Strategic Human Resource Management (SHRM): An Over View


By

Prof. Dileep Kumar M.
Ex-Professor
Symbiosis (SCMHRD, SCDL), IIIT, SCMLD, SBS
Pune
 


Introduction

Liberalization and indust6rialisation has paved an increasing pressure on organizations in India to change from indigenous, costly, sub-optimal levels of technology to performance based, competitive and higher technology provisions. The response to liberalization has created opportunities for technology upgrading and sophistication, resource mobilization from new sources, highly competitive input/output market, high growth and buoyant environment and HRM issues associated with strategic initiatives of diversification, mergers and acquisitions, restructuring, joint ventures, strategic alliances and for overall internationalization of the economy (Som, 2002). change from a regulated environment to a free market environment has direct implications for SHRM practices in India (Krishna and Monappa, 1994, Rao, 1999) and HRM specialists and the HRM departments are under severe pressure to bring about large-scale professionalized changes in their organizations in order to cope with the challenges brought about by economic liberalization (Rao et al., 2001; Som, 2002). Strategic Human Resource Management (SHRM) has received a great deal of attention in recent years, most notably in the fields of Human Resource Management (HRM), Organizational Behavior, and Industrial Relations. An area that demands greater understanding is that of Strategic Human Resource Management (SHRM). SHRM is concerned with top managements attention and approach to HRM as a critical strategic dimension affecting firm performance; which is the objective of this article.   Strategic human resource management (SHRM) enhances productivity and the effectiveness of organizations. Their implementation in organizations has proven that when organizations employ such personnel practices (mentioned in this paper) they are more able to achieve their goals and objectives. This article first describes what the word Strategy means and shifts its focus on HRM at a strategic level highlighting its importance in the present day organizations. The paper then highlights what best practices (as a result of strategic planning) the organizations can adopt that would ensure them of success.

What are Strategies?

Strategy is a multi-dimensional concept going well beyond traditional competitive strategy concepts. Strategies are broad statements that set a direction. Strategies are a specific, measurable, obtainable set of plans carefully developed with involvement by an institution's stakeholders. These action statements are linked to an individual or individuals who are accountable and empowered to achieve the stated result in a specific desired timeframe.  They are patterns of action, decisions, and policies that guide a group toward a vision or goals.

Strategic human resource management (SHRM)

Strategic human resource management is a complex process which is constantly evolving and being studied and discussed by academics and commentators. Strategic Human Resource Management (SHRM) is an area that continues to evoke a lot of debate as to what it actually embraces. Definitions range from 'a human resource system that is tailored to the demands of the business strategy' (Miles and Snow 1984) to 'the pattern of planned human resource activities intended to enable an organization to achieve its goals' (Wright and McMahan 1992).

Strategic human resource management (SHRM) is a concept that integrates traditional human resource management activities within a firm's overall strategic planning and implementation.  SHRM integrates human resource considerations with other physical, financial, and technological resources in the setting of goals and solving complex organizational problems (Legnick-Hall & Legnick-Hall, 1988) SHRM also emphasizes the implementation of a set of policies and practices that will build employee pool of skills, knowledge, and abilities (Jackon and Schulerm 1995) that are relevant to organizational goals.  Thus a larger variety and more complete set of solutions for solving organizational problems are provided and the likelihood that business goals of the organization will be attained is increased (Mechelin, 1996).

Strategic Human Resource Management (SHRM) is an area that continues to evoke a lot of debate as to what it actually embraces. Definitions range from 'a human resource system that is tailored to the demands of the business strategy' (Miles and Snow 1984) to 'the pattern of planned human resource activities intended to enable an organization to achieve its goals' (Wright and McMahan 1992). Although the difference between these two seems subtle, the implications of the difference are considerable. Where in the first definition human resource management is a 'reactive' management field in which human resource management becomes a tool to implement strategy, in the latter definition it has a proactive function in which human resource activities actually create and shape the business strategy (Sanz-Valle et al. 1999).

Strategic HRM can be regarded as a general approach to the strategic management of human resources in accordance with the intentions of the organisation on the future direction it wants to take. It is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need. It has been defined as:

All those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business. (SCHULER, R.S., 1992)

The pattern of planned human resource deployments and activities intended to enable the forms to achieve its goals. (WRIGHT, P.M. and MCMAHAN, G.C. (1992)

Approaches of the SHRM,

    • attempts to link Human Resource activities with competency based performance measures
    • attempts  to link Human Resource activities with business surpluses or profit

These to approaches indicate two factors in an organisational setting. The first one is the human factor, their performance and competency and the later is the business surplus. An approach of people concern is based on the belief that human resources are uniquely important in sustained business success. An organization gains competitive advantage by using its people effectively, drawing on their expertise and ingenuity to meet clearly defined objectives. Integration of the business surplus to the human competency and performance required adequate strategies. Here the role of strategy comes into picture. The way in which people are managed, motivated and deployed, and the availability of skills and knowledge will all shape the business strategy. The strategic orinetation of the business then requires the effective orinetation of human resource to competency and performance excellance.

Benefits of SHRM

1. Identifying and analyzing external opportunities and threats that may be crucial to the company's success.
2. Provides a clear business strategy and vision for the future.
3. To supply competitive intelligence that may be useful in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are addressed systematically.
7. To supply information regarding the company's internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough comopetency

Barriers of SHRM

Barriers to successful SHRM implementation are complex. The main reason is a lack of growth strategy or failure to implement one. Other major barriers are summarized as follows:

1. Inducing the vision and mission of the change effort.
2. High resistance due to lack of cooperation from the bottom line.
3. Interdepartmental conflict.
4. The commitment of the entire senior management team.
5. Plans that integrate internal resource with external requirements.
6. Limited time, money and the resources.
7. The statusquo approach of employees.
8. Fear of incomopetency of senior level managers to take up strategic steps.
9. Diverse work-force with competitive skill sets.
10. Fear towards victimisation in the wake of failtures.
11. Improper strategic assignments and leadership conflict over authority.
12. Ramifications for power relations.
13. Vulnerability to legislative changes.
14. Resistance that comes through the legitimate labour institutions.
15. Presence of an active labour union.
16. Rapid structural changes.
17. Economic and market pressures influenced the adoption of strategic HRM.
18. More diverse, outward looking approach.

HR Practitioners Role

The HR managers have keen role in the effective planning and implementation of the policies and decisions that in tune with the business changes. They should act as strategic partners and be proactive in their role than mere reactive, passive spectators. The HT managers should understand how far their decisions contribute to business surplus incorporating human competency and performance to the organisation. Strategic HR managers need a change in their outlook from seeing themselves as relationship managers to strategic resource managers. Kossek (1987, 1989) argues that major HRM innovations occur when senior management takes the lead and adoption of innovative SHRM practices is dependent on the nature of relationship of the HR Department with the CEO and the line managers. Legge (1978) commenting on the actions of the personnel practitioner in the innovation process suggests that adoption of an innovation by an organization depends largely on HR practitioners' credibility with information and resource providers. HR Department and HR managers in these innovative organizations play a strategic role (Ulrich, 1997) linking the HR strategy with the business strategy of the organization. A crucial aspect concerning SHRM is the concepts of fit and flexibility. The degree of fit determines the human resource system's integration with organization strategy.  It is the role of HR Managers to ensure this fit in between Human Resource System with the Organization Strategy.

Conclusion

As global business competition shifts from efficiency to innovation and from enlargement of scale to creation of value, management needs to be oriented towards the strategic use of human resources.  Strategic human resources management practices enhance employee productivity and the ability of agencies to achieve their mission. Integrating the use of personnel practices into the strategic planning process enables an organization to better achieve its goals and objectives. Combining human resource practices, all with a focus on the achievement of organizational goals and objectives, can have a substantial affect on the ultimate success of the organization. To manage future operations effectively, it is essential that companies produce "business leaders" and "innovators" through SHRM Approach.

References

1. Armstrong, M and Baron, a. (2002) strategic hrm: the key to improved business performance. developing practice. london: chartered institute of personnel and development.

2. Schuler, R.S. (1992) strategic human resource management: linking people with the needs of the business. organizational dynamics . vol 21, no 1. pp18-32.

3. Wright, P.M. and Mcmahan, G.C. (1992) theoretical perspectives for shrm. journal of management. march. pp215-247.

4. Boxall, P. and Purcell, j. (2003) strategy and human resource management. basingstoke: palgrave macmillan.

5. Purcell, J., Kinnie, N. and Hutchinson, S. (2003) understanding the people and performance link: unlocking the black box . london: chartered institute of personnel and development.

6. K. Aswathappa, Human Resource & Personal Management (3rd edition)TMH (2002), 39-50.

7. Biswajeet Pattanayak, Human Resource Management; PHI(2nd edition),309-326. 

8. USA Today, April, 1997, page B1, 163(online).

Websites:

Internet guide to Human Resource Management

1. http://guest.btinternet.com/~alan.price/hrm/site.htm
2. http://www.shrm.org
3. http://www.chforum.org
4. http://home.att.net/~nickols/articles.htm
5. http://en.wikipedia.org/wiki/Porter_generic_strategies
6. http://www.humanlinks.com
7. http://www.quickmba.com
 


Prof. Dileep Kumar M.
Ex-Professor
Symbiosis (SCMHRD, SCDL), IIIT, SCMLD, SBS
Pune
 

Source: E-mail April 14, 2006

    

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