Strategic human resource management is the process of linking the human resource function with the strategic objectives of the organization 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 strategy, no matter how well designed, 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 the desired value to them. 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 competitive advantage by using its people effectively, drawing on their expertise and ingenuity to meet clearly defined objectives.
SHRM aims to ensure that the culture, style, and structure of the organization and the quality, commitment and motivation of its employees contribute fully to the achievement of business objectives.
HR strategies combine all people management activities into an organized and integrated program to meet the strategic objectives of an enterprise.
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, the development of distinctive capabilities, knowledge management, and the management of change. It is concerned with both human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it deals with any major people issues that affect or are affected by the strategic plans of the organization. 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.’
Given the increasingly significant role of human resources in an organization, HRM has become strategic. 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 relationship, 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 competitive advantage of the organization.
2. The activities highlight the HR programs, policies, and practices as the means through which the people of the organization can be deployed to gain competitive advantage.
3. The pattern and plan imply that there is a fit between HR strategy and the organization’s business strategy (vertical fit) and between all of the HR activities (horizontal fit).
4. The people, practices, and planned patterns are all purposeful, that is, directed towards the achievement of the goals of the organization.
On the whole, SHRM is concerned with people’s issues and practices that affect or are affected by the strategic plan of the organization.
The critical issues facing an organization in the contemporary environment are mainly human issues, such as ensuring the availability of people, retaining, motivating, and developing these resources.
To stay ahead of its competitors, an organization will continuously look for ways to gain an edge over others. Today, an organization competes 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 the performance, and therefore, the success of the organization.
An organization uses a combination of several resources—tangible and intangible—in the pursuit of 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 skills, knowledge, judgment, and intelligence of the organization’s employees.
An organization may have huge capital and the most advanced machinery, but if it does not have capable, motivated, and high performing employees, the organization is not likely to demonstrate sustained levels of high performance.
Since all physical and capital resources depend on people for their efficient use, maintenance, and management, the quality of the people of an organization is important in attaining a competitive advantage.
Traditional HRM versus SHRM
Strategic human resource management and the traditional HR function differ from each other in several ways. The major points of differences between the two are;
|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 distinction can be made between the two.
In a general sense, the difference between SHRM and HR strategies is similar to that between strategic management and corporate business strategies. Both SHRM and strategic management describe an approach adopted by the management and focus on long-term issues and provide direction to the organization.
Human resource strategies and business strategies are outcomes of this approach which focus on the organizational view concerning key issues and specific functions, or activities.
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 at all, indicates that there is some qualitative difference between HRM and SHRM.
SHRM is regarded as the overarching concept that links the management and the individuals within the organization to the business as a whole and its environment.
In this way, the essential features of SHRM can be summarized as follows:
- There is an explicit linkage, of some kind between HR policy and practices and overall organizational environment.
- There are organizing schema linking individual HR interventions so that they are mutually supportive.
- Much of the responsibility for the management of 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 activities of HR integrated into a meaningful whole.
- Principle of Control: Effective organizations require a control system for cohesion and direction.
- Principle of Communication: Strategies understood and accepted by all employees, open culture with no barriers.
- Principle of Credibility: Staffs trust top management and believe in their strategies.
- Principle of Commitment: Employees motivated to achieve organizational goals.
- Principle of Change: Continuous improvement and development essential for survival.
- Principle of Competence: Organizations competent in achieving their objectives- dependent 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 to HRM. In traditional HRM staff had to be specialized in certain functional areas like interviewing, recruitment and training.
The strategic HRM role played by HR professionals is “change management”, involving strategic planning, team building and having 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 to determine whether to centralize or decentralize HR function. The relevant structure for the HR function depends on the nature of the firm’s business, the size of the firm and the firm’s 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 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 throughout the organization. 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 the development of centralized HR services that are shared throughout an organization.
- The ultimate process involves HR staff to rethink how they create value to the firm in terms of value perceived by the customers rather than perceived by the provider of the program.
- 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 go through and analyze the current and future condition of the organization.
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 practices to business strategy is becoming increasingly important and relevant HR issues for HR staff and line managers.
HR fit involves making sure HR activities make sense and help the organization achieve its goals and objectives.
The three aspects of HR fit are:
This aspect of vertical fit concerns the coincidence between HR practices and overall business strategy.
This relates to the extent to which HR activities are mutually consistent. Consistency ensures that HR practices reinforce one another.
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 to develop internally consistent configurations of HR practice choices that help to implement the firm’s strategy and enhance its competitiveness.
There is a need for strategic flexibility along with a strategic fit for the long-term competitive advantage of the firm.
The fit is defined as a temporary state in an organization, whereas flexibility is defined as the firm’s ability to meet the demands of the dynamic environment.
The two types of flexibility identified are:
Resource flexibility is the extent to which a firm can apply its resources to a variety of purposes. It also involves the cost, difficulty, and time needed to switch resources from one use to another.
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 which are at once broad, contingency-based and integrative’.
When considering the aims of strategic HRM it is necessary to consider how HR strategies will take into account the interests of all the stakeholders in the organization: employees in general as well as owners and management.
In Storey’s (1989) terms, ‘soft strategic HRM’ will place greater emphasis on the human relations aspect of people management, stressing continuous development, communication, involvement, the security of employment, the 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 achieve a proper balance between the hard and soft elements. All organizations exist to achieve a purpose and they must ensure that they have the resources required to do so and that they use them effectively.
But they should also take into account the human considerations contained in the concept of soft strategic HRM. In the words of Quinn Mills (1983), they should plan with people in mind, taking into account 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.
Tichy proposed this model. According to this model the strategy and not the vice versa influence HRM. The model shows, (depicting in a figure calling it ‘HR cycle’), 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 that are 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.
Beer proposed this model.
The model stresses the ‘human’ side of the HR through 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 seen as a strategic function focussing on tasks such as human resource planning or devising compensation policies and strategies.
This definition is similar to what Beer et al. (1984: 13) consider as SHRM. In their words “we view HRM from a strategic perspective”.
Anthony (1965) classified management level into three classes: strategic, managerial, and operational. These three levels deal with, though not solely, on 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, in the personnel selection/placement area, operational-level activities include the annual staffing and recruitment plans.
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 the year 2015, a relevant question would’ what kind of people should it be reuniting nova so that it will have employees capable of running the diversified company 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 level of management.
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, resourcing requires recruiting and formulating contracts of employment, while pay determination needs job evaluation and assessment of incentives and fringe benefits.
Like Torrington & Hall, some other authors mention that every element of the HRM process has some strategic aspects that could be termed as 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.
Business strategies are set to achieve a firm’s vision, mission, and objectives. Different environment, vision, mission, and objectives require different types of strategies.
To formulate and implement these strategies, appropriate types of HRM strategies are required.
Some authors call these 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, of prospectors could be to acquire a human resource, and of analyzers to allocate human resources.
Taking the case of performance appraisal, defenders and analyzers could be process-oriented meaning thereby that they could evaluate performance based on critical incidents and production targets while 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 which is concerned with identifying and seeking to understand the features of the organization that is regarded as determinants of organizational performance.
The task is to identify key causal connections and to assess their impact on the capability of the organization and the behavior, attitudes, and skills of staff. This line of work can itself be further differentiated into two forms.
On the one hand, there are the academic, research-based analyses and assessments of the factors which may influence levels of performance (selection processes, competencies, types of training, changing structural forms, various employment strategies, the resource-based view and so on).
And on the other hand, there is the consultancy, literature which 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) that are installed as a result of consultant recommendation or as a result of 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 which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of 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 eta/. (1984)||HRM is Strategy-focused, i.e., by itself, it is strategic.|
|Decision-focussed||Tichy era/. (1981)||There are three levels of decisions, namely, strategic, administrative or managerial, and operational. HRM at a strategic level is SHRM.|
|Content-focused||Torrington & Hall (1995)||In the model of HRM process, there are some elements and in every such element, there are some strategic aspects which are called SHRM.|
|Implementation- focussed||Miles & Snow (1984)||To formulate and implement the strategies, an appropriate type of HRM system is required and such a blending of business strategies with HRM system is called SHRM.|
Authors like Mathis& Jackson and Beer et al view HRM and SHRM to be identical.
They define that HRM by its nature itself is strategic. The elements of HRM like training, recruitment, selection all of them operate as derivatives of requirements of strategy within the organization.
Strategic planning suggests HRM planning. This view is not accepted by many of the 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 a strategy focussed 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 requirements of the strategy that an organization employs.
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, for instance, recruitment and selection are primarily administrative and operational functions yet there are some strategic issues in these functions too.
Tichy defines that there are three management levels, namely: strategic (long-term), managerial (medium-term) and operational (short-term). The author views that 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 as functional HRM activities.
According to some authors, 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 is 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. From this angle, this approach is similar to the blending strategies requiring the creation of a fit between HRM and strategy.
Torrington & Hall identify that in the model of HRM process, there are always some elements and in every such element there are some strategic aspects that are 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 in the model of HRM process, there are some elements and in every such element there are certain strategic aspects. These strategic aspects are collectively referred to as SHRM.
In other words, in every element of HRM, there are 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.
Miles & Snow view that organizations do have some competitive objectives that are achieved through some business strategies. To formulate and implement such strategies appropriate HRM systems are necessary and those HR systems are strategic so-called SHRM.
Miles & Snow (1984) express the view that organizations have some competitive objectives that are 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 as 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, 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 the integration of HRM strategies into corporate strategies.
HR strategies are essentially the plans and programs that address and solve fundamental strategic issues related to the management of human resources in an organization.
Their focus is on the alignment of 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 competitive advantage by creating unique HRM systems that cannot be imitated by others.
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 conduct analysis regarding the kind of HR competencies needed in the future, and accordingly core HR functions (of procurement, development, and compensation) are activated to meet such needs.
Lengnick-Hall (1999) summarizes the variety of topics that have been the focus of strategic HRM writers over the past couple of 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.
Effective strategic management requires effective human resource management.
Strategic Human Resource Management implies how HRM is crucial to organizational effectiveness.
Hence organizations have to carefully design strategies and relate to human resources for effective utilization in achieving greater organizational performance. The human capital, practice, which includes the kind of strategy, company, has to follow in terms of greater performance and the pattern should be taken care of in maintaining strategic human resource management (SHRM).
The emerging discipline of SHRM offers interesting and insightful variants so far as the views and approaches are concerned.
An ongoing effort is required to unravel the mysteries of SHRM that holds the promise of being a powerful tool to manage human resource in the environment of fast-paced changes that organizations are experiencing today.