Get Strategic Human Resource Management Really Strategic: Strategic

HRM in Practice
Jana Fratriov
Comenius University in Bratislava, Slovak Republic
JnRudy
Comenius University in Bratislava, Slovak Republic
Abstract
There are human resource managers who do not have strategic human resource
management in their companies, and they are aware of that. There are human resource
managers who do not have strategic human resource management in their companies but
believe that they have it. There are human resource managers who do have strategic
human resource management in their companies, and they are aware of that. But there
are no human resource managers who would like to have strategic human resource
management in their organizations, and however are not aware of that. This article is
based on the authors' empirical research in twolarge companies. The primary objective of
the article is to discuss strategic human resource management implications in practice.
Introduction
The word strategic is an adjective that is used very frequently today especially in the
theory and practice of business management. Unfortunately its meaning is not as clear as
we could reasonably expect. For example, "strategic partner" would refer to a partner who
is important. "Strategic resource" would have a similar meaning but "strategic investor"
usually refers to the solvent investor who is interested in investment, and then "strategic
planning" refers more or less to long-term planning. Of course, there is strategic
management that refers to (what? Five stages of the process. In addition to all this there
are strategic human resource management, strategic marketing, strategic finance, and
similar expressions that refer to specific areas of business management. It is clear that this
adjective has several meanings, such as, important, capable, long-term, and probably
several others. A pertinent question to be asked, therefore is, which of these many
meanings are related to human resource management systems and its role in the
organization? It looks like the adjective "strategic" has brought a "new jungle" to the field of
management. Because of that a short excursion to strategy, strategic planning, and
strategic management becomes necessary.
Strategy, Strategic Planning, and Strategic Management
What is strategy? There is a wealth of literature dealing with the term strategy. There are
seemingly innumerous strategy definitions as well. The term has been in frequent use
since the early 1960s when strategic planning became very popular. Later strategic
management, and in the 1980s, strategic human resource management came into use,
both in theory and in the practice of business management. As our perspective is business
management we should avoid suchfolklore" definitions of strategy as ...the art of war...,
movement of troops, and similar because business strategy has nothing to do with the
armed forces. They have their own strategies. A widely known definition of strategy is...the
companys long-term plan for how it will balance its internal strengths and weaknesses
with its external opportunities and threats to maintain acompetitive advantage" (Dessler,
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2003). For better understanding of the definition lets take a practical example: You are
located somewhere in Central Europe and have a good reason (the objective) to get to
Jerusalem. There are at least two ways to get there. One way is to move northward, the
other to move southward. Both ways lead to Jerusalem but one of them is much longer.
You choose the most appropriate way. It is your strategy how to get there. Strategy is the
way, it is achoice. Because we are in the business area, strategy is the way in which the
organization will survive in its competitive environment. It is the organizations
sustainability plan.
Strategic planning in its very beginnings in the early 1960s involved managerial decisionmaking about the long-term goals of an organization. Strategic planning is aprocess that
results in a strategic plan the organizations long-term objective. Strategic plans have
a strong external orientation because they deal with the long-term survival, value, and
growth of the organization. Senior executives are responsible for the development and
execution of the strategic plan that should include both effectiveness in terms of
appropriate output, and efficiency in terms of a high ratio of outputs to inputs. Strategic
planning emphasized a top-to-bottom approach to goal setting. This means that senior
managers and specialized strategic planning units have got legitimate power to develop
objectives for the organization as awhole, while lower-level managers and organizational
units have no influence over the setting of goals or objectives but are merely recipients of
tasks as delegated. The diversification of individual businesses, which formerly competed
only in a single industry resulted in the broadening of business competition. Companies
were now forced to compete in several industries at the same time. Strategic decision
makers now required more specific information about different industries. In order to get
that kind of information a specific approach was developed under the name the Growth/
Share matrix. This approach is in use till today under the name BCG (Boston Consulting
Group) matrix. Based on four combinations of business growth (high or low) and relative
competitive position (strong or weak) this matrix consists of four quadrants variously
described asStars, Cash Cows, Question Marks, and Dogs. The BCG matrix prescribed
specific actions for businesses in each of these quadrants.
As a result of increasing complexity of businesses and globalization trends in the mid
1980s, a new term was introduced into the strategic planning process - strategic
management. The idea was to involve managers from all parts of the organization in the
formulation of strategic goals and strategy implementation. From this point of view,
strategic management is an integration of strategic planning and management into one
process. Classical scientific management is a process of planning, organizing, leading,
and controlling. Strategic management is a process that includes the following five
components:
a.
b.
c.
d.
e.

Internal assessment
Environmental analysis
Strategy formulation
Strategy implementation, and
Strategic control.

If strategy is the way in which the organization will survive in its competitive environment, it
is clear then that both the internal assessment and external environmental analysis are
necessary. The key role in the process of strategic management is played by SWOT
Analysis. The acronym "SWOT" stands for strengths, weaknesses, opportunities, and
threats. The first two mentioned are related to the analysis of the internal environment, and
the last two deal with external environment analysis. Beardwell, J. and Claydon, T. (2010)
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identified four approaches to strategy-making. These are the classical or rational-planning

approach, the evolutionary approach, the processual approach, and finally the systemic
approach.
The fourth component of the strategic management process the strategy implementation
- are the arrangements necessary to get strategy into practice. The process ends with
strategic control which in reality means the feed-back information for decision-makers.
Now, after a this short tour of strategy and strategic management we shall focus our
attention on the issue of strategic human resource management.
Strategic Human Resource Management
Strategic human resource (management) is a relatively new term both in theory and
practice. First introduced in the mid 1980s it represents the present stage of human
resource management evolution. The previous stages of human resource management
evolution include Purchasing - focused on hiring and firing at best costs, Labor Relations
negotiating with unions representing company employees, negotiating talent for least
costs, Personnel focused on administering employee issues such as benefits,
compensation, and employee relations, tending towards astrong emphasis on control, and
Human Resource all represent primarily aname change with little substantive difference,
regardless of the implication of a move toward being more strategic. According to
Christensen, R. (2006), the strategic human resource role is managing organization and
employee performance. Dessler (2003) believes that strategic human resource
management is the linking of human resource management with strategic goals and
objectives in order to improve business performance and develop organizational cultures
that foster innovation and flexibility. In literature there are several more approaches to
strategic human resource management. For example, Beardwell (2010) describes best fit
(or contingency) school,
the resource-based view of strategic human resource
management, and best practice approach. Under these approaches there are several
models of strategic human resource management. For example, the Contingency
Approach includes the lifecycle model, the competitive advantage model, and the
configurational model. The Best Practice approach describes the high commitment
models. Because of the objective of this article to make strategic human resource
management really strategic a detailed description of these approaches and models is
not necessary The variety of theoretical approaches to strategic human resource
management spreads a kind of confusion over the difference between human resource
management and strategic human resource management. As aresult of this, the term "old
wine in new bottles" becomes popular among managers.
Why is Strategic Human Resource Management Necessary?
Strategic human resource management comprises present activities to get future results.
Strategic human resource management is necessary today because the company is
interested in future results. Strategic management is about differentiation and competitive
advantage. There are several ways to get competitive advantage, for example, technology,
price, quality of products, and other similar dimensions. Most of these dimensions are
quite easily immitable, which means that they are not long-lasting competitive advantages.
An exception could be competitive advantage through people the human resource.
Managers should be aware of the fact that competitive advantage through people is
a process. It is not a simple result of hiring the appropriate people. It is a process of
employee development. Why is this competitive advantage difficult to immitate? The
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answer is simple because the most important attribute of human resource as a

competitive advantage is flexibility. It means the ability and readiness of people to meet not
only today's but also tomorrow's high performance expectations. Not every human
resource is a company's competitive advantage. Competitive advantage through people is
a result of the human resource development process. Competitive advantage through
people could be one of the results or an attribute of strategic human resource
management. What are the others? The former understanding of strategic management
was the involvement of all managers in formulation and accomplishment of the company's
long-term objectives. Human resource managers are not, or are not supposed to be an
exception. Because of this, human resource specialists should be involved in all stages of
the strategic management process, starting with internal environment analysis and ending
with strategic control.
Strategic Human Resource Management and Competitive Advantage
A wealth of literature describes strategic human resource management from different
points of view. For example, some authors believe that human resource activities are not,
and never will be strategic because they are strictly operational (Dessler, 2003). (A second
group of authors believes that the strategic role of human resource is to fit the companys
strategy. Finally, there are authors who describe the strategic role of human resource in
terms like "strategic partner of top management", vertical integration of activities, etc. Of
course there always will be advocates of each of these views but there are two issues that
we should take into account:

Strategic management is about the companys competitiveness, and

competitiveness directly depends on the companys employees.
Beside finance, marketing and operations, human resource management is an
integral part or sub-system of the company management system.

If competitiveness depends on the company employees, and competitiveness at the same

time is the key strategic issue - can human resource then be a strictly operational issue?
Probably not. The four sub-systems of the company management system are not
independent entities. In concert with each other they represent a kind of "umbrella" over
the company. If there is strategic management in the company - there should be strategic
management of each of its integral parts. Based on these arguments it could be said that
the strategic human resource management role in the company is twofold:

To be an equal partner in the process of strategic management.

To build up competitive advantage through people.

To become an equal partner in the process of strategic management means to take part in
all stages of the process of strategic management. At the same time it does not mean just
to get an invitation and to be accepted at the business table. There is ageneral agreement
both in theory and practice that human resource activities are not the exclusive
responsibility of human resource specialists and managers. Line managers should be
involved in human resource activities as well. For example, compensation system design
is atypical human resource specialist's responsibility. But compensation of each individual
worker according to a compensation system is aline managers responsibility. In order to
be an equal partner in the strategic management process we should also look for greater
involvement of human resource specialists in the company business activities. Human
resource managers and specialists should understand business, the value the company
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provides for customers, technology, industry, competitors, and other similar players. That is
what makes for an equal partner in the process of strategic management. Human resource
is invited to the table not because they are experts in strategy formulation or because they
are simply experts in human resource. They are invited because they are experts in
human resource who understand in addition the business the company is involved in.
Knowledge of the business and human resource expertise is the expected contribution of
human resource specialists in their role of company strategic decision-makers.
Building the companys competitive advantage through people is the second of the twofold
role of strategic human resource management. If the classical role of personnel
management was to get the appropriate number of people, the strategic human resource
management role is the development of people to secure competitive advantage through
people. A competitive advantage is an advantage over competitors gained by offering
customers greater value. It is the ability of the company to offer such added value to its
product that its competitors cannot. It is a set of capabilities or resources giving an
organization an advantage that leads to higher company performance compared to its
competitors. It is a question of differentiation from competitors. There are several ways to
get competitive advantage, for example, price, greater benefits and services for
customers, technology, quality of the products, but also the companys human resource.
The search for competitive advantage is one of the core activities of strategic
management. The most complicated issue in searching of competitive advantage is its
sustainability. For example, a company in the automotive industry introduced the ABS
system (from German Antiblockiersystem) in its cars. Because of increased safety of cars
with ABS system, the company gained competitive advantage through technology. But
after ashort period of time almost all companies in the automotive industry followed suit.
The result competitive advantage through technology was lost. It happens because
competitive advantage through technology is usually easily imitable. The challenge for the
company's strategy is to find away of achieving asustainable competitive advantage. That
means a competitive advantage that cannot be easily imitable. Human resource is
probably the only way to get relatively sustainable competitive advantage. This is because
factors that differentiate the work force are focused on individuals. And there are no two
identical individuals in the Universe. For example, organizational performance depends on
the skills of employees, their motivation, and organizational support. A changing
environment requires flexibility in all these three aspects. Gaining competitive advantage
through people as the second of the twofold role of strategic human resource
management means a system of employee development focused on flexibility of workforce
skills, its motivation and organizational support. This could be very difficult to imitate simply
because of the company organizational culture.
Empirical Research Results
Questionnaire comparative empirical research was conducted in two large companies.
One of them company A - is a state-owned company, and the other company B - a
private company. Each of the companies have over two thousand employees. Total
number of managers involved in this study:
Company A - 52 managers, 9 of that number are top managers (71,15 % questionnaire
return ratio).
Company B 31 managers, 6 of that number are top managers (77,41 % questionnaire
return ratio).
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There are both the line and staff managers involved in the research sample - including
human resource managers. Managers were asked to answer questions focused on such
issues as the following:

Is there a strategy in (your) company?

If yes, are the human resource managers and units involved in its structure?
Are the human resource management specialists involved in strategy formulation or
do they get just the tasks to fulfil?
Is the human resource management system role in your organization traditional or
that of a strategic partner of top management?
Is the traditional role of human resource really changing or it is just "old wine in new
bottles"?

There are avariety of answers that could be and were - evaluated by such criteria like
the particular company, management level, line and staff aspects, and other similar issues.
The most important conclusions relating to strategic human resource management are the
following:

Nearly 40% of top managers in the company B were not quite sure if there was any
kind of strategy in their organization.
According to some answers "strategy is about an 80 page booklet that can be found
in the general directors office".
The great majority of managers, including top managers, believe that strategic
human resource management means fulfilling the tasks the human resource
managers have got from the company strategy.
Human resource managers and specialists are not involved in strategy formulation.
The majority of managers believe that human resource management activities are
not exclusively only human resource managers' responsibility.

As both companies are successful in their particular field of operation, it is clear from the
findings summarized above that managers in both companies take strategic management
more or less as a formal issue that is not directly related to company success in the
market. The situation in practice could differ from the that of the two companies in our
study, but still the results show how just how far from each other strategic human resource
management in practice and specific theoretical models of strategic human resource
management can be. If the company is successful in the market, is a strategic human
resource management approach then necessary at all? The answer "no" would be
politically incorrect, and managers are aware of that.
References
Beardwell, J. and Claydon, T. (2010) Human Resource Management aContemporary
Approach, 6th edn. Pearson.
Christensen, R. (2006) Roadmap to Strategic HR, AMACOM.
Dessler, G. (2003) Human Resource Management, 9th edn. Pearson.
Rudy, J., Sulikov. R., Fratriov, J., Laakov, A., Mitkov, L. (2013), Management and
Organizational Behavior, MV- Wissenschaft, Mnster.
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Rudy, J. and Rudyov, J. (2008) Human Resource Management in Japan, VHK Altdorf.

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