Strategic Human Resource Management The Strategic approach to HRM refers to the relationship between human resource practices

and the strategic objectives i.e., the long-term goals of the organization. From being a routine administrative and reactive function, HR today has evolved to being proactive & strategic. The important question is that whether an organization achieves competitive advantage by linking HR strategy with business strategy.

SHRM is an approach to the management of HR views people as assets.

Instead of viewing HR as a cost to the organization, firms have begun to consider employees as investments.

Human Resource Strategy HR Strategy involves the planned and effective use of human resources by an organization to help itself gain or maintain an edge over competitors (competitive advantage). Wright & McMahan (1992) defined SHRM as the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goal.

Key Components of SHRM Human resources (people) as the primary source of competitive advantage. HR programs, policies and practices as the means through which the people of the organization can be deployed to gain competitive advantage. The pattern and plan imply a fit between HR strategy and the organization's business strategy. The people, practices & planned pattern are all purposeful and directed towards the achievement of the goals of the organization.

An organization uses a combination of several resources tangible and intangible in its pursuit of objectives; physical capital resources, the plant, equipment & finances, organizational capital resources, HR system, history & organizational culture. Human capital resources skills, knowledge, judgment & intelligence of organization.

Factors determining the investment orientation of an organization 1) 2) 3) 4) 5) Management values Attitude towards risk Nature of skills (ESOPS) Utilitarian /bottom line perspective cost benefit analysis Availability of outsourcing

Evolution of HRM Predates to Taylors Scientific Management Theory and Fayols Administrative Theory. In 1930s and 40s, HR function grew in significance largely due to wartime imperative. In India, TISCO set a personnel department in 1947. The term HRM emerged in the early 1970s and replaced personnel management which was more mechanistic & bureaucratic. But HRM is decentralized, flexible, and has cross-functional & cross-hierarchical teams.

Shift in Focus from HRM to SHRM Early 1980s saw the emergence of SHRM when strategic is prefixed to HRM, it puts an emphasis on the ways in which HRM contributes to the organizational effectiveness.

Objectives of SHRM Ensure the availability of a skilled, committed and highly motivated workforce in the organization to achieve sustained competitive advantage. Provide direction to the organization so that both the business needs of the organization and the individual and collective needs of its workforce are met. SHRM can be practised only in organizations that have a clearly articulated corporate and business strategy.

Strategic Fit Central to the idea of SHRM is strategic fit. The interval resources and skills must match with the opportunities available in the external environment. Guest, 1989 emphasized that it is important to ensure that HRM is fully integrated into strategic planning.

Five Strategic Fits Fit as a strategic interaction (best fit approach) The HR practices linkage with the external context. Fit as contingency Internal practices of organisation respond to external factors such as nature of the market, skill availability. Fit as an ideal set of practices best practices which all firms can adopt. Fit as Gestalt finding an appropriate combination of practices

Fit as bundles of HR practices that complement each other. The best fit approach, the HR bundles or configuration approach and the best practice approach provide possible approaches to SHRM.

Best Fit Approach: Linkage of HR strategies with business strategies Miles and Snows classification of business strategy & HR strategy suggests that HRM practices should be tailored to the demands of the business strategy. They identified 4 types of organizational strategies on the basis of dominant culture of the organization. They are defenders, prospects, analyzers and reactors.

Weakness of the Best Fit Approach The best fit approach and its proposition that HR practices should be driven by the competitive strategy have been criticized. First, the approach is seen as failing to align employee interests with that of the organization. Viewing the competitive strategy as a typology. The competitive strategy is multidimensional and subject to important variations across industries. The approach is viewed as lacking attention to the dynamic scenario.

The HR bundles approach HR practices are interrelated and internally consistent. Researches prove that when a high involvement HR practice that is complementary to other HR practices is introduced the new practice improves performance. The Best Practice Approach: The best practice must be adopted irrespective of the context.

SHRM Approach The Indian Context The Integrated Model As proposed by Rao (1980), this views HRM as a process and not merely as a set of practices, mechanisms or techniques, HR practices such as appraisal, training, rewards are used to initiate, facilitate and promote this process in a continuous way. The HRD Framework According to Athraya 1988, the ultimate aim of HRD is full participation of the individual in his/her job and life A positive HR climate.

HRD as an Approach Propounded by Rayal (1993), HRD as an approach and not a Function. HR programmes are need based and may vary significantly in their approach and emphasis is laid on philosophy, programmes and on leader behavior.

Alternative HR Strategies Contract Companies in the Manufacturing Sector: Manufacturing companies rely heavily on contract companies, so it is important for contract companies to establish HRM practices that suit their business strategies if they are to generate high profiles. Development/Contractor managed type. Handling high-skill contract work and improving operation management. Segmentation/Client managed type speedy supply of contract.

Thus it is evident from all these discussions that strategic decisions should be backed by appropriate HRM practices for an organization to succeed.