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Strategic Human Resource Management

Strategic Human Resource Management

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Published by: akash280189 on Feb 07, 2010
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Strategic human resource management
Corporate and HR strategy
Revised May 2009
 This factsheet gives introductory guidance. It:
defines strategic human resource management (HRM)
examines the difference between strategic HRM and HR strategy
looks at relationships between strategic HRM, and business strategy and humancapital management
considers the impact of strategic HRM on business performance
includes the CIPD viewpoint.
What is strategic human resource management?
Strategic human resource management is a complex process which is constantly evolving and being studied and discussed by academics and commentators. Its definition and relationshipswith other aspects of business planning and strategy is not absolute and opinion varies between writers. The definitions below are from the CIPD book 
Strategic HRM: the key toimproved business performance
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within which there is comprehensive coverage of the variousdefinitions and approaches to HRM, strategy and strategic HRM.Strategic HRM can be regarded as a general approach to the strategic management of humanresources in accordance with the intentions of the organisation on the future direction it wantsto take. It is concerned with longer-term people issues and macro-concerns about structure,quality, culture, values, commitment and matching resources to future need. It has beendefined as:
 
All those activities affecting the behaviour of individuals in their efforts to formulateand implement the strategic needs of business.
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The pattern of planned human resource deployments and activities intended to enablethe forms to achieve its goals.
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 Strategic HRM can encompass a number of HR strategies. There may be strategies to deliver fair and equitable reward, to improve performance or to streamline structure. However, inthemselves these strategies are not strategic HRM. Strategic HRM is the overall framework which determines the shape and delivery of the individual strategies.Boxall and Purcell
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argue that strategic HRM is concerned with explaining how HRMinfluences organisational performance. They also point out that strategy is not the same asstrategic plans. Strategic planning is the formal process that takes place, usually in larger organisations, defining how things will be done. However strategy exists in all organisationseven though it may not be written down and articulated. It defines the organisation’s behaviour and how it tries to cope with its environment.Strategic HRM is based on HRM principles incorporating the concept of strategy. So if HRMis a coherent approach to the management of people, strategic HRM now implies that that isdone on a planned way that integrates organisational goals with policies and action sequences.
Strategic HRM and business strategy
A good business strategy, one which is likely to succeed, is informed by people factors. Oneof the driving factors behind the evaluation and reporting of human capital data is the need for  better information to feed into the business strategy formulation process.In the majority of organisations people are now the biggest asset. The knowledge, skills andabilities have to be deployed and used to the maximum effect if the organisation is to createvalue. The intangible value of an organisation which lies in the people it employs is gainingrecognition by accountants and investors, and it is generally now accepted that this hasimplications for long term sustained performance.It is therefore too simplistic to say that strategic human resource management stems from the business strategy. The two must be mutually informative. The way in which people aremanaged, motivated and deployed, and the availability of skills and knowledge will all shapethe business strategy. It is now more common to find business strategies which areinextricably linked with and incorporated into strategic HRM, defining the management of allresources within the organisation.Individual HR strategies may then be shaped by the business strategy. So if the businessstrategy is about improving customer service this may be translated into training plans or  performance improvement plans.
Strategic HRM and human capital management
A number of writers have argued that strategic HRM and human capital management (HCM)
 
are one and the same thing, and indeed the concept of strategic HRM matches that of the broader definition of HCM quite well as the following definition of the main features of strategic HRM by Dyer and Holder shows
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:
Organisational level
- because strategies involve decisions about key goals, major  policies and the allocation of resources they tend to be formulated at the top.
Focus
- strategies are business-driven and focus on organisational effectiveness; thusin this perspective people are viewed primarily as resources to be managed toward theachievement of strategic business goals.
Framework 
- strategies by their very nature provide unifying frameworks which areat once broad, contingency-based and integrative. They incorporate a full complementof HR goals and activities designed specifically to fit extant environments and to bemutually reinforcing or synergistic.This argument has been based on the fact that both HRM in its proper sense and HCM rest onthe assumption that people are treated as assets rather than costs and both focus on theimportance of adopting an integrated and strategic approach to managing people which is theconcern of all the stakeholders in an organization not just the people management function.However, the concept of human capital management complements and strengthens theconcept of strategic HRM rather than replaces it
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. It does this by:
drawing attention to the significance of ‘management through measurement’, the aim being to establish a clear line of sight between HR interventions and organizationalsuccess
 providing guidance on what to measure, how to measure and how to report on theoutcomes of measurement
underlining the importance of using the measurements to prove that superior peoplemanagement is delivering superior results and to indicate the direction in which HR strategy needs to go
reinforcing attention on the need to base HRM strategies and processes on therequirement to create value through people and thus further the achievement of organizational goals
defining the link between between HRM and business strategy
strengthening the HRM belief that people are assets rather than costs
emphasising role of HR specialists as business partners.Hence both HCM and HRM can be regarded as vital components in the process of peoplemanagement and both form the basis for achieving human capital advantage through aresource-based strategy.An alternative way of looking at the relationship between strategic HRM and human capital isin terms of the conversion of human capital into organisational value. Human capitalevaluation is useful in that it provides information about the current and potential capabilitiesof human capital to inform the development of strategy. Business success will be achieve if the organisation is successful at managing this human capital to achieve this potential andembed it in products and services which have a market value.Strategic HRM could therefore be viewed as the defining framework within which theseevaluation, reporting and management process take place and ensure that they are iterative

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