1.

1 PROLOGUE
In the previous semester we have discussed the concepts of strategy and strategic management.
We have also identified and analysed the pertinent issues related to the concept of strategic
management. Let us recollect the definitions of strategy and strategic management as defined by
experts. Glueck has defined strategy as ‘a unified, comprehensive and integrated plan relating the
strategic advantages of the firm to the challenges of the environment’i. Following Glueck, we
define strategic management as ‘that set of decisions and actions which leads to the development
of an effective strategy or strategies to help achieve corporate objectives’ii. A closer look at these
two definitions highlight that human resource management (HRM) has a definite position in the
context of strategy and strategic management since the process of strategic management is
carried out by and through people. Linking people with the strategic management process is the
subject matter of strategic human resource management. On the otherhand you have already got
an idea about HRM when you studied a full paper on HRM. Using the definition of Armstrong,
we understand that HRM is ‘a strategic and coherent approach to the management of an
organization’s most valued assets – the people working there who individually and collectively
contribute to the achievement of its objectives’iii. If you look at this definition you can probably
understand that HRM has to be understood and conceived in the light of broader organisational
issues that emanate from the strategic management process. The various aspects of
understanding HRM in the light of broader organisational issues form the subject matter of
strategic human resource management. In this context, we quote Boxall and Purcell who opine
‘the application of the adjective strategic implies a concern with the way in which HRM is
critical to the firm’s survival and its relative success…’iv. Thus, the strategic connotation in
strategic HRM develops the traditional way of looking at HRM. There is therefore the need to go
beyond the traditional way of looking at HRM and understand how HRM can be related to
organisational sustainability and success. One of the important aspects of strategic HRM is the
linkage between strategy and HRM and several studies highlight that successful companies have
aligned HRM with their strategy and the industry-specific goals. This in other way justifies the
need for understanding and emphasizing strategic HRM. The different aspects of strategic HRM
have been discussed in the different units of your paper. We shall first have a look at some of the
definitions of Strategic HRM provided by experts.

1.2 STRATEGIC HUMAN RESOURCE MANAGEMENT: DIFFERENT DEFINITIONS

• According to Michael Armstrong, Strategic HRM is a process that involves the use of
overarching approaches to the development of HR strategies, which are integrated
vertically with the business strategy and horizontally with one another. These strategies
define intentions and plans related to overall organizational considerations, such as
organizational effectiveness, and to more specific aspects of people management, such as
resourcing, learning and development, reward and employee relationsv.
 • According to Mello, strategic human resource management involves the development of
a consistent, aligned collection of practices, programs, and policies to facilitate the
achievement of the organization’s strategic objectivesvi.
• In the opinion of Schuler, Strategic human resource management entails all those
activities affecting the behavior of individuals in their efforts to formulate and implement
the strategic needs of the businessvii.
• According to Boxall and Purcell strategic HRM is concerned with the strategic choices
associated with the use of labour in firms and with explaining why some firms manage
them more effectively than othersviii.
• In the opinion of Nankervis, et al. Strategic human resource management (SHRM)
emphasises the need for HR plans and strategies to be formulated within the context of
overall organisational strategies and objectives, and to be responsive to the changing
nature of the organisation’s external ‘environment’ (i.e. its competitors, the national and
international arenas)ix

If you look at all the definitions you will perhaps understand that Strategic HRM is broader
concept which legitimises the role of HRM in an organisation. If you look at all these
definitions, you will probably agree that in all the definitions, the organisational perspective
has been has been highlighted. These definitions also highlight the fact strategic HRM is
different from traditional HRM. Let us now have a look at the differences between the two.

1.3 DIFFERENCE BETWEEN STRATEGIC HRM AND HR STRATEGY

According to Michael Armstrong, Strategic HRM is ‘a general approach to the strategic
management of human resources in accordance with the intentions of the organization on the
future direction it wants to take’x. Bamberger and Meshoulam have described strategic HRM
as ‘the process by which organizations seek to link the human, social, and intellectual capital of
their members to the strategic needs of the firm’xi. On the other hand HR strategy is an
outcome of this process and here the focus is ‘on the specific intentions of the organization on
what needs to be done and what needs to be changed’xii. Bamberger and Meshoulam have
defined HR strategy as an outcome: ‘the pattern of decisions regarding the policies and
practices associated with the HR systemxiii. Armstrong has identified two basic types of HR
strategies namely overarching strategies; and specific strategies relating to the different aspects
of strategic HRM. Overarching strategies involve the broad organisational intentions regarding
the management and development of human resources and the concomitant steps that are to be
taken for attracting, retaining human resources with an aim towards employee commitment,
motivation and engagement. Specific HR strategies identifies what the organisation aims to
accomplish in areas covering talent management, continuous improvement, knowledge
management, resourcing, learning and developing , reward and employee relations.
 In traditional HRM, the HRM activities are undertaken by staff specialists in the HR
department. On the other hand, in strategic HRM the responsibility of HRM lies with line
managers who are in closest contact with the employees and they are more suited in carrying
out HRM. Under traditional HRM there is focus on employer-employee relations for
increasing motivation and productivity. The focus changes in case of strategic HRM wherein
partnership with internal and external customers is emphasised and in this context the
question of managing several relationships among groups that include employees as an
important group is more important. In traditional HRM, the role of HRM is more of
transactional where reaction to events takes place after they occur and HRM becomes a
respondent and a change follower. In strategic HRM, the role of HRM is transformational in
nature wherein, HRM supports an organisation by developing a proactive internal system
required to meet environmental challenges. Following this approach, experts have argued
that under traditional HRM, initiative vis-à-vis change is fragmented, slow and reactive as
against strategic HRM where it is integrated, fast and proactive. Furthermore, strategic HRM
provides space for flexibility with respect to different time dimensions involving short,
medium and long term time frames. Contrary to this, in traditional HRM, only short-term
time dimension is involved. In the context of control, experts believe that traditional HRM is
bureaucratic in nature involving equitable treatment of employees through rules, procedures
and policies. Strategic HRM is not rule guided and is ‘organic’ in nature providing flexibility
to meet changing conditions. Traditional HRM, following the principles of scientific
management, gives emphasis on job specialisation and on division of labour for carrying
independent tasks and focuses on specific skills. On the otherhand, strategic HRM focus less
specialisation with broad job design, cross training and on group-based interdependent tasks.
Again, under traditional HRM, the key investments in organisations involve capital, product,
technology etc. Whereas, in case of strategic HRM, the key investments in organisations
involve knowledge, skills and abilities of employees and the focus is on attracting and
retaining knowledge workers. Finally, traditional HRM considers HRM as a cost centre
where monitoring expenditure is all the more important. In strategic HRM, HRM is
considered as an investment centre where there is focus on value addition from HRM.

Check your progress

Activity 1. On the basis of the definitions stated in section 1.2, identify and
analyse the core issues related to strategic HRM.
2. Talk to any senior HR Executive and try to find out which approach,
traditional or strategic HRM, is more relevant to his/her organisation

1.4 STRATEGIC HRM AND THE DEBATE INVOLVING ‘BEST PRACTICE’ AND ‘BEST
FIT’
Some experts are of opinion that the strategic connotation in HRM has resulted among other
things two distinct perspectives or ways in linking strategy and HRM. The first perspective,
often referred to as ‘universalistic’, suggests that there are specific ‘best’ HRM practices that
facilitate enhanced financial performance, irrespective of the strategy of an organisation. The
argument in favour of best practices is ‘all firms will see performance improvements if only they
identify and implement best practice’. Different experts have highlighted different set of best
HRM practices which are shown in the table below. The best practices hypothesis highlights the
need for developing the knowledge, skills and abilities (KSAs) of human resources through the
best HRM practice applicable across organisations. The hypothesis also highlights the need to
enhance employee development and motivation through reward and development-oriented HRM
practices. However one can find different menu of ‘best’ HRM practices and there is divergence
at times, regarding which HRM practice is best or otherwise. This is evident from the table 1.2
where it is observed that different experts suggest different sets of best HRM practices.
Moreover, experts have highlighted the role of contextual factors which may affect the best
practices approach and have raised the question as to whether the ‘best’ or the ‘universalistic’
perspective can be considered independent of organisational contextxiv. In exemplifying this,
experts have opined that what may deem to be best in one organisation may be otherwise in
some other, since strategy, culture, nature of work and organisation, style of top management
tend to vary across organisations. Furthermore, according to Armstrong ‘knowledge of best
practice as long as it is understood why it is best practice can inform decisions on what practices
are most likely to fit the needs of the organization’. Thus, the best practice perspective has been
criticised on the ground that it ‘has not contributed much to HRM in the strategic sense’xv.
Additionally some experts also argue that HRM practices are organisation-specific where
replication of practice may not be a tenable proposition altogether.

TABLE 1.2 BEST HRM PRACTICES AS SUGGESTED BY EXPERTS

Source: Armstrong, M. (2006). Strategic Human Resource Management : A Guide to Action . London: Kogan Page, p. 54

The second perspective referred to as ‘best fit’ or ‘contingency’, talks about the alignment
between HRM and the organisational context specifically its strategy. Simply stated, this
perspective advocates the integration of HRM with other aspects of business which in other
way, calls for how individual HRM practices will relate to the strategy pursued by organisations.
In this perspective, experts like Schuler and others assert that when there is lack of congruence
between HRM and organisational strategy, and among HRM practices organisational
performance is affected. Thus, we can understand the basic difference between ‘best practices’
and ‘best fit’ in the sense that best practices comprise a set of HRM practices which are
universally applicable to different organisations, irrespective of organisational context, and these
lead to enhanced organisational performance. On the other hand, the ‘best fit’ or ‘contingency’
perspective highlights the need to develop congruence between HRM and organisational
strategy, which leads to enhanced organisational performance and this approach is not
universally applicable, rather it is organisation-specific. This has been exemplified by Armstrong
‘ …having learnt about what works and, ideally, what does not work in comparable
organizations, it is up to the firm to decide what may be relevant in general terms and what
lessons can be learnt that can be adapted to fit its particular strategic and operational
requirements’xvi. This statement signifies the basis connotation of the ‘best fit’ approach. In this
context, Colbert suggests that the ‘best fit’ or ‘contingency perspective’ is concerned with
multiple HR practices and the contingent variable is the business strategy of the organisation
with need-based consideration of interaction effectsxvii.
Boxall and Purcell have effectively have suggested two levels of analysis in the context of ‘best
fit’ versus ‘best practice’ debate as shown in the figure belowxviii. In this context they have made
a distinction between ‘surface layer of HR policy and practice’ and ‘underpinning layer of
process and principles’. They argue that any selection of best practices (referred to as surface
layer) will not have universal relevance because of the relevance of context. They further posit
that there can be ‘some more effective ways of carrying out the generic HR processes (such as
selection) which all firms would be wise to follow.’
Surface layer: HR policies and practices-
heavily influenced by context(societal,
sectoral, organisational)

Underpinning layer: generic HR processes

and general principles of labour
management

Source: Boxall, P., & Purcell, J. (2003). Strategy and Human Resource Management. New York: Palgrave, p.69.

Experts have highlighted the twin issues of ‘external fit’ (or ‘vertical fit’) and ‘internal fit’ (or
‘horizontal fit’) in the context of the framework of ‘fit’. Vertical or external fit emerge directly
out of the best fit approach and it refers to the match between overall business strategy of an
organisation and HRM. Horizontal fit implies the interrelatedness and consistency among the
different HRM policies practicesxix. In the perspective of vertical fit, Schuler and Jackson aver
that a system is ‘vertically integrated’ when HRM practices are aligned with an organisation’s
strategic objectivesxx. This has also been referred to as ‘integration’ and following Brewster and
Larsen (1992: 411) this can be understood in term of ‘the degree to which the HRM issues are
considered as part of the formulation of the business strategy’. Hence there is need to consider
the strategic objectives of organisations in understanding the issues relating to ‘vertical fit’.
According to Armstrong, sometimes it is difficult to achieve vertical fit due to the ambiguous
nature of the business strategy wherein executives may not be able disentangle some aspect or all
aspects of business strategy. Furthermore, experts also argue that the changing nature of vertical
fit has to be understood in terms of time. The different dimensions of vertical fit have been
discussed in unit 3 where we shall try to discuss the linkage between HRM and corporate
strategies, business strategies and organisational characteristics. In the context of ‘internal fit’
experts have suggested three aspects of ‘desirable consistency in HRM’xxi. The first aspect has
been referred to as ‘single employee consistency’ where for example, an organisation forges
consistency among sophisticated selection, training and promotion policies. The second aspect
has been referred to as ‘among employee consistency’ where an organisation forges consistency
across employees involved in carrying out the same type of work. The third aspect has been
referred to as ‘temporal consistency’ which involves consistency in treatment of employees for a
reasonable time period.
Apart from the concept of ‘best practice’ and ‘best fit’, experts have also highlighted a third
perspective referred to as ‘configurational’, which is somewhat similar to the contingency
perspective; envisage ‘pattern’ of HRM practices facilitating the achievement of organisational
goalsxxii (Wright and McMahan, 1992). It is an improvement upon the contingency perspective in
the sense that it highlights ideal types or ‘bundles’ of HR practices for specific business
situations. In assessing the configurational perspective, experts pinpoint the intricacy and
complexity in identifying the best way to configure different HRM practices and that it is
difficult to prove the dominance of one bundle over the other.

1.10.1 References
i
Glueck, W. (1980). Business Policy and Strategic Management (3rd ed.). Singapore: Mc Graw
Hill International, p. 9.
ii Ibid. , p. 6.
iii Armstrong, M. (2004). A Handbook of Human Resource Management Practice (9th ed.).

London: Kogan Page

iv Boxall, P., & Purcell, J. (2003). Strategy and Human Resource Management. New York:

Palgrave, p.48.
v Armstrong, M. (2006). Strategic Human Resource Management : A Guide to Action . London:

Kogan Page, p. 30
vi Mello, J. (2003). Strategic Human Resource Management. Singapore: Thomson Learning.
vii Schuler, R. S. (1992). Strategic Human Resource Management: Linking the People with the

Strategic Needs of the Business. Organizational Dynamics , 21 (1), 18-33.

viii Boxall & Purcell op. cit., p. 49.
ix Nankervis, A., Compton, R., Baird, M., & Coffey, J. (2011). Human Resource Management:

Strategy and Practice (7th ed.). South Melbourne: Cengage Learning

x Armstrong, op. cit., p. 37.
xi
Bamberger, P., & Meshoulam, I. (2000). Human Resource Management Strategy. Thousand Oaks, CA:
Sage, p. 6.

xii
Armstrong, op. cit., p. 37.
Bamberger & Meshoulam, op. cit., p. 5.
xiii

xiv Bacon, N. A. (2001). Competitive Advantage Through Human Resource Management best

practices or core competencies? Human Relations , 54, 361-372

xv Colbert, B. A. (2004). The Complex Resource-Based View: Implications for Theory and Practice
In Strategic Human Resource Management. Academy of Management Review , 29 (3), 341–358.
xvi Armstrong, op. cit., p. 55
xvii Colbert, op. cit.
xviii Boxall & Purcell op. cit., p. 69.
xix Fisher, C. D., Schoenfeldt, L. F., & Shaw, J. B. (2006). 2006 Managing Human Resource. New

Delhi: Cengage Learning, p. 74

21 Schuler, R. S., & Jackson, S. E. (2005). A Quarter-Century Review of Human Resource

MAnagement in the U.S.: The Growth in Importance of the International Perspective.

Management Revenu , 16 (1), 1-25.

xxi Baron, J., & Kreps, D. (1999). Consistent human resource practices. California Manamement
Review , 41 (3), 29-53.
xxii Wright, P. M., & McMahan, G. C. (1992). Theoretical Perspectives for Strategic Human

Resource Management. Journal of Management , 18 (2), 295-320.