MODULE 1.
Introduction to Strategic Human
Resource Management (SHRM) and Human
Resource Environment
Learning Objectives:
1. Discuss and explain the concept and meaning
of strategic human resource management.
2. Identify and differentiate SHRM from
traditional HRM.
3. Discuss and explain the significance of
viewing human resources as “investment” and
source of sustainable competitive advantage
for organizations
4. Explain the linkage between HR strategy and
business strategy
5. Discuss and explain the business environment
in the industry life cycle, and appreciate the
HRM in knowledge economy
6. Discuss and explain the competitive advantage
of technology and HRM
Content Discussion:
Topic 1: Basic Concept of Human Resource
Strategy
➢ Strategic Human Resource Management is
the practice of attracting, developing,
rewarding and retaining employees for the
benefit of both the employees as individuals
and the organization as a whole.
➢ HR departments that practice strategic
human resource management do not work
independently within a silo, they interact with
other departments within the organization in
order to understand their goals and then create
strategies that align with those objectives as
well as those of the organizations.
➢ As a result, the goals of a human resource
department reflect and support the goals of
the rest of the organization.
➢ Strategic HRM is seen as a partner in
organizational success, as opposed to a
necessity for legal compliance or
compensation.
➢ Strategic HRM utilizes the talent and
opportunity within the human resources
department to make other departments
stronger and more effective.
➢ Strategic Human Resource Management
can be defined as the linking human resources
with strategic goals and objectives in order to
improve business and develop organizational
culture that foster innovation, flexibility and
competitive advantage. In an organization
SHRM means accepting and involving the HR
functions as a strategic partner in the
formulation and implementation of the
company’s strategies through HR activities
such as recruiting, selecting, training and
rewarding personnel.
➢ Strategic HRM gives direction on how to
build the foundation for strategic advantage
creating an effective organizational structure
and design, culture, employee value
proposition, systems thinking, an appropriate
communication strategy and preparing an
organization for a changing landscape which
includes downturns and mergers and
acquisitions.
➢ Sustainability and Corporate Social
Responsibility come within the ambit (or
scope/extent) of this discipline, especially with
reference to organizational values and their
expression in business decision making.
➢ Strategic HRM emphasizes organizational
codes of ethics, managing the societal impact
of business decisions, philanthropy and the
role of the human resource professional in
improving the quality of life of employees,
their families and the community at large.
➢ Strategic HRM includes typical human
resource components such as hiring, discipline
and payroll, and also involves working with
employees in a collaborative manner to boost
retention, improve the quality of the work
experience, and maximize the mutual benefit
of employment for both the employee and the
employer.
Strategic HRM therefore, is concerned with the
following:
1. Analyze the opportunities and threats existing
in the external organization.
2. Formulate strategies that will match the
organization’s (internal) strengths and
weaknesses with environmental (external)
threats and opportunities. In other words,
make a SWOT analysis of organization.
3. Implement the strategies so formulated.
4. Evaluate the control activities to ensure that
the organization’s objectives are duly
achieved.
Nature of SHRM:
1. Long-term Focus: As business strategies
have a long-term orientation, thereby focus of
SHRM is also long-term probably more than
one year.
2. Associated with Goal-Setting: SHRM is
highly related with setting of objectives,
formulation of policy and allocation of
resources and it is carried out at all levels of
top management.
3. Interrelated with Business Strategies: There
is interrelation between business strategies and
SHRM.
Example, it gives significant inputs when business
strategy is formulated, and human resource
strategies like recruitment, staffing, training and
performance appraisal.
4. Foster Corporate Excellence Skills: SHRM
considers employees as the strategic potential
of the organization and on that basis makes
effort to differentiate the organization from its
competitors present in the markets. It also
promotes learning of modern skills.
Figure 1.1 Ulrich's Model of Human Resource
Management
Whereas the Functions of HR Department include:
1.Having Strategic Focus
2.People Management
3.Systems Management
4. Operational Functions
The Roles of HR Manager include:
1. Being a Strategic Partner
2. A Change Agent
3. An Employee Champion
4. An Administrative Expert
Strategy
The origin of this concept has military orientation,
going back to the Greek word
‘strategos’,for a general who organizes, leads and
directs his forces to the most advantageous position
(Bracker, 1980; Legge, 1995).
In the context of business, it explains how top
management is leading the organization in a particular
direction in order to achieve its specific goals,
objectives, vision and overall purpose.
The main emphasis of strategy is to enable an
organization to achieve competitive advantage with its
unique capabilities by focusing on present and future
direction of the organization.
Strategy is the determination of the basic long-term
goals and objectives of an enterprise, and the adoption
of courses of action and the allocation of resources
necessary for carrying out these goals. (Chandler,
1962).
Figure 1.2 HIERARCHY OF STRATEGY
Aims of SHRM:
1.To develop Strategic Competencies
To make sure that the company needs standards and
competent and highly motivated employees for
achieving sustainable competitive advantage.
2.To give Sense of Direction
It guides the organization in the right direction so that
the business requirements of the organization and the
individual as well as the co-operative requirements of
its employees are met by creation and attainment of
consistent and reasonable HR policies and programs.
3.To achieve Integration
Target of SHRM is to give a united framework, so that
the organized HR system works synergistically in
accordance with the organizational strategic
objectives.
4.To formulate Business Strategy
By focusing on the measures through which the
organization can use the power of its human resources
for the increasing benefits.
Key Features of Strategic Human Resource
Management:
1. There is an explicit linkage between HR policy
and practices and overall organizational strategic
aims and the organizational environment.
2. There are some organizing scheme or design
linking individual HR interventions so that they
are mutually supportive.
3. Much of the responsibility for the management of
human resources is devolved or delegated down
the line.
Approaches of the SHRM:
1. Attempts to link Human Resource activities with
competency based performance measures.
2. Attempts to link Human Resource activities with
business surpluses or profits.
These two approaches indicate two factors in an
organizational setting.
1. The human factor, their performance and
competency
2. The business surplus which are uniquely important
in sustained business success.
Barriers of SHRM:
1. Inducing the vision and mission of the change
effort
2. High resistance due to lack of cooperation from
the bottom line
3. Interdepartmental conflict
4. Commitment of the entire senior management
team
5. Plans that integrate internal resource with external
requirement
6. Limited time, money and other resources
7. The status quo approach of employees
8. Fear of incompetency of senior level managers to
take up strategic steps
9. Diverse workforce with competitive skill sets
10. Fear towards victimization in the wake of failures
11. Improper strategic assignments and leadership
conflict over authority
12. Ramification or consequence or outcome for
power relations
13. Vulnerability to legislative changes
14. Resistance that comes through the legitimate labor
institutions
15. Presence of an active labor union
16. Rapid structural changes
17. Economic and market pressures influenced the
adoption of SHRM
18. More diverse, outward looking approach
Benefits of SHRM:
1. Identifying and analyzing external opportunities
and threats that may be crucial to the company’s
success
2. Provides a clear business strategy and vision for
the future
3. To supply competitive intelligence that may be
useful in the strategic planning process
4. To recruit, retain and motivate people
5. To develop and retain of highly competent people
6. To ensure that people development issues are
addressed systematically
7. To supply information regarding the company’s
internal strengths and weaknesses
8. To meet the expectations of the customers
effectively
9. To ensure high productivity
10. To ensure business surplus through competency
5P - Model of SHRM:
The 5 Ps Model of strategic human resource
management is a new model in the area of study. This
model is proposed by Randal Schuler, that melds
(blends or mix) together five human resource activities
with strategic highlight just how significant the
strategy activity link can be.
The proposed model incorporates the 5 Ps of
SHRM which stand for:
1. Philosophy of Human Resources
2. Policies of Human Resources
3. Programs of Human Resources
4. Practices of Human Resources
5. Processes of Human Resources
Philosophy: Expressed in statements defining
business values and culture. It expresses how to treat
and value people
Policies: Expressed as shared values and guidelines.
Policies establish guidelines for action on people
related business issues and HR programs.
Programs: Articulated as human resource strategy.
These coordinate efforts to facilitate change to address
major people related business issues.
Practices: For leadership managerial and operational
role practices motivate needed role behaviors.
benefits, challenges and how to overcome these
challenges in the emerging trends in Strategic HRM.
We also learned the difference between the Human
Resource Management (HRM) and the Strategic
Human Resource Management (SHRM) that may
influence how Strategic HR initiatives and the impact
they likely to have on organizations and its people

Processes: For the formulation and implementation of

other activities that define how activities are carried
out.

Importance of SHRM:

1. Helps firm in achieving cost-effective engagement

of labor
2. Enables firm to meet changing needs
3. Provides clear-cut goals, direction, and future
focus
4. Helps organization in planning and executing
organizational changes
5. Ensures optimum utilization of organizational
resources
6. Develops, manages and sustains skills and
knowledge

Challenges of SHRM:
1. Absence of long-term orientation
2. Lack of strategic reasoning
3. Lack of adequate support from top management
4. Resistance from labor unions
5. Fear of failures
6. Rigidity of HR practices

Overcoming Challenges of SHRM:

1. Conduct a rigorous initial analysis
2. Formulate strategy
3. Gain support
4. Assess barriers
5. Manage change
6. Project management and implementation
7. Follow-up and evaluate

Summary
Let us now summarize what we studied in this module.
We learned about the genesis, definitions and meaning
of Human Resource Management, Strategy, and
Strategic Management which are the foundation of
Strategic HRM.

We also discussed the concepts, nature, aims,

importance, features, approaches, hierarchy, barriers,