DELHI SCHOOL OF MANAGEMENT

DELHI TECHNOLOGICAL UNIVERSITY

INNOVATIVE PROJECT

MGH-04 STRATEGIC HUMAN RESOURCE

MANAGEMENT

“Review of Research Papers”

SUBMITTED TO
Mr. Himanshu Panwar

SUBMITTED BY
SAUMYA KAMDAR (2K20/DMBA/115) SECTION B
Paper 1: Strategic human resource management effectiveness and firm
performance
By: Orlando C. Richard and Nancy Brown Johnson

Publisher: The International Journal of Human resource Management

Citation: Richard, O. C., & Johnson, N. B. (2001). Strategic human resource

management effectiveness and firm performance. The International Journal of
Human Resource Management, 12(2), 299–310. doi:10.1080/09585190121674 

 Paper at a Glance:

 Comprehensive review of the paper:

In today’s dynamic environment where cut throat competition exist the main aim of any
organisation is to sustain its position and earn substantial profits. This simple goal however is
not as simple as it appears especially when we throw light at the journey that translates it into
success. To achieve this goal, any firm needs to have a sustained competitive advantage
which means that it should have resources that are hard to duplicate, have no direct
substitutes and widen the arena of opportunities for the firm to capture.

However when we talk about physical and technical resources what is the major problem that
sticks around is that they can easily be copied by the competitors. In such a situation it is the
human resource that can actually prove to be advantages mainly because it is quite difficult to
be imitated. Here the role of human resource management effectiveness that is creating a
pool of human resource capital comes into picture.

Studies reflect that effectiveness can be divided into two types:

 1. The technical human resource management effectiveness that involves the usage of
traditional human resource practises effectively basically recruiting selection.
2. Strategic Human resource management effectiveness which arises from building
the human resource complexity via innovation and such as a flexible workforce,
employee empowerment, team-based job design etc.

This effectiveness is indicated by how well the human resource management function is able
to achieve the goals by creating superior human capital skills, experience and knowledge and
thereby contribute to the firm’s economic value. However, it is not as easy as it seems
because the successful implementation of human resource management policies and practises
eventually remains quite difficult which in turn makes effectiveness quite hard to achieve.
The paper specifically talks about strategic human resource management effectiveness
because this form of human resource management effectiveness talks about the firm specific
capabilities that will in turn yield economic benefits which cannot be easily duplicated
through the competitive actions.

Now that it is quite evident that the human resource is quintessential for any organisation, it
is important to study the role of strategic human resource management on organisational
performance keeping in mind various factors such as employee turnover productivity and
financial performance. Further, it is very important to understand that simply having human
resources would not provide any kind of advantage to the firm rather, it is quite important
that the firm should have the ability to assemble, integrate and manage its human resources
and drive them towards productivity, effectiveness and efficiency. Keeping this resource
based view in mind; the paper has tried to understand the relationship of human resource
effectiveness on firm level outcomes especially keeping in mind the contingency theory
which states that the relationship between the independent and dependent variable varies for
different levels of a critical contingency variable. Here, the strategic variable that was taken is
“capital intensity”. The paper explains how different firms have different capital investment
in physical assets. It says that while some firms want direct control over physical assets and
they perform more work internally, the other firms actually concentrate on their core business
and believe in outsourcing the other operations. This however highlights that the basic
advantage of managing the capital asset intensity is to gain control over the operations and
quality but this also requires investments plants, equipments and other assets.

As we mentioned that for any firm, profit is one of the main goals, hence when we
specifically talk about firms that have made huge capital investment, it becomes
quintessential for them to have superior performance and productivity in order to cover their
investment costs & receive a return. This clearly indicates that firms with high capital
investment or high capital intensity need to obtain higher productivity per employee and this
point towards the need for strategic human resource management effectiveness, especially in
case of firms with high levels of capital intensity. The paper also aims to prove that there is a
positive interaction effect between the human resource effectiveness and the firm’s capital
intensity, which in simple terms means that for capital intensive firms, the organisational
effectiveness gains from the strategic human resource management effectiveness will be
amplified.
The paper has hence brought forth two hypotheses and has used primary and secondary
data sources to test the hypothesis in case of industry differences within the banking
industry. The paper reflects how the banking industry has undergone major changes after the
deregulation as they received more strategic autonomy. These structural and technical
changes have eventually contributed to the HR practices which are essential specifically in a
service oriented sector like “banking”.

The following are the primary and secondary data sources used:

1. Primary Data Source: Questionnaire to obtain information on strategic human resource

effectiveness, employee turnover and stage of organizational development.

2. Secondary Data Source: Sheshunoff bank search database to understand objective e

measures of performance and capital intensity.

The following hypotheses were tested:

1. Firms that achieve higher levels of SHRM effectiveness will have higher levels of
organizational effectiveness.
2. Strategic HRM effectiveness and capital intensity will influence organizational
effectiveness through positive interaction effect.

The following process was adopted to conduct the survey via questionnaire method:

Directly acquiring the

contact details of HR Sending reminder
Mailing the survey
directors of various messages to non-
forms.
banks and contacting respondants.
them.

Various dependent and independent measures were identified and details like annual
turnover, income per employee, return on equity etc. were collected in order to understand
employee productivity, strength of the financial institution and measure the bank’s financial
performance. Further, things like employee participation and empowerment, workforce
planning, flexibility, teamwork management, workforce productivity, quality of output,
employee and manager communications et cetera were also measured via a likert-type scale
in order to identify how well the human resource management function was performing. This
measure was quite different from the traditional assessments because in those assessments the
employers were simply asked to indicate whether these policies existed or not but in this
assessment the managers were asked if these programmes were performing satisfactorily or
not. The paper also measured the capital intensity via the branch intensity index which used
the number of branches upon total assets. A higher index indicated that the asset dispersion
across the bank’s network of branches was high while a lower index determined that there
was greater concentration of assets across the banks network of branches.
A hierarchical regression analysis was performed to test the two hypotheses and
following results were obtained:

1. Effectiveness is kind of unrelated to productivity and firm performance but it is

correlated with low turnover i.e. effective HR systems and policies can significantly
reduce employee turnovers.
2. If the strategic human resource management effectiveness is aligned with the capital
intensity it would increase both the firm’s productivity and ROE.
3. When HR programmes are implemented along with a strategy that focuses on
effective HR implementation, the company performance is more likely to improve.
4. Firms with higher level of SHRM effectiveness also witness performance gains.

 Gaps & Recommendations:

1. The findings of this study back up the idea that SHRM effectiveness varies by
company, and that higher SHRM effectiveness correlates with stronger organisational
success. It's possible, though, that company with higher performance simply have
more resources to devote to HR.
2. The study simply works on just one sector i.e. “banking”. The results might vary for
other sectors.
3. The study uses a questionnaire method; however, a huge population wasn’t covered.
Also, the study uses just one contingency factor. Hence, the scope of this study was
quite limited according to me.
4. I would suggest that a more extensive study can be conducted in future among various
sectors and keeping in mind various contingency factors.

Paper 2: Managing Two Fits of Strategic Human Resource Management

By: Lloyd Baird and Ilan Meshoulam

Publisher: Academy of Management Review

Citation: Baird, L., & Meshoulam, I. (1988). Managing Two Fits of Strategic

Human Resource Management. Academy of Management Review, 13(1), 116–
128. doi:10.5465/amr.1988.4306802

 Paper at a Glance:
  Comprehensive review of the paper:

It’s quite evident that the business environment is marked by plethora of technological
economic and social changes that cause organisations to adapt themselves to the dynamic
environment. In order to sustain in such changing times, organisations need to continuously
evolve. In such situations human resource is of prime importance.

The paper builds on the fact that more and more organisations depend on human resources in
order to achieve their objectives and these objectives can simply be achieved only when the
human resource practices, systems and procedures are crafted and implemented as per the
organisational needs. This points to need to adapt a strategic perspective to human resource
management. The paper is quite different from the previous studies which only talk about
how human resources are source of competitive advantage but do not speak much about the
human resource management practises and procedures that can be managed in order to
comply with the present and future business needs. The paper then talks about how two
strategic fits must be maintained in order to achieve organisational success and these two fits
can be categorised into external and internal fit. Based on these fits, the paper presents a
human resource management model by undertaking primary and secondary research.

1. External Fit: Fitting structures, systems and management practices to an

organizations stage of development.
2. Internal Fit: These structures, systems and management practices must also
complement each other.

When we read about the external fit in detail, it simply talks about how an organisation needs
to change when it grows and develops. Through this understanding of how organisation
changes when it grows, one can also understand how human resource management must
change and the paper talks about four models that have been used to explain this
organisational growth and development.

Life cylce and Metamorphosis

Evolutionary Model Stage Models
Hierarchical Models Theory
Organizational States that Organizations do Change occurs when
development occurs organizations don't adapt but the entire the fit between
in a cycle of birth, die, they need to process requires environment and
maturity and decline. reform when certain building organization is so poor
environment changes. blocks. that it leads to a
Organizations that fail question on the
to reform decline and survival of the
die organization.

This indicates that growth is not a buttery process and change happens in major shifts
rather than being a continuous process of small steps and human resource management must
be quite effective to fit the organisation by balancing its growth with the growth of the
organisation it is a part of. Thus, it becomes quite important to fit the human resource
management to the organizations need and for this the human resource programmes and
practices must change and evolve. So, there are basically five organisational stages starting
from initiation to strategic integration and these stages require the human resource to respond
in different ways. For example, in case of initiation, it is basically a very basic stage which
can be called as a start up or entrepreneurship stage wherein all the basic functions such as
salary, administration, hiring, termination and all these decisions are simply taken up by the
line managers. So the stage has very limited human resource management concerns.
However, when we move on to further stages, maybe to the stage two or stage three, these
require more specialised or dynamic human resource functions, for example managers need
to manage between specialised functions, different resources & they need to fight with other
departments for these limited resources and ultimately a more strategized focus is required.

In simple terms it means that as the organisation moves from one stage to a higher stage, the
human resource functions should also alter according to these stages in order to fit itself with
the organisational growth and development. This is because when the organisation grows so
it requires coordination between high numbers of personnel, they require more specialised
activities; they need to focus more on the strategic issues and due to these changes we need to
maintain a fit between the human resource and the organisational growth and development
stage. However only aligning with the organisational fit doesn’t do the job, so internal fit is
as important as external fit and by internal fit we mean how well the structure of technology,
human resources all fit and support each other. However only aligning with the organisational
fit doesn’t do the job, so internal fit is as important as external fit and by internal fit we mean
how well the structure of technology, human resources all fit and support each other. In the
internal fit, six strategic components of human resource management were identified which
talked about the management awareness ranging from focus on administrative needs such as
hiring to awareness of the environment and integration of the technology using IT tools and
other statistical tools as well. The paper revealed that these components must fit with each
other and if they fail to do so then there will be a lot of loss of money time and energy.

All in all, there should be a balance between these two fits and they should continuously
interact and be managed together. There can never be one best way to do a thing because of
the level of complexity, so the entire aim should be to align the practice of human resource
management to fit the firm’s business needs and for this the managers need to be extra
careful and craft the programs accordingly. Further the human resource management must be
very responsive to the organisations need and for this they must first identify the stage in
which the organisational development is currently and when this stage is identified, they need
to develop appropriate human resource management responses. This is basically an entire
chain and the manager should not get confused as to where to begin. So, he should imagine
that these are all blocks and need to arrange them in the correct order. In case it is not in the
correct order, then the sequence can get disrupted. So for that organisations should begin by
investing in the basic programmes and procedures and then only they should shift to some
higher level systems and procedures.

Since we have seen how important human resource is in case of organisational growth hence
the human resource personnel’s who have a strategic vision or have a strategic orientation
need to very carefully understand the organisations need, the resource constraints and also
understand the opportunities which are available and this can be easily achieved only if they
have an understanding of the organisations environment as well as its internal culture. The
following skills become very important for them to possess.

Information Change
Planning Management Integration
Management management
Skills
Skills Skills skills
Skills
Only then they can actually develop some strong plans and implement these plans and
policies in order to meet the firm’s need.