Strategic Human

Resource
Management
 Time to strategies?

HR has long since been considered as a support

function. Has that definition changed over time? Is
it becoming more strategic in nature?

THINK !!!!!!!
 Sandip Mallik, director- HR, Aviva India,
says,
"HR is becoming more strategic
on two counts.

• First, HR is a risk manager.

• Second, HR facilitates the

growth of engagement capital

both of which have a huge

impact on franchise valuation.
 TODAY’S SCENARIO

• Today's HR professionals contribute to

creating engagement capital, or building
engagement over time, to improve
employee effort, retention, and key
business outcomes. As we balance
short-term improvements with
engagement drivers that sustain
engagement over time, there has to be a
greater alignment of the HR function to
an organization's strategic needs.
 HR’s Strategic Challenges
• Strategic plan
– A company’s plan for how it will match its
internal strengths and weaknesses with
external opportunities and threats in
order to maintain a competitive
advantage.
• Three basic challenges
– The need to support corporate
productivity and performance
improvement efforts.
– That employees play an expanded role in
employers’ performance improvement
efforts.
– HR must be more involved in designing—
not just executing—the company’s
strategic plan.
 The Strategic Management Process
• Strategic management
– The process of identifying and executing the organization’s
mission by matching its capabilities with the demands of its
environment.

• Strategy
– A strategy is a course of action.
– The company’s long-term plan for how it will balance its
internal strengths and weaknesses with its external
opportunitiesand threats to maintain a competitive
advantage.
 Strategic Human Resource
Management
• Strategic Human Resource
Management
The linking of HRM with
strategic goals and objectives
in order to improve business
performance and develop
organizational cultures that
foster innovation and flexibility.

-Formulating and executing

HR systems—HR policies
and activities—that produce
the employee competencies
and behaviors the company
needs to achieve its strategic
aims.
 Nature of SHRM:

1) Long-term Focus: As business strategies have a long-term orientation, therefore, 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 an interrelation between business

strategies and SHRM. E.g. it gives significant inputs when business strategy is
formulated, and human resource strategies (like recruitment, staffing, training and
performance appraisal).

4) Fosters 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.
 Aims of SHRM:

1) To develop Strategic Competencies: to make sure that the company has needed
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 programmes.

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.
 Barriers of SHRM:
Inducing the vision and mission of the change effort.
High resistance due to lack of cooperation from the bottom
line.
Interdepartmental conflict.
The commitment of the entire senior management team.
Plans that integrate internal resource with external
requirements.
Limited time, money and the resources.
The status quo approach of employees.

Fear of incompetency of senior level managers to take up

strategic steps
 Barriers of SHRM:

Diverse work-force with competitive skill sets.

Fear towards victimisation in the wake of failures.
Improper strategic assignments and leadership conflict over
authority.
Ramifications for power relations.
Vulnerability to legislative changes.
Resistance that comes through the legitimate labour
institutions.
Presence of an active labour union.
Rapid structural changes.
Economic and market pressures influenced the adoption of
strategic HRM.
More diverse, outward looking approach.
 Benefits of SHRM:

1) Identifying and analysing 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 thorough competency.

 5P Model of SHRM:

The 5 Ps model of strategic human resource management (SHRM) is a new

model in the area of study. This model is proposed by Randal Schuler.

This model melds five human resource activities with strategic highlight just
how significant, the strategy activity link can be.

The proposed model incorporates the 5 Ps of strategic human resource

management which stand for:

1. Philosophy of Human resources

2. Policies human resources
3. Programme of human resources
4. Practices of human resources
5. Processes of human resources
 Importance of SHRM:

a) Helps firm in achieving cost-effective engagement of Labour

b) Enables firm to meet changing needs

c) Provides clear-cut goals, direction, and future focus

d) Helps Organization in Planning and Executing Organizational Changes

e) Ensures Optimum Utilization of Organizational Resources

f) Develops, Manages and Sustains Skills and Knowledge

 Challenges of SHRM:

i. Absence of Long-term orientation

ii. Lack of Strategic Reasoning

iii. Lack of adequate support from top management

iv. Resistance from Labour Unions

v. Fear of Failure

vi. Rigidity of HR Practices

 Overcoming Challenges of SHRM:

i. Conduct a rigorous initial analysis

ii. Formulate Strategy

iii. Gain Support

iv. Assess barriers

v. Manage Change

vi. Project Management and Implementation

vii. Follow-up and Evaluate

 Difference between Traditional HR and Strategic HR:
Linking Corporate and HR Strategies
 HR’s Strategic Roles
• HR professionals should be part of the firm’s
strategic planning executive team.
– Identify the human issues that are vital to business
strategy.
– Help establish and execute strategy.
– Provide alternative insights.
– Are centrally involved in creating responsive and market-
driven organizations.
– Conceptualize and execute organizational change.
 HR’s Strategy Formulation Role
• HR helps top management formulate strategy in a variety of ways
by.

– Supplying competitive intelligence that may be useful in

the strategic planning process.

– Supplying information regarding the company’s internal

human
strengths and weaknesses.

– Build a persuasive case that shows how—in specific and

measurable terms—the firm’s HR activities can and do
contribute to creating value for the company
The Basic Architecture of HR
The High-Performance Work System
• High-performance work system
(HPWS) practices.
– High-involvement employee
practices (such as job
enrichment and team-based
organizations),
– High commitment work practices
(such as improved employee
development, communications,
and disciplinary practices)
– Flexible work assignments.
– Other practices include those
that foster skilled workforces
and expanded opportunities to
use those skills.
Translating
Strategy HR
into Policy
and
Practice

Basic Model of
How to Align
HR Strategy
and Actions
with
Business
Strategy
 FACTORS CONTRIBUTING TO STRATEGIC
ASPECTS OF HR FUNCTIONS
Internal factors :
• organization structure
• organization culture
• organization competencies
• organization internal
• organization policies
processes, etc.
External factors:
• market scenario
• competitors government
• policies technological
• advancements, etc."
Emerging Trends In The Field Of
Strategic
Human Resource Management

• The employee
involvement
• Flow rate of an HR
• Performance
Management
• Reward Systems
• Loyalty towards the
work
• Focus on employee
retention
• Cross cultural issues
• Effects of rapid
changes in technology
• New emerging
concepts of line and
general management
THREE IMPORTANT
STRATEGIC HR
TOOLS
 STARTEGY MAP
• Graphical tool that
summarizes the chain of
activities that contribute to
the company’s success,
and shows employees the
“big picture” of how their
performance contributes
to achieving the company’s
overall strategic goals.
 HR SCORECARD
• A process for managing
employee performance
and for aligning all
employees with key
objectives, by assigning
financial and non
financial goals,
monitoring and
assessing performance,
and quickly taking
corrective action.
The HR Scorecard
Approach
to Formulating HR
Policies,
Activities, and
Strategies
 DIGITAL DASHBOARD

• Presents the manager

with desktop graphs
and charts, so he or she
gets a picture of where
the company has been
and where it’s going. In
terms of each activity
in the strategy map.
 S.H.R.M
in
Small and
Medium
Sized
Enterprises
 According to “Journal of Management and
Marketing Research”, the conceptual framework
for studying the relationship between the strategic
human resource management practices of small
and medium sized businesses and their
performance as corporate partners, as industry
and competitive conditions change.
Like any other organization, the sophistication
of their human resource management
practices can lead to operational inefficiencies
that can affect their ability to meet their
obligations to corporate buyers.
 Factors that
Enable Operating Excellence

STRONG RECRUITING AND

MANAGEM RETAINING
ENT TALENT
TEAM

OPERATING
EXCELLANCE

ENABLING REWARDS AND

STRATEGY INCENTIVES TO
SUPPORTIV INDIVIDUAL
E AND
CULTURE TEAM
 Element of Factor Affecting
SME’s S.H.R.M.
According to “Journal of Management and
Marketing Research”
COMPETETIVE
INDUSTRY
CONDITIONOF
CONDITIO
INDUSTRY
N

FACTORS

DIRECT
VALUE TO SME’S
COMPETETION
PARTNER
FROM OTHER
SME’S
 Reasons for Adopting SHRM In SME’S
• Emerging Strategic
Partnership.
• Building competitive
advantage in industry.
• Strategic implementa tion
and execution of
strategies.
• To be focused on
intellectual, human and
social capital.
• Focusing on Core
Competency.
SHRM IN DIFFERENT SME
INDUSTRY
 SHRM
Growth Industry APPROACH
Innovative leader, aggressively
adopting strategic human resource
management practices to enable it meet
the needs of partners in fast growing
industries
Flexible leader whose human resource
management practices is focused on
meeting the current needs of its big
business partner
Fragmented Industry
Matured Industry
Matured leader relying on the technical
human resources management
capabilities that have proven beneficial in
meting partner needs. May be anticipating
a competitive need to shift focus to
serving the needs of companies in a fast
moving industry and thus a need to adopt
strategic human resource management
practices
Laggard, reliant on technical human
resource management practices. Has
limited resources to be competitive in
serving the needs of companies in a
growing industry
Declining Industry
 Success of Strategic Human Resource
Management in SME’S
• Institutionalization and the resultant job
satisfaction and psychological ownership
of SHRM practices are keys towards
building the core competencies and
internal organizational capabilities that
enables an SME to become a valued
strategically.

• Management commitment is also critical

to the success of the SHRM practices of a
SME.