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
Determining the strategic objective
2. Developing a plan of action
1.

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
may decline
HR
Assets
Cannot be
duplicated
Can walk over
to other
organizations

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
Organiz
ation
Imitabili
ty

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
Management
Human
Resource
Management
(early 1970s)
Strategic
Human
Resource
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
with larger issues
Fast,flexible &
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
HR Strategies
• 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
• 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 Fit1. 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)
HR strategy
Defenders
 Find change threatening
Favour strategies which
encourage continuity & security
 Bureaucratic approach
 Planned & regularly maintained
policies
 Build human resource
Prospectors
 Thrive on change
 Favour strategies of product or
market development
 Creative & flexible management
style
 Have high quality human resource
 Little opportunity for long term HR
planning.
 Emphasize on
recruitment,selection & performance
based compensation
Analyzers
 Seek to match new ventures
with the present business set-up
 These firms are followers- the
 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
Flexibility
Prospect
ors
Inside
selection
Outside
Development
Business
Strategies
Outside
Development
Established
Markets/niches
Inside selection
Defenders

Theoretical Perspectives of
SHRM
SHRM
Fit
Perspective
Functional
perspective
Economic
Perspective
Typological
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
context)
HRD
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 firmsOperation
Workers’ Skill
Workers’ Skill
Management
Policy
Level
(Development
Type)
Level
(Acquisition
Type)
Contractormanaged type
Development/Cont
ractor-managed
type
Acquisition/Contra
ctor-managed type
Client Managed
type
Development/Clien Acquisition/Client
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