Strategic Management of Human Resources, Human Resources Strategic Model (2022)

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Strategic human resource management, abbreviated as SHRM is a viable approach to the management of human resources that gives a strategic structure to support long-lasting business objectives and results. The approach is associated with longer-term people problems and macro-concerns about structure, quality, culture, values, obligation and matching resources to future requirement. Strategic human resource management is a planned process to deal with human resources of a firm. In the area of management, Strategic human resource management is viewed as novel concept, in spite of its constant development since last many decades. The conventional human resource functions or technical HRM operations include array of employment practices, such as recruitment, selection, performance appraisal, training and development and the administration of compensation and benefits. In order to combine the HRM function with business policy, Strategic human resource management reveals flexible plan and use of human resources to accomplish the targeted goals of multinational firms and assists organisations to compete in tough marketplace.

Components of SHRM: Strategic Management of Human Resources, Human Resources Strategic Model (1)

Strategic HRM stresses the requirement for Human Resource plans and strategies to be devised within the framework of general organizational strategies and objectives, and to be approachable to the varying nature of the organizations outside environment. It is a representation which requires interpretation and adjustment by specialists to make sure the most fit between human resource and business strategies and plans. Thus, Strategic Human Resource Management is the incorporation of the adherence of all human resource functions to broad organizational goals, and awareness to the external environment.

(Video) Introduction to Strategic Human Resource Management | Strategic hr management

Theoretical review of Strategic human resource management:The field of human resource strategy differs from traditional HR management research in two significant ways. First, Strategic human resource management focuses on organizational performance instead of individual performance. Secondly, it also stresses the role of human resource management systems in order to resolve business problems rather than individual human resource management practices in separation. It is apparent that previous studies done for Strategic human resource management are positively related with various conceptualisations of HRM and firm performance (Wright et al., 2005). The strategic dimension of human resource management got attention of researchers at the end of the 1970s, with the confluence of basic changes in the literature. There was shift from the old personnel administration approach to the more modern concept of human resources and the reorientation of generic strategic models to internal aspects of the organization. Strategic Human Resource Management is the designed pattern of human resource deployment and activities intended to enable the organization to meet organizational goals and objectives (Noe et al. 2007). According to Wright and McMahan, strategic human resource management is “the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals” (1992).

Evolution of SHRM: Strategic Management of Human Resources, Human Resources Strategic Model (2)

The issue of Strategic human resource management emerged in the beginning of 1990s, at that time scholarly experts described it as: The undertaking of all those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of business. Strategic human resource management deals with extensive organizational issues relating to changes in structure and culture, organizational efficacy and performance, matching resources to future requirements, the development of distinguishing capabilities, knowledge management, and the management of change. It is concerned with both human capital requirements and the development of process capabilities. In general, Strategic human resource management addresses any major people issues that are influenced by the strategic plans of the organization. In theoretical literature, SHRM has been explained “A distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques” (Storey, 2001: 6). The simplest representation of the Strategic human resource management model is an association between a firm’s HR architecture and firm performance. The HR architecture comprises of the systems, practices, competencies, and employee performance behaviours that reveal the development and management of the firm’s strategic human capital. Strategic human resource management mainly emphasizes on actions that distinguish the firm from its competitors (Purcell, 1999). Hendry and Pettigrew (1986) put forward that it has four meanings such as the use of planning; a coherent approach to the design and management of personnel systems based on an employment policy and workforce strategy and often underpinned by a ‘philosophy’; matching HRM activities and policies to some explicit business strategy; seeing the people of the organization as a ‘strategic resource’ for the achievement of ‘competitive advantage’. As Boxall (1996) commented that ‘The critical concerns of HRM, such as choice of executive leadership and formation of positive patterns of labour relations, are strategic in any firm.’ His underlying principle for strategic HRM is the apparent advantage of having an agreed and understood basis for developing approaches to people management in the long term.

According to Lengnick-Hall and Lengnick-Hall (1990), it is the concept of accomplishing competitive advantage. The strategic human resource role focuses to align human resource strategies and practices with business strategy. In this perspective, the HR expert works to be a strategic associate, helping to make certain the success of business strategies. By fulfilling this role, HR professionals increase the capacity of a business to implement its strategies. Converting business strategies into HR practices assists a business in three ways. First, the business can adjust to change because the time from the conception to the execution of a strategy is brief. Second, the business can fulfil purchaser demands because its customer service strategies have been translated into specific policies and practices. Third, the business can accomplish financial performance through its more effective execution of strategy.

Strategic human resource management supplies a perception that critical issues or success factors related to people can be addressed and strategic decisions are taken that have a major and long-term impact on the behaviour and triumph of the organization. The basic objective of Strategic human resource management is to create strategic capability to make certain that the organization has the skilled, committed and well-motivated employees it needs to accomplish sustained competitive advantage. Its purpose is to give a sense of direction in an often unstable environment so that the business needs of the organization and the individual and combined needs of its workers can be fulfilled by the development and execution of consistent and practical human resource strategies and programmes.

Dyer and Holder (1988) commented that tactical human resource management should provide ‘unifying frameworks which are at once broad, contingency based and integrative’. Storey’s (1989) described that soft strategic HRM will place greater prominence on the human relations aspect of people management, stressing continuous development, communication, involvement, security of employment, the quality of working life and work-life balance. ‘Hard strategic HRM’ will emphasize the yield to be obtained by investing in human resources in the interests of the business. Strategic human resource management tries to accomplish proper balance between the hard and soft elements. All organizations exist to achieve a purpose and they must ensure that they have the resources required to do so and that they use them effectively. But they should also take into account the human considerations contained in the notion of soft strategic HRM. It is a general belief in the business world that the human resources of an organization can be a basis of competitive advantage, provided that the policies and practices for managing people are incorporated with planned goals and objectives. Strategic human resource management highlights the significance of establishing equivalence between human resource policies and organizational strategic goals.

(Video) Strategic HR Planning Overview | Basics of Strategic Human Resource Planning

The impact of Strategic human resource management implementation on organizational performance:Strategic Management of Human Resources, Human Resources Strategic Model (3)

There are numerous factors that affect strategic aspects of human resource. Internal factors include organizational structure, organizational culture, organizational competencies, organizational internal policies and organizational processes. External factors include market scenario, competitors, government policies and technological advancements.

Approaches of Strategic Human Resource Management

There are five approaches to Strategic human resource management. These include resource based strategy, achieving strategic fit, high-performance management, high commitment management and high involvement management.

The resource-based approach: the resource-based view is influential theoretical approach in the discussion on Strategic human resource management. In the resource-based, the importance is to attain sustainable competitive advantage through effective utilisation of the resources of an organisation (Wright et al., 2001). Main objective of resource-based human resource strategy, as is to develop strategic capability to achieve strategic fit between resources and opportunities and obtaining added value from the effective use of resources (Barney, 1991). A resource-based approach deals with methods to enhance the firm’s strategic capability by the development of managers and other employees who can tactically plan and who understand the major strategic issues. The resource-based approach is developed on the principle that competitive advantage is obtained if a firm can achieve and develop human resources that allow it to learn quicker and apply its learning more successfully than its competitors (Hamel and Prahalad, 1989). Kamoche (1996) proposes that ‘In the resource-based view, the firm is seen as a bundle of tangible and intangible resources and capabilities required for product/market competition.’ According to human capital theory, resource-based theory stresses that investment in people adds to their value in the firm. The strategic goal will enable firm to ‘create firms which are more intelligent and flexible than their competitors by hiring and developing more capable employees and by extending their skills (Boxall, 1996). Ulrich (1998) observed that Knowledge has become a direct competitive advantage for companies selling ideas and relationships. The challenge to organizations is to make sure that they have the potential to find, incorporate, balance and maintain the brilliant staff.

Grant (1991) presented reasonable statement to use resource-based strategy. When the external environment is in a state of instability, the firm’s own resources and capabilities may be a much more stable basis on which it has to define its identity. Therefore, a definition of a business in terms of what it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs (which the business seeks to satisfy). Talented employees such as their better performance, productivity, flexibility, innovation, and the ability to deliver high levels of personal customer service, are ways in which employees can contribute to develop an organization’s competitive position. Delery and Shaw (2001) stated that the choice of the resource-based view offers numerous benefits to investigators researcher in exploring the strategic nature of human resource management. There theorists also gripped in criticisms of the approach, chiefly that the resource-based view does not meet the standards for a true theoretical viewpoint and contains several tautological elements (Priem and Butler, 2001).

resource based approach to strategic analysis: Strategic Management of Human Resources, Human Resources Strategic Model (4)

(Video) Models of Strategic HRM | human resource, hr, human resource management,

Strategic fit: The human resource strategy must be aligned to the business strategy (vertical fit). Vertical integration is essential for comparison between business and human resource strategy so that the latter supports the achievement of the former and, indeed, helps to define it. Horizontal integration with other aspects of the human resource strategy is required so that its different elements fit collectively. The main intent is to accomplish a consistent approach to managing people in which the various practices are jointly helpful. Strategic fit suggests that if firms want to maximize its competitive advantage, it must match with its internal sources and skill with opportunities available in external environment. Experts, categorized five types of fit such as best fit approach, fit as contingency, best practice approach, fit gestalt and fit bundles.

Two fits of SHRM:Strategic Management of Human Resources, Human Resources Strategic Model (5)

High-performance management: The objective of High-performance management is to make an impact on the performance of the firm through its people in the arena of productivity, quality, and levels of customer service, growth, profits, and finally the delivery of increased shareholder value. High-performance management practices include accurate recruitment and selection procedures, wide-ranging and appropriate training and management development activities, incentive pay systems and performance management processes.

High-involvement management: This practice involves treating workers as collaborators in the enterprise whose interests are valued and who can put their views on matters that concern them. It is concerned with communication and participation. The goal is to produce a climate in which a continuing conversation between managers and the members of their teams takes place in order to describe expectations and share information on the organization’s mission, values and objectives. This establishes common understanding of what is to be achieved and an agenda for managing and developing people to guarantee that it will be achieved.

Limitations: The theory of strategic HRM is based on the principle that the development of strategy is a logical and linear process. This designates that the overall HR strategy flows from the business strategy and creates specific HR strategies in major fields. The process happen by reference to systematic reviews of the internal and external environment of the organization, which recognize the business, organizational and HR issues that need to be dealt with. But strategic HRM in real scenario does not usually take the form of a formal, well-articulated and linear process that flows logically from the business strategy as described by Mintzberg (1987). Mello (2001) presented eight barriers to successful strategic human resource management. The first one is the short-term orientation of firms. As most of the HR interventions or practices have long-term implications, short-term oriented actions can obstruct effective human resource management. The second barrier is the incapability of the human resource managers to think tactically. Their inadequate general management training or inability to influence colleagues in other departments is visualized as barricade to SHRM.

The third hindrance of SHRM is lack of admiration for HRM as a function. The fourth barrier is lack of teamwork from the line managers and their untrustworthiness in handling HR function in their respective departments. The fifth reason that hinders HR functioning is the increasing focus on the quantifying results. The feeling of risk in investing heavily on human resources is major and sixth reason that can obstruct the development of the workers for complementing organisational performance. The seventh barrier that can slow down strategic linkage is the incapacity of the HR practices to change according to the business requirements. The final cause would be the disincentives related to changes associated with SHRM. Implementation of SHRM may involve radical changes in the work practices and other HR processes and hence may affect majority of employees. Bringing about change is a complex process and people who have faced negative consequences of an unproductive effort to change may hamper the change processes of the future.

(Video) Strategic Management of HRM Function: Human Resources C16

Despite of barriers, strategic human resource management is significant for organization’s success as it is concerned with the following factors:

  1. Analyse the opportunities and threats existing in the external environment.
  2. Devise strategies that will match the organisation’s (internal) strengths and weaknesses with environmental (external) threats and opportunities.
  3. Execute the strategies so formulated.
  4. Assess and control activities to ensure that organisation’s objectives are duly achieved.

Strategic management presents financial and non-financial advantages to firms which practices it. Organizations who adopt SHRM can compete in tough business environment because it permits identification, prioritisation and exploitation of opportunities, provides an objective view of management issues, reveals a structure for improved co-ordination and control of activities, reduces the effects of unfavourable conditions and changes, enables major decisions to better support established objectives, Allows more effectual allocation of time and resources to identified opportunities, facilitates fewer resources and lesser time to be devoted to correcting erroneous or adhoc decisions, develops a framework for internal communication among personnel, assists to incorporate the behaviours of individuals into a total effort, gives a basis for the explanation of individual responsibilities, Gives support to forward thinking, Provides a co-operative, integrated and passionate approach to resolve problems and opportunities, promotes a positive attitude towards change and provides a degree of discipline and formality to the management of a business.

To summarize, Strategic human resource management is vital procedure to create human resource strategies, which are incorporated vertically with the business scheme and horizontally with one another. It is an effective process of recognizing and executing organization’s mission by harmonizing its abilities with demands of its environment. It relates human resource management with strategic goals in order to improve business output and develop culture to promote innovation and flexibility.

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FAQs

What is strategic human resource management model? ›

Strategic human resource management (strategic HRM) provides a framework linking people management and development practices to long-term business goals and outcomes. It focuses on longer-term resourcing issues within the context of an organisation's goals and the evolving nature of work.

What is meant by strategic human resource management Mcq? ›

Strategic human resource management is the connection between a company's human resources and its strategies, objectives, and goals. The aim of strategic human resource management is to: Advance flexibility, innovation, and competitive advantage.

What are the 4 human resources strategies? ›

These include recruitment, learning & development, performance appraisal, compensation, and succession planning. An example of an HR strategy is an HR mission statement and HR vision, with concrete, high-level actions about how to execute on this mission and vision.

What are the 5 steps of strategic HR management? ›

Your Strategic HR Plan will be built upon the foundation of this strategic business plan.
  1. Step 1: Identify Future HR Needs. ...
  2. Step 2: Consider Present HR Capabilities. ...
  3. Step 3: Identify Gaps Between Future Needs & Present Capability. ...
  4. Step 4: Formulate Gap Strategies. ...
  5. Step 5: Share & Monitor The Plan.
18 Apr 2018

Why is strategic human resources management important? ›

Strategic Human Resource Management is essential for retaining the best talent and development of human resources. It focuses on making employees feel valued and engaged so that they are motivated to stay with the company.

What is an example of strategic human resource management? ›

Examples of strategic HR functions include compensation planning, recruitment, succession planning and employee development.

What are the strategic HR issues in global assignment Mcq? ›

Strategic HR Issues in Global Assignments
  • Compliance and International HRM Issues. ...
  • Scope of Human Resource Management. ...
  • Cultural Diversity and Global HR Issues. ...
  • Benefits and Compensation. ...
  • Training and Development.
21 Jan 2020

Which of the following is the first step in strategic HR planning process? ›

1. Assessing the current HR capacity. Based on the organization's strategic plan, the first step in the strategic HR planning process is to assess the current HR capacity of the organization. The knowledge, skills and abilities of your current staff need to be identified.

What are the key elements of strategic human resource management? ›

Main factors or variables involving in research of strategic HRM can be divided into HRM system, organizational strategy, organizational performance, and internal and external environment of organization.

What are the main types of human resource planning? ›

Three major types of HR Planning are tactical, operational and strategic planning.

What is the basic human resource planning strategy? ›

Human resources planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses. There are four key steps to the HRP process. They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals.

How do you implement strategic human resource management? ›

Developing and implementing a successful HR strategy in 6 steps
  1. Step one: align with business needs. ...
  2. Step two: plan, prepare and measure. ...
  3. Step three: communicate to stakeholders. ...
  4. Step four: promote collaboration. ...
  5. Step five: create measures. ...
  6. Step six: assessment.
4 Jan 2020

What are the benefits of strategic human resources planning? ›

Benefits of Strategic Human Resource Planning
  • It helps in retaining the top talents of your organization.
  • Find out the strength and weakness of your overall human resource method.
  • Help you develop a process that ensures the best hiring.
  • Build a plan that helps employees learn their responsibilities.
25 Mar 2020

What is the meaning of strategic human resource development? ›

Strategic human resource development can be defined as a systematic process of. developing the skills and competencies of people through talent development, leadership development, employee development, performance development, and training/development processes to enable the organization to sustain its.

Is strategic human resource management HR strategies are generally aligned with? ›

In strategic human resource management, HR strategies are generally aligned with Business Strategy.

Which is the human resource strategy among the following? ›

Human resource management involves maximizing employee performance in order to achieve an employers objectives. Human resource management includes attractions, selection, training, assessment and rewarding.

What are the factors affecting human resource planning? ›

Factors Affecting Human Resource Planning
  • Type and Strategy of Organization.
  • Organizational Growth Cycles and Planning.
  • Environmental Uncertainties.
  • Time Horizons.
  • Type and Quality of Information.
  • Labor Market.

How do you manage human resources? ›

7 Best Practices to Manage Your Human Resources
  1. Anticipate future HR needs. ...
  2. Manage employee competency and development. ...
  3. Take availability and competency into account when assigning employees to projects. ...
  4. Ensure your employees' workload is right.
30 Jan 2017

What are the functions of human resource development? ›

HRD functions as a “human resource wheel” The HR wheel identifies three primary HRD functions: 1)Training and development 2) Organization development 3) Career development.

What are the functions of human resource management? ›

What Does an HR Manager Do? 7 Functions of the Human Resources Department
  • Recruitment and Hiring.
  • Training and Development.
  • Employer-Employee Relations.
  • Maintain Company Culture.
  • Manage Employee Benefits.
  • Create a Safe Work Environment.
  • Handle Disciplinary Actions.

What is the importance of HRM to employees? ›

HRM can be defined as the effective management of people in an organisation. HR management helps bridge the gap between employees' performance and the organisation's strategic objectives. Moreover, an efficient HR management team can give firms an edge over their competition.

How do you develop human resources? ›

10 Best Practices for Developing a Human Resources Strategy
  1. 1) Promote What Makes Your Firm Unique. ...
  2. 2) Find the Best Fit(s) ...
  3. 3) Explain What You Expect. ...
  4. 4) Feedback, Feedback, Feedback. ...
  5. 5) Motivate Your Employees. ...
  6. 6) Delegate. ...
  7. 7) Embrace Technology. ...
  8. 8) Encourage Staff Development.

What is the meaning of human resource management? ›

Human resource management, HRM, is the department of a business organization that looks after the hiring, management and firing of staff. HRM focuses on the function of people within the business, ensuring best work practices are in place at all times.

What is a human resource plan in project management? ›

A human resource plan is all aspects of a project management plan that relate to the individual members of a project's team. This can include identifying needed team members, assigning roles and tracking professional relationships between staff members.

What are the three elements of the human resources planning model? ›

The three key elements of the HR planning process are forecasting labour demand, analysing present labour supply, and balancing projected labour demand and supply.

What are impact of SHRM on performance? ›

Results indicate that the direct impact of SHRM on organizational performance is positive and significant, as hypothesized. Further, SHRM was found to directly and positively influence individual performance, organizational commitment and job satisfaction.

What are the key elements of strategic human resource management? ›

Main factors or variables involving in research of strategic HRM can be divided into HRM system, organizational strategy, organizational performance, and internal and external environment of organization.

What are main characteristics of SHRM? ›

The key features of SHRM are
  • 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.
2 Mar 2019

What are the components of strategic human resource management? ›

In the HR cycle, the model shows four generic processes or functions performed by the HR system in all organizations-selection, appraisal rewards, and development. These four processes reflect sequential managerial tasks, and performance is the function of all these four HR components.

What is the meaning of strategic human resource development? ›

Strategic human resource development can be defined as a systematic process of. developing the skills and competencies of people through talent development, leadership development, employee development, performance development, and training/development processes to enable the organization to sustain its.

How do you implement strategic human resource management? ›

Developing and implementing a successful HR strategy in 6 steps
  1. Step one: align with business needs. ...
  2. Step two: plan, prepare and measure. ...
  3. Step three: communicate to stakeholders. ...
  4. Step four: promote collaboration. ...
  5. Step five: create measures. ...
  6. Step six: assessment.
4 Jan 2020

What are the 5 P's model of SHRM? ›

As its name suggests, The 5P's Model is based on five constitutional aspects: purpose, principles, processes, people, and performance. According to this framework, aligning and balancing these five principles leads to achieving company success.

What are the barriers of SHRM? ›

BARRIERS TO STRATEGIC HRM –

Short-term mentality/focus on current performance. The inability of HR to think strategically. Lack of appreciation for what HR can contribute. Failure to understand line manager's role as an HR manager.

What is strategic management process? ›

Strategic management process is a continuous culture of appraisal that a business adopts to outdo the competitors. Simple as it may sound, this is a complex process that also covers formulating the organization's overall vision for present and future objectives.

Who is responsible for strategic human resource planning? ›

The role players involved with strategic human resource development are executives, managers and individuals responsible for managing and developing the human resources of the company. Garavan (1991:18) explains that the executives and managers of the company must support strategic human resource development.

What is the objective of strategic human resource development? ›

The specific objectives of strategic HRD are to develop intellectual capital and promote organizational, team and individual learning by creating a learning culture – an environment in which employees are encouraged to learn and develop and in which knowledge is managed systematically.

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