Strategic Human Resource Management

(SHRM)
 Strategic HRM
Strategic human resource management is the practice of
attracting, developing, rewarding, and retaining employees for
the benefit of both the employees as individuals and the
organization as a whole.

HR departments that practice strategic human resource

management do not work independently within a silo; they
interact with other departments within an organization in order
to understand their goals and then create strategies that align
with those objectives, as well as those of the organization.

As a result, the goals of a human resource department reflect

and support the goals of the rest of the organization.
 Strategic HRM
Strategic HRM is seen as a partner in organizational success, as
opposed to a necessity for legal compliance or compensation.

Strategic HRM utilizes the talent and opportunity within the

human resources department to make other departments
stronger and more effective.

Strategic human resource management can be defined as the

linking of human resources with strategic goals and objectives in
order to improve business performance and develop
organizational culture that foster innovation, flexibility and
competitive advantage. In an organisation SHRM means
accepting and involving the HR function as a strategic partner in
the formulation and implementation of the company's strategies
through HR activities such as recruiting, selecting, training and
rewarding personnel.
 Strategic HRM

Strategic HRM gives direction on how to build the foundation for

strategic advantage by creating an effective organizational
structure and design, culture, employee value proposition,
systems thinking, an appropriate communication strategy and
preparing an organization for a changing landscape, which
includes downturns and mergers & acquisitions.

Sustainability and corporate social responsibility come within the

ambit of this discipline, especially with reference to
organizational values and their expression in business decision
making.
 Strategic HRM

Strategic HRM emphasizes organizational codes of ethics,

managing the societal impact of business decisions, philanthropy
and the role of the human resource professional in improving
the quality of life of employees, their families and the
community at large.

Strategic human resource management includes typical human

resource components such as hiring, discipline, and payroll, and
also involves working with employees in a collaborative manner
to boost retention, improve the quality of the work experience,
and maximize the mutual benefit of employment for both the
employee and the employer.
 Strategic HRM
Strategic HRM, therefore, is concerned with the following:

Analyse the opportunities and threats existing in the external

environment.

Formulate strategies that will match the organisation’s

(internal) strengths and weaknesses with environmental
(external) threats and opportunities. In other words, make a
SWOT analysis of organisation.

Implement the strategies so formulated.

Evaluate and control activities to ensure that organisation’s

objectives are duly achieved.
 Nature of SHRM
Long-term Focus: As business strategies have a long-term
orientation, therefore, focus of SHRM is also long-term probably
more than one year.
Associated with Goal-Setting: SHRM is highly related with setting of
objectives, formulation of policy and allocation of resources and it is
carried out at all levels of top management.
Interrelated with Business Strategies: There is an interrelation
between business strategies and SHRM. E.g. it gives significant
inputs when business strategy is formulated, and human resource
strategies (like recruitment, staffing, training and performance
appraisal).
Fosters Corporate Excellence Skills: SHRM considers employees as
the strategic potential of the organization and on that basis makes
effort to differentiate the organization from its competitors present
in the markets. It also promotes learning of modern skills.
 Aims of SHRM
To develop Strategic Competencies: to make sure that the
company has needed standards and competent and highly
motivated employees for achieving sustainable competitive
advantage.
To give Sense of Direction: It guides the organization in the right
direction so that the business requirements of the organization
and the individual as well as the co- operative requirements of
its employees are met by creation and attainment of consistent
and reasonable HR policies and programmes.
To achieve Integration: Target of SHRM is to give a united
framework, so that the organized HR system works
synergistically in accordance with the organizational strategic
objectives.
To formulate Business Strategy: by focusing on the measures
through which the organization can use the power of its human
 Key Features of Strategic Human
Resource Management
There is an explicit linkage between HR policy and practices
and overall organizational strategic aims and the
organizational environment.

There is some organizing schema linking individual HR

interventions so that they are mutually supportive.

Much of the responsibility for the management of human

resources is devolved down the line.
 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 two 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.
 Approaches of the SHRM
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
orientation of the business then requires the effective
orientation of human resource to competency and performance
 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:

▪ Inducing the vision and mission of the change effort.

▪ High resistance due to lack of cooperation from the bottom line.
▪ Interdepartmental conflict.
▪ The commitment of the entire senior management team.
▪ Plans that integrate internal resource with external
requirements.
▪ Limited time, money and the resources.
▪ The statusquo approach of employees.
▪ Fear of incompetency of senior level managers to take up
strategic steps.
▪ Diverse work-force with competitive skill sets.
 Barriers of SHRM
Fear towards victimisation in the wake of failures.
Improper strategic assignments and leadership conflict
over authority.
Ramifications for power relations.
Vulnerability to legislative changes.
Resistance that comes through the legitimate labour
institutions.
Presence of an active labour union.
Rapid structural changes.
Economic and market pressures influenced the adoption of
strategic HRM.
More diverse, outward looking approach.
 Benefits of SHRM
▪ Identifying and analysing external opportunities and threats that
may be crucial to the company's success.

▪ Provides a clear business strategy and vision for the future.

▪ To supply competitive intelligence that may be useful in the

strategic planning process.

▪ To recruit, retain and motivate people.

▪ To develop and retain of highly competent people.

 Benefits of SHRM

▪ To ensure that people development issues are addressed

systematically.

▪ To supply information regarding the company's internal strengths

and weaknesses.

▪ To meet the expectations of the customers effectively.

▪ To ensure high productivity.

▪ To ensure business surplus thorough competency.

 5P Model of SHRM

The 5Ps model of strategic human resource

management (SHRM) is a new model in the area
of study. This model is proposed by Randal
Schuler.

This model melds five human resource activities

with strategic highlight just how significant, the
strategy activity link can be.
 5P Model of SHRM

The proposed model incorporates the 5Psof strategic

human resource management which stand for:

1. Philosophy of Human resources

2. Policies human resources
3. Programme of human resources
4. Practices of human resources
5. Processes of human resources
 5P Model of SHRM
1. Philosophy: Expressed in statements defining business values
and culture. It expresses how to treat and value people.

2. Policies: Expressed as shared values and guidelines. Policies

establish guidelines for action on people related business
issues and HR programs.
3. Programs: Articulated as human resource strategy. These
coordinate efforts to facilitate change to address major
people related business issues.
4. Practices: For leadership managerial and operational role
practices motivate needed role behaviours.
5. Processes: For the formulation and implementation of other
activities these define how activities are carried out.
 How SHRM differs from HRM
In the last two decades there has been an increasing
awareness that HR functions were like an island unto itself
with softer people-centred values far away from the hard
world of real business.

In order to justify its own existence HR functions had to be

seen as more intimately connected with the strategy and day
to day running of the business side of the enterprise. Many
writers in the late 1980s, started clamouring for a more
strategic approach to the management of people than the
standard practices of traditional management of people or
industrial relations models.
 How SHRM differs from HRM
Strategic human resource management focuses on human
resource programs with long- term objectives. Instead of
focusing on internal human resource issues, the focus is on
addressing and solving problems that effect people
management programs in the long run and often globally.
Therefore the primary goal of strategic human resources is to
increase employee productivity by focusing on business
obstacles that occur outside of human resources.

The primary actions of a strategic human resource manager

are to identify key HR areas where strategies can be
implemented in the long run to improve the overall
employee motivation and productivity. Communication
between HR and top management of the company is vital as
without active participation no cooperation is possible.
 How SHRM differs from HRM
In the last two decades there has been an increasing awareness
that HR functions were like an island unto itself with softer
people-centred values far away from the hard world of real
business.

In order to justify its own existence HR functions had to be seen as

more intimately connected with the strategy and day to day
running of the business side of the enterprise. Many writers in the
late 1980s, started clamouring for a more strategic approach to the
management of people than the standard practices of traditional
management of people or industrial relations models.
 How SHRM differs from HRM
Strategic human resource management focuses on human
resource programs with long- term objectives. Instead of focusing
on internal human resource issues, the focus is on addressing and
solving problems that effect people management programs in the
long run and often globally. Therefore the primary goal of strategic
human resources is to increase employee productivity by focusing
on business obstacles that occur outside of human resources.

The primary actions of a strategic human resource manager are to

identify key HR areas where strategies can be implemented in the
long run to improve the overall employee motivation and
productivity. Communication between HR and top management of
the company is vital as without active participation no cooperation
is possible.
 Importance of
SHRM
Helps firm in achieving cost-effective engagement of Labour.

Enables firm to meet changing needs.

Provides clear-cut goals, direction, and future focus.

Helps Organization in Planning and Executing Organizational

Changes.

Ensures Optimum Utilization of Organizational Resources.

Develops, Manages and Sustains Skills and Knowledge.

 Challenges of SHRM
▪ Absence of Long-term orientation

▪ Lack of Strategic Reasoning

▪ Lack of adequate support from top management

▪ Resistance from Labour Unions

▪ Fear of Failure

▪ Rigidity of HR Practices
 Overcoming Challenges of SHRM
i. Conduct a rigorous initial analysis

ii. Formulate Strategy

iii. Gain Support

iv. Assess barriers

v. Manage Change

vi. Project Management and Implementation

vii. Follow-up and Evaluate

Difference between Traditional HR and
Strategic HR