STRATEGIC HUMAN RESOURCE MANAGEMENT

COURSE INSTRUCTOR

MUHAMMAD FAISOL CHOWDHURY

ACADEMIC, RESEARCHER, CONSULTANT

EMAIL: FAISOL.CHOWDHURY@ICLOUD.COM
MOBILE: 88 019 3399 0000
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THE CONTEXT OF SHRM

LECTURE 1

CONTENT

Strategy, Strategic Management, Business Strategy

Strategic Human Resource Management

Strategic Management Model

Strategic Decision Making Process

Strategic HRM Matching Model

SHRM Diagnostic Model

Strategic vs Traditional HRM

Dimensions of SHRM

Conception of Context & Open System

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STRATEGY

Strategy was derived from the Greek noun strategus which means
commander in chief. The word first used in English language in 1656 (Bratton
& Gold, 2003).

In a management context, strategy now denotes long-term planning.

There is no definitive answer about what strategy really is. People think about
strategy in different ways.

Strategy is needed to define and communicate an organisations unique

position. It should determine how organisational resources, skills, and
competencies should be combined to create competitive advantage (Porter,
1996).

Strategy defines the direction in which an organisation intends to move and

establishes the framework for action through which it intends to get there
(Schermerhorn, 1984).
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STRATEGIC MANAGEMENT

It is that set of managerial decisions and actions that determines the long-run
performance of corporation (Wheelen & Hunger, 1995).

It is an action a company takes to attain superior performance (Hill & Jones,

2001).

It is a continuous activity that requires a constant adjustment of three major

interdependent poles (Aktouf, 1996):
(a) the values of senior management
(b) the environment
(c) the available resources

STRATEGIC HRM

Strategic Human Resource Management - is it a process or outcome or both?

It is an outcome as organisational systems designed to achieve sustainable

competitive advantage through people (Snell et al., 1996).

It is a process by which organisations seek to link the human, social, and

intellectual capital of their members to the strategic needs of the firm
(Bamberger & Meshoulam, 2000).

SHRM is the grand plan or general approach an organisation adopts to ensure

that it effectively uses its people to accomplish its mission (McDonald, 2002).

SHRM involves the development of a consistent, aligned collection of

practices, programmes, and policies to facilitate the achievement of the
organisations strategic objectives (Mello, 2011).

BUSINESS STRATEGY

A business strategy is the means by

which it sets out to achieve its desired
ends (objectives). It can simply be
described as a long-term business
planning.

Typically a business strategy will cover a

period of about 3 to 5 years or
sometimes even longer.

Two main categories of strategies can be

identified:
(a) Generic (general)
(b) Competitive
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BUSINESS STRATEGY - GENERIC

The main types of generic strategies that organisations can pursue are:

Growth - expansion of the company through purchase of new assets, or to

develop new products.

Internationalisation - moving operations into different countries.

Retrenchment - reducing diversity or the overall size of the operations of the

company, to cut expanses with the goal of becoming a more financial stable
business.

BUSINESS STRATEGY - COMPETITIVE

Competitive advantage is the ability of a firm to win consistently over the

long term in a competitive situation (Hitt et al., 2010).

It is the ability of a firm to provide value to customers that exceeds what

competitors can provide (Lavie, 2006).

A competitive advantage is created by having and managing resources to

provide goods and services that meet the following criteria:
(a) Superior value
(b) Rarity
(c) Difficult to imitate
(d) Non-substitutability
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STRATEGIC MANAGEMENT MODEL

Strategic management process is typically broken down into five steps:

Environmental
Analysis

Mission & Goals

Strategic
Formulation
Strategy
Implementation

Strategy Evaluation

(Wheelen & Hunger, 1995)

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STRATEGIC MANAGEMENT MODEL

Mission & Goals

Management
Philosophy & Values

Strategy
Implementation
Leadership,
Structure, Control
Systems, HR

Environmental
Analysis
External-Internal &
SWOT

Strategic
Formulation
Corporate, Business,
Functional,
Departmental,
Individual
(Wheelen & Hunger, 1995)
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Strategic
Evaluation
Operating &
Financial
performance

STRATEGIC DECISION MAKING

Corporate Management

Contextual Factors
Product Market
Capital Market
Labour Market
Technology
Government Policy
Regional Policy
Stakeholder Interest

Corporate Level
Business
Unit 1

Business
Unit 1

Business
Unit 1
Business Level

HR

ADM

FIN

MKT
Functional Level

(Bratton & Gold, 2003; Schuler, 1992)

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SHRM MATCHING MODEL

HR Systems and organisational

structure should be managed in
a way that is congruent with
organisational strategy (Devanna
et al., 1984).

SHRM DIAGNOSTIC MODEL

Assess Internal & External Environment Influence

Organisational Purpose & Objectives

Organisational
Structure

HRM Audit
(Performance evaluation)

Organisational
Culture

Strategy
HRM Objectives
(What to be achieved)

HRM Outcomes
(Commitment, Competence,
Congruence, Cost-effectiveness, etc.)

HRM Strategy
(How it is to be achieved)

HRM Activities
(Hiring, Development, Reward,
Maintenance, Motivation, etc.)

STRATEGIC VS TRADITIONAL HRM

Strategic HR should deliver results that enrich the organisations value to its
customers, its investors, and its employees.

This can be accomplished in four ways, as suggested by Ulrich (1997):

HR becoming a partner with senior and line managers in strategy

execution.

HR becoming an expert in the way that work is organised and executed.

HR becoming a champion for employees, working to increase employee

contribution and commitment to the organisation.

HR becoming an agent of continuous transformation that shapes processes

and culture to improve an organisations capacity for change.

DIMENSIONS OF SHRM

In addition to focusing on the validity of the matching SHRM model and typologies
of HR strategy, a number of important themes are associated with the notion of
SHRM:

HR practices and performance - it is assumed that an alignment between business

strategy and HR strategy will improve organisational performance and
competitiveness (Guest, 1997).

What type of performance data are available to measure the HRM-performance

link?

Re-engineering - importance of organisational design. Vertical and horizontal

compression or expansion of tasks, greater worker autonomy (JCM model),
flattened hierarchy, decentralisation, IT, strong leadership, etc. These practices
make workers behaviour more congruent with the organisations culture and
goals (Hammer, 1997; Champy, 1996).

HPWS, business process re-engineering, high commitment management.

DIMENSIONS OF SHRM

Leadership - it is a process whereby an individual exerts influence upon others

in an organisational context (Bratton & Gold, 2003). Managers have to look
for a style of leadership that will develop firms human endowment, and,
moreover, cultivate commitment, flexibility, innovation and change (Bratton,
et al., 2004).

What is the difference between a manager and a leader? Which one does
the organisation need?

Workplace Learning - formal and informal work-related learning has come to

represent a key level that can help managers to achieve the substantive HRM
goals of commitment, flexibility and quality (Keep, 1989; Beer et al., 1984).

How can a learning and sharing organisation culture be developed?

CONCEPTION OF CONTEXT

The context is infinite and includes everything outside the immediate

boundaries of the organisation (Bratton & Gold, 2003).

The analysis of external factor is limited to the factors of forces to which the
organisational is sensitive and to which it must respond to survive (Scott,
2003).
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OPEN SYSTEM

To understand the context of the

strategic human resource
management, an open system model
analysis is required to examine the
multidimensional and changing
nature of context.

Organisations are said to be open

systems in that they acquire inputs
(e.g.materials, energy, people,
finance) from the environment,
transform them into services or
products, and discharge outputs in
the form of services, products - and
sometimes pollutants - to the external
environment (Bratton & Gold, 2003).
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Environment Inputs
Economic (materials, money,
information)
Sociocultural (labour, information)
Technology (machinery, information)
Politico-legal (legislation, information)

Organisation (transforms)

Environment Outputs
Goods, Services, Money, Satisfaction,
Information

OPEN SYSTEM

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CONTEXT OF STRATEGY
Society &
Culture

Legal

Demography

Technology

Firm

Economy

Environment

Labour
Market

Politics

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REVIEW QUESTIONS

How would you differentiate HRM from SHRM?

What is competitive advantage? What are the characteristics of a sustainable

advantage?

What is a SHRM diagnostic model? Why is it important for an organisation?

What is the relationship between the SHRM diagnostic model with strategic
decision making model?

How does the concept of open system help our understanding of the SHRM
function?

How do the external contextual elements impact a firms performance?

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ACTIVITY

Find out the competitive advantages of an organisation. Justify your

findings.

Conduct a SWOT analysis of your organisation. Based on the SWOT

analysis:

prepare a corporate-level strategy

suggest appropriate business-level strategy

outline functional-level strategy

Justify your plan.

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REFERENCES
Aktouf, O. (1996), Traditional Management and Beyond, Morin, Montreal.
Bamberger, P. and Meshoulam, I. (2000), Human Resource Management Strategy, Sage, California.
Beer, M., Spector, B., Lawrence, P.R., Quin Mills, D. and Walton, R.E. (1984), Managing Human Assets, Free Press, New York.
Bratton, J. and Gold, J. (2003), Human Resource Management: Theory and Practice, 3rd ed., Palgrave Macmillan, Hampshire.
Bratton, J., Grint, K. and Nelson, D. (2004), Organizational Leadership, South-Western Thompspn, Ohio.
Champy, J. (1996), Reengineering Management: The Mandate for New Leadership, HarperCollins, New York.
Devanna, M.A., Fombrun, C.J. and Tichy, N.M. (Eds) (1984), Strategic Human Resource Management, Wiley, New York.
Guest, D.E. (1997), Human resource management and performance: a review and research agenda, International Journal of
Human Resource Management, 8(3): 263-276.
Hill, C. and Jones, G. (2001), Strategic Management Theory, 5th ed., Houghton-Mifflin, Massachusetts.
Hitt, M.A., Black, J.S. and Porter, L.W. (2010), Management, 2nd ed., Pearson Dorling Kindersley, New Delhi.
Hammer, M. (1997), Beyond Reengineering, HarperCollins, New York.
Keep, E. (1989), Corporate training policies: the vital component, In J. Storey (Ed.) New Perspectives of Human Resource
Management, pp. 109-125, Rutledge, London.
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REFERENCES
Lavie, D. (2006), The competitive advantage of interconnected firms: an extension of the resource based view, Academy of
Management Review, 31(3): 638-658.
McDonald, D. (2002), Radical change: breaking ground for e-HR implementation, Workspan, 45(2): 5-10.
Mello, J.A. (2011), Strategic Human Resource Management, India Edition, Cengage Learning, Delhi.
Porter, M.E. (1996), What is Strategy?, Harvard Business Review, 74(6): 61-78.
Schermerhorn, J.R. Jr. (1984), Management for Productivity, John Wiley & Sons, New York.
Schuler, R.S. (1992), Strategic human resource management: linking people with the strategic needs of the business,
Organisational Dynamics, 21(1): 18-31.
Scott, W.R. (2003), Organizations: Rational, Natural, and Open Systems, 5th edn. Prentice Hall, New Jersey.
Snell, S.A., Youndt, M.A. and Wright, P.M. (1996), Establishing a framework for research in strategic human resource
management: Merging source theory and organisational learning, Research in Personnel and Human Resources Management,
14: 61-90.
Ulrich, D. (1997), Human Resource Champions: The Next Agenda for Adding Value and Delivering Results, Harvard Business
School Press, Boston.
Wheelen, T. and Hunger, J. (1995), Strategic Management and Business Policy, 5th ed., Addison-Wesley, New York.
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