Strategic HRM (SHRM) and Business Performance


Prof. R.K.Gupta
B.E Mech (Hons), MBA, FIE, FIMA
Aravali Institute of Management
E-mail: /

Strategic HRM (SHRM) and Business Performance

To make profits, you need people who can perform. Period!

In most organizations until recently, the HR Department was a decorated time office or Personnel department.

The main responsibilities were:

Manage attendance and discipline.
Manage payroll every month or weekly as case may be.
Arrange namesake employee welfare programs
Comply with various labor laws including payment of Bonus Act
Recruit persons as per requirements as laid down by functional Boss or Big boss
Be ears of Boss and tip off management about gossip and rumors and any inappropriate actions by any employee (policing)
Keep records of employees update and go through rigmarole of yearly appraisals.
Organize internal or external training programs, which later on have became compulsory for compliance with ISO 9000 format.

The fact remains that HR personnel have failed to answer and find solution of various problems of organizations like:-

- Motivation of workers and Managers
- Retention of outstanding employees
- Check employee attrition like in BPO industry and many more
- Align employee functions and objectives with that of strategic objectives set by organization (which itself are not clear to organizations themselves)
- Draw effective skill up-gradation and training programs for giving competitive edge to employees and thus to the organization despite all their talks of competency mapping and HR card, new jargons developed recently.

The list can be longer but it would suffice to mention only above few points.

In fact HR was never taken seriously by owners and senior executives themselves . Basically an important function of all Line supervisors, this was hived off to HR department to shift the blame for failures and to get rid of complex employee development and appeasement task. The gun could easily be fired from shoulders of HR department. When someone is to be got rid of, consultants( if beyond scope of HR department) are appointed to study restructuring the organization or part of its activity in face of emerging challenges (read challenge from inconvenient or  undesirable employee to boss or organization).

Despite writing of voluminous literature on various aspects of HRM, the fact remains that HRD has yet to prove its value in most organizations even as most of routine tasks are handled now by system managers on ready made software or are outsourced to smaller firms at cost effective rates.

Desperate and frantic efforts of HR specialists to justify existence of department, their huge pay packets and continuation of HR department as a separate and distinct discipline, as the globalizing world takes chaotic turn with competitive conundrum, have resulted into development of several HRM processes and models like competency mapping and HR score cards and many more. The unproven academicians churn out volumes of garbage as research work in a bid to weather 'Publish or perish' dictates of entrenched tenured professors.

Ken Hammonds' article, "Why We Hate HR," in Fast Company, shocked the HR community. Hammonds quoted a college professor stating, "The best and the brightest don't go into HR." Pretty harsh words, especially when the HR professionals are trying to reinvent HR.

If we list the following goals for HR people:

How to Make Values Live in Your Organization
Build a Strategic Framework: Mission Statement, Vision, Values...
Help in goal setting. Look Beyond Traditional SMART Goals
Create Leadership Vision and culture of innovation
Support Company's Brand
View employees as internal customers and convince them to believe in organization and its products and claims
Manage a cross cultural work force and manage the young overambitious guys who are desperate to blow off the hook.
Manage continuous competitiveness in changing business environment and technology and product delivery systems
On top of it keep HR cost to minimum possible as it sure is burgeoning as skilled and committed (repeat committed) employee are becoming rare commodity. The wages and dissatisfaction are rising in strange consonance
Create employee loyalty programs.

All this has to be done in consultative mode with senior functionaries and the top management

Roughly that can be called Strategic Human Resource management and its challenges

We have all heard that HR needs to be more strategic to gain a seat at the "proverbial" table, and that we need to be more business-oriented. However, unless the whole HR community starts investing in educating, certifying, and mentoring junior HR professionals, we will never see the industry gain the respect it deserves

What does organization need from Human Resources professionals in the twenty-first century? They need to:

  • clearly demonstrate their value-added contribution to the success of the overall strategic goals of the organization;
  • provide measurements that show the success of the initiatives and processes you provide as an HR service;
  • recognize and treat all the members of your organization as customers; and
  • Change the perception of these customers about the role of the HR professional.

Many people in organizations still relegate the HR professional to a traditional policing, systematizing, and administrative role.

People are the real differentiators in modern business environment of cut throat competition and fast changing technology product deliveries. So what are the implications for HRM function? Go strategic.

To succeed, HR must be a business driven function with a thorough understanding of the organization's big picture. It must be viewed as a strategic consulting partner providing innovative solutions and influencing key decisions and policies.

Some of the HR surveys show that many of today's younger workers exhibit persistence and older workers are adopting this newfound attitude. They believe their desired changes are good for everyone--company and employees. If they don't win change immediately, they regroup, rethink their strategy, and try again. They believe in speaking the unspeakable, in being pragmatic, not cynical. They want to be treated as customers, not commodities. Many senior managers complain about the arrogance. Today's workers view assertiveness as their right. They prefer to persist rather than quit because they know it doesn't get better elsewhere.

By understanding today's workers, HR professionals can help companies find ways to balance employees' increasing work and family challenges so they are satisfying and profitable to both employee and employer.

Human resource systems and processes are expected to enhance the effectiveness of organizational learning process and develop leadership pipeline.

Sharing the secrets

My long experience in corporate sector in India and in academics management reveals startling issues to be addressed by HR function:

      1. Excellent communication, both horizontal and vertical is essential for involving employees at various levels in pursuing both long term and short term goals

      2. Organizations in India have been traditionally lacking solid values and ethical practices that support the propagated policies and value system by top management, thus making employees cynical

      3. Job insecurity and negative punitive management style in most of firms

      4. Inability to create dramatic effect and sustained excitement in organization

      5. Failure to develop a visible work culture and organization culture

      6. Political rather than merit and loyalty based appraisals and rewards (systems?). Most of these are ad-hoc and to retain some employees temporarily.

      7. Superficial intentions for training and develop employees viewing it as financial cost, time waste and fear of employee leaving thereafter.

      8. Loosening of process and quality standards after initial success is serious issue in most organizations, which are many times intentional, particularly true with Indian entrepreneurs.

      9. Strange but true that even in 1000 crore organizations the delegation is partial, lacking or superficial thus .limiting innovative capability of organization.

      10. Treating employees as commodity even now.

      11. Trying to have same policies across the multi ethnic and multi cultural organization in different location, especially transnational, is definitely fatal.

      12. Cohesive training and development program giving adequate exposure to employees about, market conditions, consumer preferences and competition evolving globally.

      13. Poor ability to absorb quality models and new technology processes and plant & machinery.

      14. Lack of leadership and motivation by functional managers lacking leadership qualities.

      15. In Asian system like India, seniority matters a lot as cultural subset and should be given due respect and recognition.

      16. Installing MIS and ERP and rule books without turning organization into bureaucratic monolith is major challenge for large organizations. Such organization can't operate as learning organizations and able to adapt quickly to environment changes and challenges as well as absorption of new technology, products and processes.

      17. Cost cutting in Personnel cost for super profits or profiteering ( A typical Indian attitude).

I have been reasonably successful in diverse work settings by employing aggressive policies of HR management as senior functionary by up gradation of technology, leading upfront, creating excitement and dramatizing work environment and utilizing resources better. Delegation, trust and participation with involvement were major plank in these situations. It is strange but true that major resistance and lack of support came from Owner/CEOs rather than from employees. Lack of stimulating environment with freedom to work and experiment are main causes of lower productivity, high attrition rate, lack of innovation.

Research evidence also support that there are four factors that affect the degree to which HRM can improve business performance –the ultimate purpose of any model.

  • The organizational context
  • The views of top management
  • The competence of the HR leader and the team
  • The attitude and behavior of senior and middle level line managers                                                     
  • One method of defining HR strategic policy and practice areas is to consider various strategic models:

    High-performance model (Stevens 1998)

    High-commitment (Walton 1985 )

    High-involvement (Pil and Macduffie 1999)

    Let us have a look at HRM good practices elements suggested by US department of labor (1993) {Michael Armstrong and Angela Baron: Handbook of strategic HRM}

    Careful and extensive systems for recruitment selection and training (RST);Formal system for sharing information with employees; Clear job design; High level participation processes ; Monitoring of attitudes ; Performance appraisals(*self appraisal system should be followed for all executive positions in my view); Properly functioning grievance procedures (*with both procedural and technical justice visible); promotion and compensation schemes that provide for the recognition and reward of high- performing employees.

    This point should not be lost while discussing Strategic HRM that every employee has a right and looks forward to both horizontal and vertical growth with room for experimenting with ideas and testing entrepreneurial spirit within and organization have to continuously adapt to this requirement by changing and expanding. No one likes to work with stagnant organization or organization without sharing growth with employees-Promotions, participations and financial rewards.

    The changing profile of New Age young workers has to be built in HR policies like flexibility of work time, freedom for experimenting, quick growth and sense of identity with projects of company.

    It is also seen that Top management/owners in Indian companies still have commodity approach underpaying, disallowing delegation, curbing enterprise and failing to communicate organizational goals. Such organizations have little chances of growth or survival for long in new environment. Here role of HR leadership is most crucial to transform the organizations into innovative, learning and flexible organization where employees find it exciting to work with lot of room with all round positive environment within the organization.

    Strategic Human Resource management despite all sorts of definitions available in literature is simply: Sourcing and making best use of human assets towards achieving business goals of organization on long term basis. It is thus a planned & proactive process of partnership with top management to achieve desired long term organizational growth and direction while satisfying the individual objectives and growth of best employees; A tall order indeed.

About Author and acknowledgments: The references and text taken for fair use has been acknowledged at respective places. This article is attempt to document various findings in HR literature and besides it is based on practical experience of author as senior manager in Indian corporate sector for over 20 years, mostly with growing organizations. The author, Presently a Business Consultant and Professor of Management, has worked in several Indian multi-unit multi-location well managed cash rich industrial houses across various sectors like engineering, special steels, textiles, chemicals and food processing and exceeded previous records almost everywhere.

Prof. R.K.Gupta
B.E Mech (Hons), MBA, FIE, FIMA
Aravali Institute of Management
E-mail: /

Source: E-mail October 4, 2007


Back to Articles 1-99 / Back to Articles 100-199 / Back to Articles 200-299 / Back to Articles 300-399
Back to Articles 400-499 / Back to Articles 500-599 / Back to Articles 600 Onward
Faculty Column Main Page