Strategic human resource management is the process of linking the human resource function with the organization’s strategic objectives to improve performance.
Attracting and keeping talented and skilled employees is one of the most important challenges organizations face in today’s dynamic business world.
No matter how well designed, no strategy will work unless the organization has the right people, with the right skills and behaviors, in the right roles, motivated in the right way, and supported by the right leaders.
A company can develop a competitive advantage through the skills and competencies of its people.
So to be successful more value must be given to people.
Strategic human resource management is the proactive management of people to their desired value. It is designed to help companies better meet the needs of their employees while promoting company goals.
Several commentators have argued that the concept of Strategic Human Resource Management (SHRM) has evolved as a bridge between business strategy and the management of human resources.
SHRM is a philosophy of people management based on the belief that human resources are uniquely important to sustain business success.
An organization gains a competitive advantage by using its people effectively, drawing on its expertise and ingenuity to meet clearly defined objectives.
SHRM aims to ensure that the organization’s culture, style, structure, and employees’ quality, commitment, and motivation contribute fully to achieving business objectives.
HR strategies combine all people management activities into an organized and integrated program to meet the strategic objectives.
Let’s understand the strategic human resource management;
Definition of Strategic Human Resource Management
Experts define SHRM from a different perspective. Some of the important definitions are listed below:
“Strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors that the company needs to achieve its strategic aims.”- Gary Dessler.
“Strategic human resource management is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and the organization’s recruitment, training, development, performance management, and the organization’s strategies, policies, and practices.” – Armstrong.
Strategic human resource management (SHRM) is defined as “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals.” – Wright & McMahan.
Strategic HRM focuses on actions that differentiate the firm from its competitors (Purcell, 1999). It is suggested by Hendry and Pettigrew (1986) that has these meanings:
- The use of planning,
- A coherent approach to the design and management of personnel,
- Systems based on an employment policy and workforce strategy and often underpinned by a ‘philosophy,’
- Matching HRM activities and policies to some explicit business strategy, structure, and culture, organizational effectiveness and performance, matching resources to future requirements, developing distinctive capabilities, knowledge management, and the management of change. It is concerned with human capital requirements and the development of process capabilities- the ability to get things done effectively. Overall, it deals with any major people issues that affect or affect the organization’s strategic plans. As Boxall (1996) remarks: The critical concerns of HRM, such as choice of executive leadership and formation of positive patterns of labor relations, are strategic in any firm.’
HRM has become strategic given the increasingly significant role of human resources in an organization. Strategic human resource management (SHRM) is concerned with the relationship between HRM and strategic management in an organization.
Strategic human resource management is an approach that relates to decisions about the nature of employment relationships, recruitment, training, development, performance management, reward, and employee relations.
Wright and McMahan (1992) defined SHRM as ‘the pattern of planned human resource deployment and activities intended to enable the firm to achieve its goals.
4 Components of Strategic Human Resource Management
This definition implies the following four components of SHRM:
1. It focuses on an organization’s human resources (people) as the primary source of the organization’s competitive advantage.
2. The activities highlight the HR programs, policies, and practices as the means through which the organization’s people can be deployed to gain a competitive advantage.
3. The pattern and plan imply a fit between HR strategy and the organization’s business strategy (vertical fit) and all HR activities (horizontal fit).
4. The people, practices, and planned patterns are purposeful and directed towards achieving the organization’s goals.
Overall, SHRM is concerned with people’s issues and practices that affect or are affected by the organization’s strategic plan.
The critical issues facing an organization in the contemporary environment are mainly human issues, such as ensuring the availability of people and retaining, motivating, and developing these resources.
To stay ahead of competitors, an organization will continuously look for ways to gain an edge over others. Today, organizations compete for less on products or markets and more on people.
In the 21st century, there is increasing recognition among management thinkers and practitioners of the potential of human capital resources in providing a competitive advantage.
Two organizations using the same technology may show different levels of performance.
What leads to this difference?
The quality of human resources and their contribution to the organization determine its performance and, therefore, its success.
An organization uses a combination of several tangible and intangible resources to pursue its objectives.
These resources can be grouped into three basic types:
- Physical capital resources—the plant, equipment, and finances.
- Organizational capital resources—the organization’s structure planning, HR systems, history, and organizational culture.
- Human capital resources—the employees’ skills, knowledge, judgment, and intelligence.
An organization may have huge capital and the most advanced machinery, but if it does not have capable, motivated, and high-performing employees, it is not likely to demonstrate sustained levels of high performance.
Since all physical and capital resources depend on people for efficient use, maintenance, and management, the quality of an organization’s people is important in attaining a competitive advantage.
Traditional HRM versus SHRM
Strategic human resource management and the traditional HR function differ in several ways. The major points of differences between the two are;
| # | Traditional human resource management | Strategic |
|---|---|---|
| Responsibility for HR programs | Staff personnel in the HR department. | Line managers; all managers responsible for people are HR managers |
| Focus of activities | Employee relations— ensuring employee motivation and productivity, compliance with laws | Partnerships with internal (employees) and external (customers, stakeholders, public interest groups) groups |
| Role of HR | Reactive and transactional | Proactive and transformational, change leader |
| Initiative for change | Slow, piecemeal, and fragmented, not integrated with larger issues | Fast, flexible, and systemic change initiatives implemented in concert with other HR systems |
| Time horizon | Short-term | Consider various time frames as necessary (short, medium, or long-term) |
| Control | Bureaucratic control through rules, procedures, and policies | Organic control through flexibility, as few restrictions on employee behavior as possible |
| Job design | Focus on scientific management principles—the division of labor, independence, and specialization | Broad job design, flexibility, teams and groups, and cross-training |
| Important investments | Capital, products, technology, and finance | People and their knowledge, skills, and abilities |
| Accountability | Cost center. | Investment center. |
Difference between SHRM and HR Strategies
The terms strategic human resource management and human resource strategies are often used interchangeably. However, some distinctions can be made between the two.
Generally, the difference between SHRM and HR strategies is similar to that between strategic management and corporate business strategies.
Strategic human resource management and strategic management describe an approach that focuses on long-term issues and provides direction.
Human resource and business strategies are outcomes of this approach, focusing on the organizational view concerning key issues and specific functions or activities.
| Strategic human resource management | HR Strategies |
|---|---|
| A general approach to the strategic management of human resources. Aligned with the organizational intention about its future direction. Focus on long-term people issues. Defines the areas in which specific HR strategies need to be developed. Focus on macro concerns such as structure and culture. Strategic HRM decisions are built into the strategic business plan. | Outcome (manifestation) of the general SHRM approach. Focus on specific organizational intentions about what needs to be done. Focus on specific issues that facilitate the achievement of corporate strategy. Human resource strategy decisions are derived from SHRM. |
Essential Features of SHRM
The key characteristic of strategic HRM is that it is integrated. HR strategies are generally integrated vertically with the business strategy and horizontally with one another.
The HR strategies developed by a strategic HRM approach are essential components of the organization’s business strategy.
The fact that SHRM has emerged indicates that there is some qualitative difference between HRM and SHRM.
SHRM is the overarching concept that links the management and the individuals within the organization to the business and its environment.
In this way, the essential features of SHRM can be summarized as follows:
- There is an explicit linkage between HR policy and practices and the overall organizational environment.
- There are organizing schemas linking individual HR interventions so that they are mutually supportive.
- Much of the responsibility for managing human resources is cascaded down the line.
Principles of SHRM
Price (1997) mentioned ten principles of SHRM, which he claimed are measurable in some way and can be used for ‘benchmarking.’
These are given below:
- Principle of Comprehensiveness: HRM should be closely matched to business objectives.
- Principle of Coherence: Allocation and HR activities integrated into a meaningful whole.
- Principle of Control: Effective organizations require a control system for cohesion and direction.
- Principle of Communication: All employees understand and accept strategies open culture with no barriers.
- Principle of Credibility: Staffs trust top management and believe in their strategies.
- Principle of Commitment: Employees are motivated to achieve organizational goals.
- Principle of Change: Continuous improvement and development are essential for survival.
- Principle of Competence: Organizations that are competent in achieving their objectives depend on individual competence.
- Principle of Creativity: Competitive advantage comes from unique strategies.
- Principle of Cost-effectiveness: Competitive, fair reward and promotion systems.
Essential Elements of SHRM
The above-discussed theoretical perspectives have identified six key elements necessary in developing SHRM within the firm.
Transforming HR Staff
There exists a significant difference in the skills needed by HR staff in the traditional and strategic orientations of HRM. In traditional HRM, staff had to be specialized in certain functional areas like interviewing, recruitment and training.
The strategic HRM role HR professionals play is “change management,” involving strategic planning, team building, and a global perspective.
Most HR units will face a significant transformation to manage human resources with a new strategic view.
Transforming the Organizational Structure
In transforming the HR structure from traditional to SHRM, it is common for the organizational unit to restructure.
The major issue in designing a new strategic HRM unit is determining whether to centralize or decentralize HR function. The relevant structure for the HR function depends on the nature of the firm’s business, the firm’s size, and overall business strategy.
In some organizations, a centralized structure for the HR unit would be appropriate, and in some, highly decentralized HRM may be necessary.
Regardless of which particular structure has been used, the key element in the successful transformation from traditional HR function to SHRM is to find a structure that meets the pressing needs of business strategy and allows the HR unit to provide services designed to help the firm achieve strategic objectives.
Enhancing administrative efficiency
Dave Ulrich (1996) suggested that one of the key roles of HR staff is to be “administrative experts.”
As administrative experts, HR staff members must take an active role in engineering, administrative and other processes within the firm and find ways to share services more effectively. The objective is to increase HR service efficiency and save money.
Several processes are needed to enhance the administrative expertise of HR units. The first focuses on:
- Improving administrative efficiency by targeting current processes for improvement by examining the gaps between the “as is” process and what the system ” needs to be.”
- Administrative efficiency can also be enhanced by developing centralized HR services shared throughout an organization.
- The ultimate process involves HR staff rethinking how they create value for the firm in terms of value perceived by the customers rather than perceived by the program provider.
- Integrating HR into the strategic planning process
The strategic integration of HR requires the strategic planning process and the involvement of HR managers in that process.
The development of a strategic plan involves top management, with the help of outside consultants, to analyze the organization’s current and future conditions.
To achieve full integration, HR managers should not only have the ability to influence the development and selection of information used in decision-making but should also have the ability to influence decision-making.
Linking HR practices to business strategy and one another
This issue of fitting HR practice into business strategy is becoming an increasingly important and relevant HR issue for HR staff and line managers.
HR fit involves ensuring HR activities make sense and help the organization achieve its goals and objectives.
The three aspects of HR fit are:
Vertical fit
This aspect of vertical fit concerns the coincidence between HR practices and overall business strategy.
Horizontal fit
This relates to the extent to which HR activities are mutually consistent. Consistency ensures that HR practices reinforce one another.
External fit
The third aspect concerns how well HR activities match the demands of the external environment. Ensuring these aspects of fit requires HR practice choices.
The challenge is developing internally consistent configurations of HR practice choices that help implement the firm’s strategy and enhance its competitiveness.
There is a need for strategic flexibility and a strategic fit for the firm’s long-term competitive advantage.
Fit is a temporary state in an organization, whereas flexibility is the firm’s ability to meet the demands of the dynamic environment.
The two types of flexibility identified are:
Resource Flexibility
Resource flexibility is the extent to which a firm can apply its resources to various purposes. It also involves the cost, difficulty, and time needed to switch resources from one use to another.
Coordination flexibility
Coordination flexibility concerns the extent to which an organization has decisionmaking and other systems that allow it to move resources quickly from one use to another.
This task is accomplished by having an effective partnership between HR managers and line managers.
Objectives of SHRM
The rationale for strategic HRM is the perceived advantage of having an agreed and understood the basis for developing approaches to people management in the long term.
It has been suggested by Lengnick-Hall (1990) that underlying this rationale in a business is the concept of achieving competitive advantage through HRM.
Strategic HRM supplies a perspective on how critical issues or success factors related to people can be addressed, and strategic decisions are made that have a major and long-term impact on the behavior and success of the organization.
The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed, and well-motivated employees it needs to achieve sustained competitive advantage.
Its objective is to provide a sense of direction in an often turbulent environment so that the business needs of the organization and the individual and collective needs of its employees can be met by the development and implementation of coherent and practical HR policies and programs.
As Dyer and Holder (1988) remark, strategic HRM should provide ‘unifying frameworks at once broad, contingency-based and integrative.’
When considering the aims of strategic HRM, it is necessary to consider how HR strategies will consider the interests of all the stakeholders in the organization: employees in general and owners and management.
In Storey’s (1989) terms, ‘soft strategic HRM’ will emphasize the human relations aspect of people management, stressing continuous development, communication, involvement, employment security, quality of working life, and work-life balance.
Ethical considerations will be important. ‘Hard strategic HRM,’ on the other hand, will emphasize the yield to be obtained by investing in human resources in the interests of the business.
Strategic HRM should attempt to balance the hard and soft elements properly. All organizations exist to achieve a purpose, and they must ensure they have the resources required to do so and use them effectively.
But they should also consider the human considerations in the soft strategic HRM concept. In Quinn Mills’s (1983) words, they should plan with people in mind, considering the needs and aspirations of all the members of the organization.
The problem is that hard considerations in many businesses will come first, leaving soft ones some way behind.
Process of SHRM
There are several models of SHRM. Two representing models, which are divergent, are discussed below in brief to show the process of SHRM.
Michigan Model
Tichy proposed this model. According to this model, strategy and not vice versa influence HRM. The model shows how activities with HRM can be unified and designed to support the organization’s strategy.
In the HR cycle, the model shows four generic processes or functions performed by the HR system in all organizations-selection, appraisal rewards and development.
These four processes reflect sequential managerial tasks, and performance is the function of all these four HR components.
Harvard Model
Beer proposed this model.
The model stresses HR’s ‘human side by emphasizing psychological objectives, including motivating people by involving them in decision-making and developing a culture based on trust and teamwork.
Within the model’s ‘map,’ four strategic policy areas are addressed:
- HR flows: into, through, and out of the organization.
- Reward systems: designed to attract, motivate and keep employees.
- Employer influence: controlling levels of authority, power, and decision-making.
- Work systems: defining and designing jobs to get the most productive result.
These four policies result in the ‘four Cs,’ namely, commitment, congruence, competence, and cost-effectiveness.
Different Views on Strategic HRM
As an emerging concept, SHRM is facing an ‘identity crisis, and it is defined and viewed from several perspectives. Some of the major perspectives are;
HRM or Strategic HRM
HRM and strategic HRM are considered identical and used interchangeably by some authors.
For example, Mathis & Jackson (1985: 3-4) define HRM as “the strategic planning and management of human resources for an organization.
HRM is more broadly focused and strategic”. They clarify the distinction between the older concept of personnel management and HRM.
While personnel management is viewed primarily as an administrative-operational activity dealing with responsibilities such as recruiting and selecting personnel or resolving employee grievances.
HRM is a strategic function focusing on human resource planning or devising compensation policies and strategies.
This definition is similar to what Beer et al. (1984: 13) consider SHRM. In their words, “we view HRM from a strategic perspective.”
Management Level
Anthony (1965) classified the management level into three classes: strategic, managerial, and operational. These three levels deal with, though not solely, three distinct types of decisions respectively.
Tichy et al. (1981:119) listed the HR activities associated with the strategic, managerial, and operational levels. These represent only a subset of the principal HR functions for illustrative purposes.
For example, operational-level activities include annual staffing and recruitment plans in the personnel selection/placement area.
The managerial level is more concerned with staff planning for the intermediate-range future.
A question posed at the managerial level is, for instance, if the company is about to set up two plants in different parts of the country, what kind of people will be needed and how will they be found?
Strategic-level activities look to the long-term future.
Here a question such as this could be posed: what kind of people will be needed to manage and run in the future?
Lilt implications of the long-run position are then retracted to guide current selection, placement, and training practices.
If, say, a major oil company formulates a strategic business plan for major diversification by 2015, a relevant question would be, what kind of people should it be reuniting nova so that it will have employees capable of running the diversified company for five years and beyond?
From this discussion, it is clear that Tichy et al. (1981) see strategic HRM as a part of HRM, and its area covers only the strategic management level.
Strategic Functions of HRM
According to this view, every function of the HRM process has its strategic elements. These strategic elements of the functions of the HRM process are also called strategic HRM.
For instance, Torrington & Hall’s (1995: xvi) model proposes this viewpoint. Inputs, in their model, act on the strategy, operations, and interaction levels, requiring a three-tiered response at the levels of the organization, resourcing, and pay.
For instance, operations at the organization level require planning for jobs and people, and resourcing requires recruiting and formulating employment contracts.
At the same time, pay determination needs job evaluation and assessment of incentives and fringe benefits.
Like Torrington & Hall, some other authors mention that every HRM process has some strategic aspects that could be termed SHRM.
For example, Olian & Rynes (1984: 172) see a relation between the stages of staffing processes and their corresponding strategic dimensions.
The stage in staffing, say, the choice of selection criteria, needs to focus on the strategic dimensions of the type of knowledge, skills, and abilities required for the job.
Blending Strategies
Business strategies are set to achieve a firm’s vision, mission, and objectives. Different environments, visions, missions, and objectives require different strategies.
To formulate and implement these strategies, appropriate HRM strategies are required.
Some authors call this blending of strategies with HRM strategies as strategic HRM.
Miles & Snow (1984) investigated the competitive strategies of several hundred companies in more than a dozen widely differing industries.
This resulted in their popular classification of organizations as defenders, prospectors, and analyses depending on their strategic behavior and supporting characteristics.
These authors attempt to relate the elements in the HRM system across these three types of organizations.
About the HRM system, the basic strategy of the defenders, according to them, could be to build the human resource, prospectors could be to acquire human resources, and analyzers to allocate human resources.
Regarding performance appraisal, defenders and analyzers could be process-oriented, meaning they could evaluate performance based on critical incidents and production targets. At the same time, prospectors could be result-oriented by evaluating performance on profit targets.
Tackling the important question of compensation, defenders could determine it based on the position of a person in the organizational hierarchy, prospectors on performance and analyzers on a mix of hierarchy and performance popularly referred to as merit-cum-performance basis.
Approaches to SHRM
Broadly speaking, the SHRM literature can be divided into two categories. The first consists of work that is concerned with identifying and seeking to understand the organization’s features that are regarded as determinants of organizational performance.
The task is to identify key causal connections and assess their impact on the organization’s capability and staff behavior, attitudes, and skills. This line of work can itself be further differentiated into two forms.
On the one hand, there are academic, research-based analyses and assessments of the factors that may influence performance levels (selection processes, competencies, types of training, changing structural forms, various employment strategies, the resource-based view, and so on).
And on the other hand, the consultancy literature advocates particular ‘solutions’ and seeks to sell their merits to managers.
The standard academic literature seeks to identify and understand the role and impact of the organizational measures (structures, processes, and so on) installed as a result of consultant recommendations or other influences.
Singularly and together, these measures are claimed to impact positively on organizational performance. Therefore, they merit attention.
The second type of SHRM literature, which is less well developed than the first, but of equal importance, is directly related to but stands apart from this prescriptive literature.
Rather than focusing directly on how organizational performance can be improved through capacity-building or staff management processes, it focuses on the ideas underpinning prevalent practices.
It has been noted that the idea of strategic human resource management can be regarded as a ‘discursive formation’ and that when exponents talk about SHRM, they broadly refer to an understood set of interconnecting propositions.
Within the confines of this approach, SHRM has been defined as follows:
A distinctive approach to employment management seeks to achieve competitive advantage by strategically deploying a highly committed and capable workforce using various cultural, structural, and personnel techniques.
There are different approaches to strategic HRM. These consist of resource-based strategy, achieving a strategic fit, high-performance management, high-commitment management, and high-involvement management, as described below.
The major approaches to Strategic Human Resource Management identify the differing views, which are consolidated under:
- Strategy-focused Approach.
- Decision-focused Approach.
- Content-focused Approach.
- Implementation-focused Approach.
| Nomenclature of Approach | Example of Major Contributors to the Approach | Suggested Approach |
|---|---|---|
| Strategy-focused | Mathis & Jackson (1985) and Beer et. (1984) | HRM is Strategy-focused, i.e., by itself, it is strategic. |
| Decision-focussed | Tichy era. (1981) | There are three decision levels: strategic, administrative or managerial, and operational. HRM at a strategic level is SHRM. |
| Content-focused | Torrington & Hall (1995) | In the model of the HRM process, there are some elements, and in every such element, there are some strategic aspects called SHRM. |
| Implementation- focussed | Miles & Snow (1984) | An appropriate type of HRM system is required to formulate and implement the strategies, and such a blending of business strategies with an HRM system is called SHRM. |
Strategy-focused Approach
Authors like Mathis& Jackson and Beer et al. view HRM and SHRM as identical.
They define HRM, by its nature itself, as strategic. The elements of HRM, like training, recruitment, and selection, all operate as derivatives of strategy requirements within the organization.
Strategic planning suggests HRM planning. This view is not accepted by many scholars and views that HRM is strategic to some extent but not in all aspects.
Several authors view HRM and SHRM as identical. According to them, HRM is strategy focused and contains certain elements. This means that HRM, by its very nature, is strategic.
The elements of HRM, such as recruitment and selection or compensation, do not strictly operate in isolation but are derivatives of the strategy’s requirements.
Strategic planning dictates HRM planning. Though desirable and idealistic, this view does not seem to be fully accepted by thinkers. There is a feeling that HR planning is, to some extent, strategic but not in all its aspects.
On the other hand, recruitment and selection are primarily administrative and operational functions, yet there are some strategic issues in these functions.
Decision-focused Approach
Tichy defines that there are three management levels, namely: strategic (long-term), managerial (medium-term), and operational (short-term). The author views the HR functions performed at the strategic management level are SHRM.
The managerial and operational level HR functions do not come under SHRM and would rather be considered functional HRM activities.
According to some authors, including Tichy et al. (1984)., there are three management levels- strategic (long-term), management (medium-term), and operational (short-term), and HR functions performed at the strategic management level are SHRM.
It is implied in their writings that managerial and operational management level activities that deal with medium and short-term HR functions do not come under SHRM. Rather, these are functional HRM activities.
It can also be inferred that the strategic management level activities are directed to achieve strategic goals. This approach is similar to the blending strategies requiring the creation of a fit between HRM and strategy from this angle.
Content-focused Approach
Torrington & Hall identify that there are always some elements in the model of the HRM process, and in every such element, there are some strategic aspects referred to as SHRM.
According to this approach, the functional aspects of HRM elements can also be included with the organization’s strategy leading to the emergence of SHRM.
Torrington & Hall (1995) opine that there are some elements in the model of the HRM process, and in every such element, there are certain strategic aspects. These strategic aspects are collectively referred to as SHRM.
In other words, every element of HRM has two aspects: the strategic and the functional. This view of defining SHRM is contradictory to the idea of blending strategies.
In this, when HRM elements match with the organization’s strategy, SHRM emerges.
In the content-focused approach, the functional aspects of HRM elements can also be blended with the organization’s strategy, which leads to the emergence of SHRM.
Implementation-focused Approach
Miles & Snow view that organizations have some competitive objectives that are achieved through business strategies.
To formulate and implement such strategies, appropriate HRM systems are necessary, and those HR systems are so-called strategic SHRM.
Miles & Snow (1984) express that organizations have some competitive objectives achieved by some business strategies. To formulate and implement these business strategies, appropriate types of HRM systems are required.
Such HRM systems are strategic, and this approach can be termed SHRM.
Dimensions of Strategic HRM
Organizational performance – examines the HRM-firm performance link and prepares some of the methodological challenges of measuring the impact of HRM.
- Organizational architecture: It is claimed that the process leads to flatter organizational structures, ‘reengineering,’ redesigned work teams, use of IT, and senior management commitment.
- Leadership: Considered important in the ‘soft’ HRM model to develop a high level of employee commitment and cooperation.
- Workplace learning: Posited to be a central building block in the resource-based SHRM model and the ‘learning organization.’
- Trade unions: Draws attention to the contradictions between the normative HRM model and trade unions and introduces the debate on ‘partnership’ between management and unions.
The field of strategic HRM is still evolving, and there is little agreement among scholars regarding an acceptable definition.
Broadly speaking, SHRM is about systematically linking people with the organization; more specifically, it is about integrating HRM strategies into corporate strategies.
HR strategies are the plans and programs that address and solve fundamental strategic issues related to managing human resources in an organization.
They focus on aligning the organization’s HR practices, policies, and programs with corporate and strategic business unit plans. Strategic HRM thus links corporate strategy and HRM and emphasizes the integration of HR with the business and its environment.
It is believed that integration between HRM and business strategy contributes to the effective management of human resources, improvement in organizational performance, and, finally, the success of a particular business.
It can also help organizations achieve a competitive advantage by creating unique HRM systems that others cannot imitate.
For this to happen, HR departments should be forward-thinking (future-oriented), and the HR strategies should operate consistently as an integral part of the overall business plan (Stroh and Caligiuri, 1998).
The HR-related future-orientation approach of organizations forces them to regularly analyze the kind of HR competencies needed in the future. Accordingly, core HR functions (procurement, development, and compensation) are activated to meet such needs.
Lengnick-Hall (1999) summarizes the topics that have been the focus of strategic HRM writers over the past few decades.
These include HR, accounting (which attempts to assign value to human resources to quantify the organizational capacity); HR planning; responses of HRM to strategic changes in the business environment; matching human resources to strategic or organizational conditions; and the broader scope of HR strategies.
Strategic HRM is a multidimensional process with multiple effects.
Such writing also highlights the growing proactive nature of the HR function, its increased potential contribution to the success of organizations, and the mutual relationships (integration) between business strategy and HRM.
Conclusion
Effective strategic management requires effective human resource management.
Strategic Human Resource Management implies how HRM is crucial to organizational effectiveness.
Hence, organizations must carefully design strategies and relate to human resources to effectively achieve greater organizational performance.
The human capital practice includes the strategy the company has to follow for greater performance. The pattern should be taken care of in maintaining strategic human resource management (SHRM).
The emerging discipline of SHRM offers interesting and insightful variants regarding the views and approaches.
An ongoing effort is required to unravel the mysteries of SHRM that hold the promise of being a powerful tool to manage human resources in the environment of fast-paced changes that organizations are experiencing today.
