Assignment

Strategic Human Resource Management

1st Module
Submitted by
Misbah Banu
4th Semester HRM
Defining Strategic Human Resource Management

Strategic human resource management means formulating and executing human

resource policies and practices that produce the employee competencies and
behaviors the company needs to achieve its strategic aims.

The basic idea behind strategic human resource management is this:

In formulating human resource management policies and activities, the aim must be
to produce the employee skills and behaviors that the company needs to achieve its
strategic goals.
 • Company’s
environment
• Economic, political,
Demographic,
technological
Company’s strategic plan
Company’s strategic plan

Company’s
strategic situation

Companys HR (and other

functional) strategies
Company’s What are the basic policies
strengths and HR will pursue to ensure that
weaknesses the recruiting, selecting,
training, appraising, and
compensation systems support
Organizational the company’s strategic plans
Performance
The basic idea behind strategic human resource
management is this: In formulating human resource
management policies and activities, the aim must be to
produce the employee skills and behaviors that the
company needs to achieve its strategic goals.
Human Resource Strategies and Policies:
Managers call the specific human resource management
policies and practices they use to support their strategic
aims human resource strategies. The Shanghai Portman’s
human resource strategy aimed to produce the service-
oriented employee behaviors the hotel needed to
improve significantly the hotels level of service . Its HR
policies included having top management personally
interview each candidate and selecting only employees
who cared for and respected others.
An Investment Perspective of Human
Resource Management
Effective organizations realize that their employees do have value,
much as the organization’s physical and capital assets have value.
Taking an investment perspective toward
HR/assets is critical considering that other
physical assets, such as facilities, products
and services, technologies, and markets,
can be readily cloned or imitated by
competitors.
This is becoming increasingly important as
the skills required for most jobs become
less manual and more cerebral and
knowledge-based in nature.
Human assets cannot be duplicated and
therefore become the competitive
advantage that an organization enjoys in its
market(s).
An organization’s “technology” is becoming
more invested in people than in capital.
Thought and decision-making processes as
well as skills in analyzing complex data are
not “owned” by an organization but by
individual employees.
Managing an organization’s employees as investments mandates the
development of an appropriate and integrated approach to managing
HR that is consistent with the organization’s strategy.
As an example, consider an organization whose primary strategic
objective involves innovation. An organization pursuing an innovation
strategy cannot afford high levels of turnover within its ranks. It needs
to retain employees and transfer among employees the new
knowledge being developed in-house.
it is critical as part of the organization’s overall strategy for the
organization to devise strategies to retain its employees and their
knowledge bases
Valuation of Assets: Valuation of
human assets has implications for
compensation, advancement
opportunities, and retention
strategies as well as how much
should be invested in each area for
each employee.
HR Metrics
Absence Rate
Cost per Hire
Health Care Costs per Employee
HR Expense Factor
Human Capital Return on Investment (ROI)
Human Capital Value Added
Labor Costs as a Percentage of Sales or Revenues
Profit per Employee
Revenue per Employee
Time to Fill
Training Return on Investment (ROI)
Turnover Costs
Turnover Rate (Monthly/Annually)
Vacancy Costs
Workers’ Compensation Incident Rate
Workers’ Compensation Severity Rate
Difference between traditional HRM and
strategic HR
1. Focus and Orientation:
Traditional HRM: Traditional HRM has a primarily administrative and
operational focus. It emphasizes day-to-day activities such as
recruitment, employee onboarding, payroll administration, performance
appraisals, and compliance with labor laws and regulations.
Strategic HRM: Strategic HRM takes a more proactive and forward-
looking approach. It aligns HR practices with the overall strategic goals
and objectives of the organization. It focuses on activities that
contribute to long-term organizational success, such as talent
management, succession planning, and workforce planning.