Managing

Key elements of SHRM thinking

The internal processes of organizational change are caused or necessitated by processes of external environment change. Under these environmental pressures management must develop new and appropriate strategies to defend or advance corporate interests. So environmental challenge requires strategic response. This strategic response in turn requires organizational response. SHRM is represented as developing corporate capability to deliver new organizational strategies.

Key elements of SHRM thinking

However, the argument that environmental cues require strategic responses and that senior managers are responsible for identifying these cues and developing the appropriate responses overlooks two important issues: First, the definition of environmental cues and developments as strategic issues is a matter of judgment. Secondly the SHRM approach argues that managers, recognizing external threat and opportunities, design programmes of organizational change in response to these perceived needs. Finally, the SHRM approach assumes that organizational change is driven by managers perceptive and informed understanding of the need for, and the principles of, organizational change.

Strategic responses and the links with environmental changes

Environmental & competitive pressures produce three types of strategic challenges
Demand risk : reduction in the market/or an increase in levels of competition. This brings the risk of sharply fluctuating demand or demand collapse. It leads to a need for flexibility and responsiveness and improved quality. Innovation risk: the failure to match competitors technological innovations. To counter this organizations need to retrieve or develop capacity to innovate. Risk of inefficiency: inability to match competitors costs. This leads to drive to cut costs.

Each of these environmental challenges, is argued, is met by an organizational response.

SHRM Responses
In the early days of SHRM management efforts centered on increasing flexibility; they have recently moved to increasing work output through reengineering and downsizing. Types of flexibility:
Numerical flexibility: adjust the number of employees in response to varying demand Functional flexibility: ability to use the skills of workforce in varying ways in response to demand Financial flexibility: adjusting wages to demand and to performance

Human Resource Management

HRM refer to the policies, procedures and processes involved in the management of people in work organizations. Sission(1990) suggests that there are four main features associated with HRM: A stress on the integration of personnel policies both with one another and with business planning from generally; The locus of responsibility for personnel management no longer resides with specialist managers, but is now assumed by senior line management; The focus shifts from management-trade union relation to managementemployee relation, from collectivism to individualism ; There is a stress on commitment and the exercise of initiative, with managers now donning the role of enabler. HRM is viewed as strategic; it involves all managerial personnel; it regards people as the most important single asset of the organisation; it is proactive in its relationship with people; it seeks to enhance company performance, employee needs & societal well-being.

New assumptions about the management of people which underpin the commitment based HRM System: Organisations are open systems with effectiveness defined as being successful in achieving a fit between its various components and between the system & its environment. There is change of emphasis towards linking HRM with strategic planning and developing a culture that supports this and away from piecemeal interventions in response to specific problems. People are capable of growth in terms of skills, values and commitment if & when the work environment encourages this. People therefore are social capital rather than variable costs. There is a long-run coincidence of interests between all of the various stakeholders of the organization. This requires a shift from a climate in which self-interest dominates. Power equalization is a a key factor in encouraging openness & collaboration among stakeholders. This is in contrast with the old assumption that there must be managerial control to enhance power efficiency.

Open communication builds trust & commitment. Instead of adversarial relationships there is encouragement of mutuality of interest between employer & employed. Employees will be motivated and the organization more effective if they work towards organizational goals that they accept as legitimate. People who participate in defining problems and solutions will become committed to the new directions that result from the process of participation. This in contrast to hierarchical control at the top.

Strategic Human Resource Management

Human Resource strategy refers to as a short term focus on the business needs& defined it as a set of processes and activities jointly shared by human resources and line managers to solve people related problems. Guests(1989) suggested that SHRM is concerned with ensuring that human resource management is fully integrated into strategic planning; that HRM policies cohere both across policy areas and across hierarchies and that HRM practices are accepted & used by line managers as part of their everyday work. Schuler stated that all the activities affecting the behavior of individuals in their efforts to formulate and implement the strategic needs of the business. In other words, SHRM is the macro-organizational approach to viewing the role & function of HRM in larger organization. Thus, SHRM can be defined as the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.

These definitions indicate:

First, vertically, it entails the linking of human resource practices with the strategic management process of the organization. Second, horizontally, it emphasizes the co-ordination or congruence among various human resource practices through a pattern of planned action.
Firm Strategy
Institutional/Political Forces

Resource Dependence, Institutional Resource Based View of the Firm HRM Practices

Behavioral Approach

HR Capital Pool

HR Behavior

Firm-Level Outcomes Performance, Satisfaction

A CONCEPTUAL MODEL OF THEORETICAL FRAMEWORK FOR STUDYING SHRM

What is SHRM?
Sisson(1989) proposes four features associated with SHRM: A stress on the integration of personal policies both with one another and with business planning more generally; The locus of responsibility for personal managers no longer resides with specialist managers, but is now assumed by senior line management The focus shifts from management-trade union relations to management employee relations, from collectivism to individualism

What is SHRM?
Hendry and Pettigrew (1986) argue that the strategic aspects of SHRM consists of four elements: The use of planning A coherent approach to the design and management of personnel systems based on an employment policy and manpower strategy, and often underpinned by philosophy Matching HRM activities and policies to some explicit strategy Seeing the people of the organization as a strategic resource for achieving competitive advantage

What is SHRM?
According to Guest, SHRM can be defined as Integration of relevant employee activities into general organizational strategies and policies; Fluid and adoptive organizational structure High quality staff and internal practices to achieve high quality products Optimal employee commitment to enterprise goals and practices.

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Potential relationships between organisational strategy and HR strategy: Separation

Org. Str.

HR Str.

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Potential relationships between organisational strategy and HR strategy: Fit

Org. Str.

HR Str.

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Potential relationships between organisational strategy and HR strategy: Dialogue

Org. Str.

HR Str.

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Potential relationships between organisational strategy and HR strategy: Holistic

Org. Str.

HR Str.

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Potential relationships between organisational strategy and HR strategy: HR driven

Org. Str.

HR Str.

STRATEGIC HUMAN RESOURCE MANAGEMENT

Environmental factors

Environmental Scanning

Strategic Plan

Internal Capability Analysis of Human Dimensions Implementation Needs Capabilities in Structure System Processes Statement of Philosophy Definition of Core Effectiveness Criteria Design Of Human Resources Activities Training & Rewards development

Selection

Performance appraisal

Work Environment

Develop Human Resource strategy Stable Environment Dynamic Environment