304HRM- Strategic Human

Resource Management
 Introduction to Strategic Human Resource
Management:
• Strategic Human Resource Management
(SHRM) is defined as alignment of strategic
business goals of the organization with human
resources, so as to foster innovation and
improve motivation, satisfaction, productivity,
and eventually overall performance. Strategic
HRM is a relatively new term, which
differentiates itself from traditional HRM which
was just merely an organizational function.
• Infosys Chairman Mr. Narayan Murthy has
emphasized on human capital as one of Infosys’
critical factors for growth. Thus, there has been a
strategic Human resource dimension added to the
organization in the form of ‘People managers’, whose
function is to look after the needs of employees. The
company aims to treats its employees as assets
rather than just as resources. Nurturing and
nourishing the resources ensures competitive
advantage for Infosys. Thus, a dedicated human
resource department including people managers in
every group serves as a SHRM practice which fulfills
the business objectives of the organization.
• Samson Enterprises through strategic HR
initiatives started recruiting people with good
communication skills along with technological
prowess, due to the increase in number of
client calls, so that client solutions could be
effectively dealt with by the team.
 Definition-
 “Strategic human resource management means formulating
and executing human resource policies and practices that
produce the employee competencies and behaviours that the
company needs to achieve its strategic aims.”- Gary Dessler

 “Strategic human resource management is an approach to

making decisions on the intentions and plans of the
organization concerning the employment relationship and the
organization’s recruitment, training, development,
performance management, and the organization’s strategies,
policies, and practices.” – Armstrong
 Components of Strategic Human Resource
Management
• This definition implies the following four components of SHRM:

1. It focuses on an organization’s human resources (people) as the

primary source of competitive advantage of the organization.
2. The activities highlight the HR programs, policies, and practices as
the means through which the people of the organization can be
deployed to gain competitive advantage.
3. The pattern and plan imply that there is a fit between HR strategy
and the organization’s business strategy (vertical fit) and between all
of the HR activities (horizontal fit).
4. The people, practices, and planned patterns are all purposeful, that
is, directed towards the achievement of the goals of the organization.
 Objectives of SHRM-
• 1. To focus the HR policies, programmes and practices as the means through which
the people can be deployed to gain better and competitive advantages;
• 2. To manage and maintain human capital resources, skill, knowledge, efficiency
and intelligence of the employees;
• 3. To find out the ways and means for effective and efficient utilisation of human
resources;
• 4. To emphasise that human resources treated as the primary source of
competitive advantages of the organisation;
• 5. To integrate the HR strategies with the Business strategies for the betterment of
organisation;
• 6. To make an appropriate direction for people, practices and performance
towards the achievements of the goals of the organisation;
• 7. To develop stable employee relations by way of effective resource utilisation,
optimizing remuneration, better productivity and better work culture; etc.
• 8. To recognise the needs and customised services of different market segments
and try to fulfil them properly;
• 9. To make an appropriate ‘cost optimisation’ with increase the efficiency of
resources; and
• 10. To make an appropriate and feasible plan for change environment.
Evolution of SHRM
 Traditional HRM versus SHRM
BASIS FOR COMPARISON HRM SHRM 

Human resource management (HRM) implies SHRM is a managerial function which implies
the governance of manpower of the framing of HR strategies in such a way to direct
Meaning
organization in a thorough and structured employees efforts towards the goals of the
manner. organization.

Nature  Reactive  Proactive 

Responsibility lies with   Staff specialist  Line manager

Approach   Fragmented   Integrated 

Scope  Concerned with employee relations  Concerned with internal and external relations 

Time horizon  Short term  Long term 

Basic factor   Capital and products  People and knowledge 
Change  Follows change  Initiates change
Accountability   Cost center  Investment center

Control  Stringent control over employees  It exhibits leniency. 

 Strategic Fit
• Strategic fit relates to the situation in which various resources
of organization (human, financial,
material, technology, knowledge) are aligned with strategic
goals and development objectives set by managers in the
organization during strategic management process.
• Strategic fit can be divided into various sub-fits e.g. financial
strategic fit, market strategic fit, technology strategic fit.
• By achieving high degree of strategic fit, managers can exploit
opportunities of the organization and reduce negative impact
of threats.
•  Strategic analysis and strategic planning helps to identify
optimal degree of strategic fit needed to achieve long-
term competitive advantage.
 Types of HR strategies
• General HR Strategies
High-performance management
High-commitment management
High-involvement management
• Specific HR Strategies
• Human capital management – obtaining, analysing and
reporting on data that inform the direction of value-adding
people management, strategic, investment and operational
decisions.
• Corporate social responsibility – a commitment to managing
the business ethically in order to make a positive impact on
society and the environment.
• Organization development – the planning and implementation
of programmes designed to enhance the effectiveness with
which an organization functions and responds to change.
• Engagement – the development and implementation of policies
designed to increase the level of employees’ engagement with
their work and the organization.
• Knowledge management – creating, acquiring, capturing, sharing
and using knowledge to enhance learning and performance. •
Resourcing – attracting and retaining high quality people.
• Talent management – how the organization ensures that it has the
talented people it needs to achieve success.
• Learning and development – providing an environment in which
employees are encouraged to learn and develop.
• Reward – defining what the organization wants to do in the longer
term to develop and implement reward policies, practices and
processes that will further the achievement of its business goals
and meet the needs of its stakeholders.
• Employee relations – defining the intentions of the organization
about what needs to be done and what needs to be changed in the
ways in which the organization manages its relationships with
employees and their trade unions.
• Employee well-being – meeting the needs of employees for a
healthy, safe and supportive work environment.
Linking HR strategies to business strategies
• The three aspects of HR fit are:
• 1. Vertical fit
This aspect of vertical fit concerns the coincidence between HR practices
and overall business strategy.
• 2. Horizontal fit
This relates to the extent to which HR activities are mutually consistent.
Consistency ensures that HR practices reinforce one another.
• 3. External fit
The third aspect concerns how well HR activities match the demands of the
external environment. Ensuring these aspects of fit requires HR practice
choices. The challenge is to develop internally consistent configurations of
HR practice choices that help to implement the firm’s strategy and enhance
its competitiveness.
 Four Steps to Align HR with the Business Strategy

• Understand the business strategy and current state challenges. Consider the

goals and expected outcomes for the organization. Is the organization pursuing a
growth strategy? Or, is it trying to turn around underperforming business lines?
• Identify how people contribute to organizational growth and success. Seek to
understand what you are asking your workforce to do in service of the goals.
What new or different skills, competencies, and behaviors are needed? What are
the best functions and positions needed to deliver on these expectations?
• Design and implement your HR talent strategy. Once you know where the
organization is headed and what it requires of its people to get there, HR must
determine the gaps between its current workforce and what is required to
accomplish the organization’s business goals. Define strategies needed to
acquire, train, develop, performance manage, and reward the very high-
performing talent that will carry your organization into the future.
• Measure your HR strategy. Whether you use an HR scorecard or other metrics,
these measures indicate if your HR talent strategy is successful or when a course
correction is necessary.