Strategic Human Resource

Management
An Introduction

Ms. Pooja Rahul Sharma

(Faculty of HRM)
HLCPE, Ahmedabad
“Strategy comes out of process of ascertaining
objectives of business unit, making necessary
changes in such objectives taking decisions in
respect of utilization of required resources, for
achieving objects & taking policy decisions
decisions to get resources,its use & its disposal”
Strategic Management-As per general opinion,
strategic management means strategic planning
implemented by the management for solution of
various problems arose in the area of production,
employees,& finance to the business unit.
Scope of Strategic Management
 To fix mission of the unit
 To make favourable internal environment
 Analysis & evaluation of External environment
 SWOT analysis to be made
 Selection of new alternatives to achieve mission
 To develop grand strategy
 To fix short-term annual targets
 To raise resources & facilities
 Evaluation & control on activities.
HR Strategy
 HR Strategy is concerned with two key elements
1. Determining the strategic objective
2. Developing a plan of action
Strategic Human Resource
Management
 Strategic Human Resource
Management is an approach relates to
decisions about the nature of
employment
relationship,recruitment,training,develop
ment,performance management,
reward,& employee relationship.
Four Components of SHRM
An organization uses combination of
several resources Tangible & Intangible
resources
A) Physical capital resources
B) Organizational capital resources
C) Human capital resources
Human resources as assets
HR are not
owned by firm

Value of HR HR Can walk over

to other
may decline
Assets organizations

Cannot be
duplicated
The VRIO Framework
 VRIO framework a resource based view of an
organization determines the value of human
resources for the organization on the basis of four
criteria-value,rareness,imitability & organization.
Rarene
ss

Value VRIO Imitabili

ty

Organiz
ation
The Investment perspective of
Human Resource
 Factors Determining the investment orientation of
an organization
1. Management values
2. Attitude towards risk
3. nature of skills needed by employees
4. „utilitarian‟ or „bottom-line‟ perspective
5. availability of outsourcing
Evolution of SHRM

Personnel Human Strategic

Management Resource Human
Management Resource
(early 1970s) Management
(early 1980s)
Objectives of SHRM
 To ensure the availability of a skilled,commited, &
highly motivated workforce in the organization to
achieve sustained competitive advantage.
 To provide direction to the organization so that
both the business needs of the organization & the
individual & collective needs of its workforce are
met.
Difference b/w SHRM & Traditional
HRM
Traditional HRM SHRM

Focus of activity Employee relations Partnership with internal

& external groups
Role of HR Reactive & transactional Proactive &
transformational,
change leader
Initiative for change Slow & not integrated Fast,flexible &
with larger issues systematic
Time Horizon Short-term Consider various time
frames
Control Bureaucratic control Organic control

Job design Focused job design Broad job design

Important investment Capital,products,technol People & their

ogy & finance knowledge skills &
abilities
Difference b/w SHRM & HR Strategy
SHRM
• A general approach to strategic
management to HR
• Aligned with the organizational
intention with future directions
• Focus on long term people issue
• Defines the areas in which specific
HR strategies need to be developed
• Focus on macro concern such as
structure & culture
• Strategic HRM decisions are built
into strategic business plans
HR Strategies
• Outcome of the general SHRM
approach.
• Focus on specific organizational
intentions about what needs to be
done.
• Focus on specific issues that
facilitate the achievement of
corporate strategy.
• Human resource strategy derived
from SHRM
Strategic FIT: A Conceptual
Framework
 The strategic fit proposes that if an organization
seeks to maximize its competitive advantage, it
must match its internal resources & skills with
opportunities available in the external
enviornment.
 Five types of Fit-
1. Best fit approach
2. Fit as contingency
3. Best Practice approach
4. Fit getalt
5. Fit as bundles.
Strategic FIT: A Conceptual
Framework
Best Fit Approach-This linkage is reffered
as external fit or vertical integration means the
linkage of HR strategies with business
strategies.
Bases of classification of HR Strategies:
 Different types of business strategies
 Stages in the business or product cycle
 Types & number of products
HR strategy classification
 HR Practices corresponding to the
stages of an organization‟s life cycle
Life Cycle Stages HR Practices
Start-up • Flexible patterns of work
• Recruitment of highly motivated &
committed employees.
• Competitive pay
•Little formality
Growth • More sophisticated recruitment &
selection
• Training & development
• Performance Mgmt process
• Reward systems
• Developing stable employee
relations
Maturity • Attention to the control of labour
cost
• Focus on increasing productivity
• Control compensation
Decline • Emphasis on rationalization of
Linking Business Strategy HR
Strategy
Business Strategy HR Strategy
Cost Leadership Utilization HR Strategy
Differentiation Facilitation HR Strategy
Focus Accumulation HR strategy
Miles & Snow‟s Classification of
Business Strategy with HR strategy
Dominant culture of organization
(Business Strategy)
Defenders
 Find change threatening
Favour strategies which
encourage continuity & security
Prospectors
 Thrive on change
 Favour strategies of product or
market development
Analyzers
 Seek to match new ventures
with the present business set-up
 These firms are followers- the
HR strategy
 Bureaucratic approach
 Planned & regularly maintained
policies
 Build human resource
 Creative & flexible management
style
 Have high quality human resource
 Little opportunity for long term HR
planning.
 Emphasize on
recruitment,selection & performance
based compensation
 Low level of monitoring &
coordination
 „Buy‟ as well as „Make‟ key human
resources
Other frameworks
 Golden & Ramanjuman(1985)-4 types of linkage
1. Administrative Linkage
2 .One way linkage
3. Two way linkage
4. Integrated Linkage
„HR Bundles‟ Approach
 In general terms the bundles approach is also
termed as internal fit or horizontal integration. The
purpose of bundling is to bring about coherence
b/w HR practises.Coherence exist when a
mutually reinforcing set of HR practices is
developed to contribute to the strategic objectives
of the organizations so that these practices
ensure the matching of resources to the needs of
organization & bring about the performance
quality.
Best Practice Approach
 This approach focus on the view that organizations
should adopt best practice irrespective of the context.
According to this view, superior management
practices are readily identifiable & are transferable
across organizations.
It contains-
 employment security
 Selective hiring
 Team working
 High pay contingent
 Extensive training
 Reduction of status differences
 Information sharing
Distinctive Human Resources
Practices
HR
competencies

Outside
Development
Prospect
ors
Inside
Flexibility
selection

Outside
Business Development
Strategies
Outside
Development
Established
Markets/niches
Inside selection Defenders
Theoretical Perspectives of
SHRM

SHRM

Fit Functional Economic Typological

Perspective perspective Perspective perspective
Theoretical Perspectives of
SHRM
 Fit Perspective-match its internal resources & skills
with opportunities available in the external
environment.
 Functional Perspective-An organization performs
best when each departmental unit maximizes its
contributions limited to its unique area of expertise.
 Economic perspective- Human resources are a
unique & distinguishable source of competitive
advantage.
 Typological Perspective-Three distinct ‘types’ of
HR strategies
 Inducement
 Investment
 Involvement
SHRM Approaches: The Indian
Context
Three Major approaches to understanding people function developed in
India are presented-

Integrated
System Model

SHRM(Indian HRD
context) Framework

HRD as an
approach
Alternative HR Strategies
 Contract companies in manufacturing sector- The
use of contract workers has increased
significantly at the production sites in electric &
auto industries.
 Business Strategy of Contract firms-
Operation Workers’ Skill Workers’ Skill
Management Level Level
Policy (Development (Acquisition
Type) Type)
Contractor- Development/Cont Acquisition/Contra
managed type ractor-managed ctor-managed type
type

Client Managed Development/Clien Acquisition/Client

type t Managed type Managed type
Restructuring & SHRM in Healthcare
Organization
 The healthcare industry is in a growth mode & there is
high level of focus on healthcare cost. As the part of
strategy, the hospital industry is likely to engage in
downsizing & restructuring
 Steps involved in plan to restructuring of hospital
 Environmental scan prior to developing restructuring
activities.
 The environmental scan will result in defining the
business strategy
 Pre-structuring
 Re- structuring
 Post-restructuring
Competition related HRM changes in
the Retail Banking Industry
Since the mid-1990s,the retail banking divisions of
commercial banks are under pressure to change the
way they do business banks are faced with an
extremely competitive environment as well as threats
from non-banking institutions
Focus or Niche Strategy-the typical initiatives are
as follows:
 being a „one-stop‟ financial service provider.
 Aggressive selling to new customers
 Aggressive cross selling of new products to existing
customers.
 Establishing a presence in chosen geographical
markets.
 Establishing alternative channels of delivery of