Everything you need to know about the Strategic Human Resource Management (SHRM).

Strategic Human Resource Management (SHRM) involve a set of internally consistent policies and practices designed and implemented to ensure that a firm’s human capital (employees) contribute to the achievement of its business objectives Schuler has developed a more comprehensive academic definition of SHRM, “Strategic human resources management is largely about integration and adaptation.

Its concern is to ensure that- (1) human resources (HR) management is fully integrated with the strategy and the strategic needs of the firm; (2) HR policies cohere both across policy areas and across hierarchies; and (3) HR practices are adjusted, accepted, and used by line managers and employees as part of their everyday work”.

In this article we will discuss about the strategic human resource management.

Learn about:- 1. Definition of SHRM 2. Concept of SHRM 3. Objectives 4. Process 5. Life Cycle 6. Reality and Action 7. Role 8. Dimensions 9. Importance 10. Approaches 11. Business Strategy 12. Integration of HR Strategy with Corporate Planning 13. Levels 14. Application and Other Details.


  1. Definition of Strategic Human Resource Management (SHRM)
  2. Concept of Strategic Human Resource Management (SHRM)
  3. Objectives of Strategic Human Resource Management (SHRM)
  4. Process of Strategic Human Resource Management (SHRM)
  5. Life Cycle of Strategic Human Resource Management (SHRM)
  6. Reality and Action of Strategic Human Resource Management (SHRM)
  7. Role of Strategic Human Resource Management (SHRM)
  8. Dimensions of Strategic Human Resource Management (SHRM)
  9. Importance of Strategic Human Resource Management (SHRM)
  10. Approaches of Strategic Human Resource Management (SHRM)
  11. Strategic Human Resource Management (SHRM) and Business Strategy
  12. Integration of HR Strategy with Corporate Planning
  13. Levels of Strategic Human Resource Management (SHRM)
  14. Application of Strategic Human Resource Management (SHRM)
  15. Strategic Human Resource Issues while Formulating and Implementing Strategies
  16. Barriers to Strategic Human Resource Management (SHRM)
  17. Current Scenario of Strategic Human Resource Management (SHRM)

Strategic Human Resource Management (SHRM): Definition, Concept, Objectives, Process, Approaches and Benefits

Meaning of Strategic Human Resource Management (SHRM) – Definition by Eminent Authors and Scholars

Strategic Human Resource Management (SHRM) involve a set of internally consistent policies and practices designed and implemented to ensure that a firm’s human capital (employees) contribute to the achievement of its business objectives Schuler has developed a more comprehensive academic definition of SHRM, “Strategic human resources management is largely about integration and adaptation. Its concern is to ensure that- (1) human resources (HR) management is fully integrated with the strategy and the strategic needs of the firm; (2) HR policies cohere both across policy areas and across hierarchies; and (3) HR practices are adjusted, accepted, and used by line managers and employees as part of their everyday work”.

According to Wright & McMahan (1992), SHRM refers to “the pattern of planned human resource deployments and activities intended to enable an organisation to achieve its goals”.

HR needs to take a proactive, not a reactive role as a partner in determining strategic direction. If HR practices are entrenched in old ways of thinking, they may actually support the old assumptions about organisational leadership and development. The essential test is whether the HR plan is mainly focused on enabling the company to play the existing games better, or to proactively create new mindsets.

So, here are a few questions for HR practitioners to consider in order to become a better strategic partner and create value in a different way.

In the same way that senior operational managers are being forced to rethink their own assumptions and conventions about overall business strategy, HR professionals should re-examine their own methods for developing HR strategy.

Storey further detailed the terrain of strategic human resource management as follows:

Beliefs and Assumptions:

a. It is the human resource that gives competitive advantage.

b. The aim should not be mere compliance with rules but employee commitment.

c. Therefore employees should, for example, be very carefully selected and developed.

Strategic Qualities:

a. Because of the above factors, HR decisions are of strategic importance.

b. Top management involvement is necessary.

c. HR policies should be integrated into the business strategy – stemming from it and even contributing to it.

Critical Role of Managers:

a. Because HR practice is critical to the core activities of the business, it is too important to be left to personnel specialists alone.

b. Line managers are (or need to be) closely involved as both deliverers and drivers of the HR policies.

c. Much greater attention is paid to the management of managers themselves.

Key Levers:

a. Managing culture is more important than managing procedures and systems.

b. Integrated action on selection, communication, training, rewards and development.

c. Restructuring and job redesign to allow devolved responsibility and empowerment.

The concept of strategic management consists of a set of decisions and actions resulting in formulation and implementation of a strategy to achieve the objectives of an organization.

Glueck defined strategic management as ‘a set of decisions and actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives. The strategic management process is the way in which strategists determine objectives and make strategic decisions’.

This definition points out the following elements of strategic management:

1. Analysis and Diagnosis:

It involves determining environmental problems and opportunities and internal strengths and weaknesses, recognizing problems and /or opportunities and assessing information needs to solve the problems and heuristics for evaluating the information.

2. Choice:

Involves generating alternative solutions to the problem, assessing them and choosing the best ones.

3. Implementation:

Involves making the strategy work by building the structure to support the strategy and developing appropriate plans and policies.

4. Evaluation:

Involves review of results and future possibilities, determining whether the strategy is working and taking steps to make it work.

Chandler describes strategic management as “the determination of basic long term goals and objectives of an enterprise and adoption of course of action and allocation of resource necessary to carry out these goals.”

According to Paine and Naumes, “Strategic management involves decision-making and the activities in an organization, which (1) have wider ramifications, (2) have a long time perspective, and (3) use critical resources towards perceived opportunities or threats in a changing environment.”

John Pearce and Robinson defined strategic management ‘as the set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objectives of an organization’.

Strategic Human Resource Management (SHRM) – Concept

SHRM is a concept that blends traditional HR management practices within a firm’s overall strategic planning and implementation program. Nowadays increased interest in HRM is also because of the perceived connection between HRM activities and production. Strategic human resource management (SHRM) enhances productivity and effectiveness of organizations.

Their implementation in organizations has proven that when organizations employ such personnel practices they are more able to achieve their goals and objectives in a far better way.


Strategy is multidimensional concept which goes beyond traditional competitive strategy concepts. “It is the direction and scope of an organization over long term which achieves advantage for the organization through its configuration, to meet the needs of markets and to fulfill stakeholder’s expectations.” The concept of SHRM is based on the notion that HR strategies should be integrated with corporate strategies.

The most important reason for the increased interest in the HRM by Indian Business is the realization of the connection between HR activities and productivity. As a result of this realization, more and more Indian companies are trying to acquire the status of global organizations, for, e.g. Wipro, Aditya Birla Group, Ranbaxy and Infosys.

They are using best management and HR practices that aim at cutting costs, improving product quality and services and developing in-house technology as well as improving quality of their employees. They have adopted modern innovative managerial tools, methods and processes like TQM, QCS, JIT, benchmarking, teamwork, etc., to improve their efficiency and effectiveness.

As it is the employees who make or mar an organization, human resource management, which is responsible for hiring, training, paying and maintaining employees, plays a crucial role in planning and achieving an organization’s success. Hence, the top managements increasingly expect their HRM personnel to apply their special expertise in developing and executing the organization’s strategic plan.

Strategic Human Resources Management means formulating and executing HR systems such as HR policies and practices that produce the employee competences and behaviours the organization needs to achieve its goals. It is a pattern of planned human resource deployments and activities intended to enable an organization achieve its goals. The term HR strategies refers to the specific human resource courses of action the firm pursues to achieve its aims.

In the current scenario, the HR manager has to play a dual role -to formulate and execute the firm’s strategic plan.

Strategic Human Resource Management (SHRM) – Objectives

The primary objective of the HR function, like all other functions in the organization is to add value to business. Strategic human resource management is managing people in a manner that helps in achieving business goals by effectively supporting and servicing the business strategies.

The key considerations are:

i. How do people need to be managed to achieve the business goals and fulfill customer needs?

ii. What do people managers need to do the same? How should they behave?

iii. What HR strategies need to be formulated to achieve the business strategies?

iv. What role does the HR department, other than functional expertise?

v. How will the HR practices, policies and process be impacted?

Strategic Human Resource Management, hence, has four implications:

(a) Use of planning;

(b) Clear and comprehensive approach of design and management of employees based on HR strategy and driven by ‘philosophy’.

(c) Congruence between HR activities, policies and business strategy; and

(d) Treating employees as ‘strategic resource’ of the organization that helps latter in achieving competitive advantage.

Strategic Human Resource Management (SHRM) – Process

The process of strategic management follows the stages of establishing mission statement, conducting environmental and organizational analysis, establishing goals to strategy.

1. Mission Statement:

Mission statement defines business and future chalks out plan for success.

2. Environmental Analysis:

Environmental analysis involves opportunities and threats analysis and preparing to meet environmental pressures.

3. Organizational Analysis:

The organizational analysis assesses organisation’s strengths and weaknesses and chalks road map for attaining goals.

4. Establishing Goals and Objectives:

Laying concrete figures that will help in benchmarking the performance. These benchmarks will lead to the development of strategy that will decide how the company intends to meets its environmental challenges with given environmental and resource constraints in the time to come.

Strategic Human Resource Management (SHRM) – Life Cycle

It is divided into four different stages, each indicating a separate stage of HR life cycle. Each stage has specific actions or steps that form respective stage for example, in third stage there are six different steps involved such as step 3 to step 8. These four stages cover all actions or functions pertaining to HR manager’s job and they are related with strategic plan of the organization.

The cycle starts with laying down a strategic plan, linking HR functions in it, and it provides the basis for Manpower planning and internal mobility. The manpower planning will lead to the function of acquiring right people for the right job and in accordance recruitment as well as selection exercise will be designed and tools selected.

For example, if an automobile company decides to launch a new four-wheel model in the time to come their focus will be on Research and Development and then on Market Testing and last but foremost production and after sales.

This new plan will act as the guideline for the company and will help in determining how many people do we need and what qualifications they should possess and how many of them can be kept on full-time rolls and as permanent employees.

The next stage is for sustaining and retaining those who are hired and making sure that they work efficiently and help the company move in the selected direction. They should also facilitate the smooth movement of the company in the desired direction and should result in achievement of corporate goals and objectives effectively and efficiently.

Employee’s performance should be rated and compared with the benchmarks, recorded deviations are to be corrected, and precautionary measures for the future are implemented. In last stage the separation or farewell to those who are non-performing or may be to those who have completed their job or task, i.e., project teams, is bided.

Strategic Human Resource Management (SHRM) – Reality and Action

The classic approach to implementing human resource strategies follows the ‘matching’ process outlined in the Michigan model of HRM. The goal is a realization of the organization’s strategic human resource requirements in terms of numbers and, more importantly, attitudes, behaviour and commitment.

According to Miller, the key lies with ‘the concept of “fit”- the fit of human resource management with the thrust of the organization’.

Michael Armstrong argues that the significant issue in HR strategy is that of integration with overall business strategy. In practice, this integration is difficult to achieve. Armstrong’s solution to these problems is to emphasize the need for human resource practitioners to achieve an understanding of how business strategies are formed.

They should adopt a wider point of view and an understanding of key business issues such as:

1. Corporate intentions for growth or retrenchment.

2. Methods of increasing competitiveness.

3. A perceived need for a more positive, performance culture.

4. Other cultural consequences of an organization’s mission such as ‘commitment, mutuality, communications, involvement, devolution and team working’.

The Reality of HR Strategy:

Whipp concludes that control of the environmental, organizational and strategic aspects of both competition and human resources is so problematic that the relationship between the two can only be indirect and fragile. Another critical factor is that the human resource is but one of the resources of the firm.

Strengths and weaknesses in other areas, such as marketing and finance, may obscure the best people management. They are highlighted in recession when the business needs do not fit with ‘soft’ HR values. HR strategies may focus on redundancies, and sacking employees inevitably damages or destroys a caring corporate image.

Legge outlined a strategy described as tough love – being cruel to be kind – in which employees are expected to be both dedicated and disposable. More positively, human resource strategies can be aimed at improving an organization’s competitiveness by increasing its ‘knowledge base’ or competence.

Research by Warwick Business School has emphasised the value of ‘complementarities – using several HR practices at the same time to complement and reinforce each other. This is common in the U.S.A. and has proven to be extremely effective in some of the largest U.K. companies.

The survey examined HR practices at 139 U.K. businesses, particularly: incentive compensation, communication, team working, flexibility, job security and skills training. The theory of complementarities advocates that HR policies which are consistent and mutually
supportive deliver results.

U.S. firms have ‘bundled’ HR practices in a formal way for some time, believing that improvements in one area enhances other HR practices as well. Overall the survey showed productivity gains of up to 8 per cent in businesses which bundle such practices together compared to companies which take a less comprehensive approach to human resource management.

Strategic Human Resource Management (SHRM) – Role

Strategic human resource management (SHRM) represents a relatively new transformation in the field of human resource management. SHRM is concerned with the role of human resource management systems, especially, focusing on the alignment of human resources as a means of gaining competitive advantage. Organizations are becoming aware that successful human resource policies and practices may increase performance in different areas such as productivity, quality and financial performance.

The human resource management has consistently faced a battle in justifying its position in organizations. At good times when there are enough budgets, firms easily justify expenditures on training, staffing, rewards and employee involvement systems, but when faced with financial difficulties, such HR systems get the earliest cutbacks.

The advent of the subfield of strategic human resource management (SHRM), devoted to exploring HR’s role in supporting business strategy, provided one opportunity for demonstrating its value to the firm. The birth of the field of strategic human resource management can be dated back to 1984, when Devanna, Fombrun and Tichy extensively explored the link between business strategy and human resources.

HRM discipline has witnessed a great deal of change over the past 25 years. These changes represent two major transformations. The first is the transformation from being the field of personnel management to being the field of human resource management. The second is the transformation from being the field of human resource management to being the field of strategic human resource management.

The first transformation incorporated helped the recognition that people are an important asset in organizations and can be managed systematically. The second transformation has built on the preceding knowledge base of the discipline. This transformation is based upon the recognition that, in addition to coordinating human resource policies and practices with each other, they need to be linked with the needs of the organization.

Given that these needs are reflected in the strategies of the firm, this transformation of “human resource management” came to be known as “strategic human resource management”.

Strategic human resource management is based upon the recognition that organizations can be more effective if their human resources are managed with human resource policies and practices that deliver the right.

Researchers in the field of SHRM have increasingly relied on the resource-based view of the firm to explain the role of human resource practices in firm performance. Resource based view of strategy is that the strategic capability of a firm depends on its resource capability, especially its distinctive resources. Indeed, theoretical research on SHRM has suggested that systems of HR practices may lead to higher firm performance and can be sources of sustained competitive advantage because these systems of practices are often unique, causally ambiguous, and difficult to imitate.

HR practices can enhance firm’s performance when they are internally aligned with one another to manage employees in a manner that leads to competitive advantage. HR practices can create value for a firm when the individual practices are aligned to develop critical resources or competencies.

HR Practitioners Role:

The HR managers have a key role in the effective planning and implementation of the policies and decisions that are in tune with the business changes. They should act as strategic partners and be proactive in their role than mere reactive, passive spectators. The HR managers should understand how far their decisions contribute to business surplus incorporating human competency and performance to the organisation.

Strategic HR managers need a change in their outlook from seeing themselves as relationship managers to strategic resource managers. Kossek (1987, 1989) argues that major HRM innovations occur when senior management takes the lead and adoption of innovative SHRM practices is dependent on the nature of relationship of the HR Department with the CEO and the line managers.

Legge (1978) commenting on the actions of the personnel practitioner in the innovation process suggests that adoption of an innovation by an organization depends largely on HR practitioners’ credibility with information and resource providers. HR Department and HR managers in these innovative organizations play a strategic role linking the HR strategy with the business strategy of the organization.

A crucial aspect concerning SHRM is the concepts of fit and flexibility. The degree of fit determines the human resource system’s integration with organization strategy. It is the role of HR Managers to ensure this fit in between Human Resource System with the Organization Strategy.

The Changing Role of HRM:

The role of human resource management is changing and is changing very fast, to help companies achieve their goals. HRM has gone through many phases – from hiring and firing to relationship building, from there to legislation role, and now its role is shifting from protector and screener to strategic partner and as a change agent.

Role of HRM in Providing Strategic Competitive Advantage:

Human resources can provide strategic competitive advantages in two additional ways, namely- emergent strategies and enhancing competi­tiveness.

1. Emergent Strategies:

Generally, strategies are considered as being proactive, rational decisions aimed at predetermined goals. These are intended strategies. Most of the strategies companies plan are intended strategies. These strategies are decided by the strategic planning team in the top management. On the other hand, emergent strategies are strategies that evolve from the bottom level and what the organizations really do, as opposed to what they intend to do.

The distinction between intended and emergent strategies has important implications for HRM. Now, the focus on strategic HRM is primarily on intended strategies.

In emergent strategies, HRM’s role has been seen as:

i. Identifying people-related business issues relevant to strategy formulation.

ii. Developing HRM systems that help in the implementation of strategic plan.

iii. Giving importance to strategies identified by the people at the bottom level.

iv. Encouraging the shop-floor workers to provide ideas for new products, new markets and new strategies, and

v. Facilitating communication throughout the organization to enable emergent strategies reach the top management.

2. Enhancing Organization Competitiveness:

As in the case of emergent strategies human resources can be a source of competitive advantage by developing a human capital pool that gives the firm the unique ability to adopt to an ever-changing environment. Nowadays, managers evince keen interest in the idea of “learning organization”, in which employees continually expand their capacity through learning to achieve the desired results.

This can be achieved by constant learning process through monitoring the environment, assimilating information making decisions and restructuring. Though management information system (MIS) can be used, ultimately it is the human capital which makes up the company provide raw material in learning organization.

Thus the role of human resources continues to increase in competitive advantage because of fast-changing environment-

i. Developing flexible and adoptable manufacturing systems to respond to customer needs more quickly to beat the competition.

ii. Allowing the emergent strategy to come directly from the market place by determining and responding to the exact mix of customer desires.

iii. Placing right people in the right places to adapt quickly.

Strategic Human Resource Executives:

The role played by HR executives two or three decades ago is quite different from the role being played today. Earlier, HRM executives played only the traditional role of administration, namely, processing of paperwork and administering, hiring, training, appraisal, compensation and benefit scheme. These activities are by and large, unrelated to the strategic direction of the firm. Now, strategic decision makers are realizing the importance of people issues, are making HRM a part and parcel of strategic planning process.

This new role makes the HR manager to possess and use knowledge of how people can and do play a role in competitive advantage as well as the policies, programs and practices that can make the firm’s people as a source of competitive advantage. This results in a new set of competencies to be acquired by present day HR executives.

In future, HR professionals will need four basic competencies to play important role is strategic management process:

1. Business Competence:

It is knowing the company’s business and understanding its financial capabilities. This calls for making logical decisions based on accurate information. As the effectiveness of any decision is the corporate world is evaluated in terms of profit, the HR managers must be capable of calculating the cost and benefits of each decision. In addition to material benefit, the HR managers must be able to identify the non-monetary impact such as social and ethical issues attached to HRM practices.

2. Professional-Technical Knowledge:

HR executives must have professional knowledge in all the areas of HRM practices such as recruitment, selection, maintenance/reviews, organizational designs, communication, etc. Selection techniques, performance appraisal methods, training programmes and incentive plans require regular refinement. HR executives must be able to critically evaluate the new techniques in the state-of-the-art HRM programmes and use only those that are beneficial to the company.

3. Management of Change Process:

The HR executives must be competent to diagnose problems, implement organizational changes and evaluate results. As any change, minor or major, results in conflict, resistance confusion among the people who implement the new plans or programmes the HR executives must have the skills to solve the problems that crop up while changes are made. It has been found that many companies had their organization development/changes function as part of the HR department.

4. Integration Competence:

This is the ability to integrate the three other competencies to increase the company’s effectiveness and values. This requires that in addition to being specialists, they must be also generalists in making overall decisions. The HR executives must be able to integrate all the functions of HRM to make the strategy implementation effective. They must be aware that changes in any one part of HRM package are likely to require changes in other parts of the package.

Strategic Human Resource Management (SHRM) – Dimensions

1. Re-Engineering and Strategic HRM:

Both ‘hard’ and ‘soft’ normative models of HRM lay emphasis on the importance of organizational and job redesign. Much of the literature on the ‘soft’ HRM model is concerned with job design which covers the vertical and horizontal compression of tasks, worker autonomy and self-control or accountability. A new buzz word for the redesign of work organizations is ‘Business Process Reengineering’ (BPR).

Hammer and Champy (1993) popularized the concept named-‘re- engineering’ with over 2 million copies of their book sold worldwide since it was published in 1993. Hammer and Champy define BPR as- The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.

Hammer and Champy argued for a new and improved approach to organizational design, work processes, and management. First, many middle-management positions give way to ‘enabling’ information technology and self-managed work teams which removes the hierarchy of the corporation and its structure gets flattened.

Second, according to Champy work is redesigned into self-managed teams and managerial accountability is shifted to the ‘front line’- ‘Whatever supervisory capacity those middle managers might have had now passes to the people who work in teams or have become increasingly more self-managed’.

Third, information technology allows organizations to do work in ‘radically’ different ways. Fourth, senior management make an ‘unwavering’ commitment to radical change process by including cultural change, set ambitious goals, and initiate the re-engineering process.

Thus, elimination of many middle-management positions, the vertical and horizontal compression of job assignments, as well as introduction of self-managed work teams draws attention to ‘strong’ leadership and corporate culture, and the critical role of HRM.

In essence, BPR puts the HRM techniques that seek to make workers’ behaviour and performance more compatible with the organization’s culture and goals. Finally, re-engineering is a social construct which displays the inherent power of corporate leaders to shape and define reality.

Champy’s candid observation also reveals the ‘darker side’ to re- engineering and further tensions between ‘hard’ and ‘soft’ HRM models. The ‘hard’ version of HRM might be a necessary prerequisite before the ‘soft’ version of HRM is put to work in the re-engineered workplace.

2. Leadership and Strategic HRM:

During the last 25 years, human resource strategy has grown and changed considerably—from functional strategies in the 1980s and capabilities strategies in the 1990s to today’s result-oriented strategies. Such strategic shifts in HR reflects changing labor markets and new business philosophy. Research suggests that in the future there will be a need for increased contributions from HR business strategy, including ethical and cultural leadership. In the immediate future, strengthening HR strategic leadership is one of today’s most critical goals.

In the management texts, leadership has been defined in terms of traits, behaviour, contingency and power of an administrative position. Most definitions assumes that leadership involves a process whereby an individual exerts influence upon others in an organizational context. Leadership is by nature dialectical- it is socially constructed through the interaction of both leaders and followers.

After a comprehensive review of the leadership literature, Yukl (1998) affirms that any definition of leadership is ‘arbitrary and very subjective’ and goes on to define leadership as-

The process wherein an individual member of a group or organization influences the interpretation of events, the choice of objectives and strategies, the organization of work activities, the motivation of people to achieve the objectives, the maintenance of cooperative relationships, the development of skills and confidence by members, and the enlistment of support and cooperation from people outside the group or organization.

Morgan argued that leadership is not simply a process of behaving or a process of manipulating rewards, it is a process of ‘power-based reality construction’. Within the literature of leadership, there is a continuing debate over the alleged differences between a manager and a leader. For example- Bennis and Nanus proposed that ‘managers are people who do things right and leaders are the people who do the right thing’. Kotter stated that managers develop plans whereas leaders create a vision and a strategy for achieving the vision.

Also, Kotter proposed that managers and leaders differ in their methods of execution. Managers organize and engage in a process of controlling and problem- solving, while leaders involve in a process of alignment and seek to motivate and inspire. It indicates that an individual can be a manager without leading, and an individual can be a leader without being a manager (for example- an informal group leader or elected trade union leader). Kotter argues that a balance of management and leadership is necessary for effective operation of the work organization.

The concept of leadership is the main aspect for developing a ‘strong’ organizational culture and building a high level of worker commitment and cooperation. Of the many management gurus, Peter Senge makes the most explicit link between strategic HRM, workplace learning, and leadership when he writes that ‘leaders are designers, stewards, and teachers’ and that a learning organization will remain only a ‘good idea, an intriguing but distant vision’ until the leadership skills required are more readily available.

Thus, leadership competencies would seem to be a key constraint on the development of a resource- based SHRM model and a ‘learning organization’.

Barney emphasizes that the resource-based SHRM requires leaders that develop the organization’s ‘rare and non-substitutional’ human assets. Unlike technology assets, organizations cannot readily purchase human sustainable competitive advantages on the open markets and therefore ‘managers are important in this model, for it is managers that are able to understand and describe the economic performance potential of a firm’s endowments. Without such managerial analyses, sustained competitive advantage is not likely’.

‘Transformational’ leaders exalt to employees the need for working beyond contract for the ‘common’ good. This leadership style emphasizes the importance of vision building and the ability to communicate this vision and, simultaneously, enthuse subordinates to make their vision a reality – ‘to innovate, to change and indeed to conquer new frontiers in the marketplace or on the shop floor’.

In contemporary parlance, the transformational leader is concerned with empowering workers. The transformational model shifts the focus away from the hierarchical nature of work organizations, towards the individualization of the employment relationship, and the development of individual leadership qualities or traits.

Legge states that even though the new leadership paradigm emphasize ‘shared leadership’ and empowerment among ‘core’ workers, they represent a ‘unitary’ frame of reference on employment relations and are squarely aimed at ‘bottom-line’ results.

3. Workplace Learning and Strategic HRM:

Within most formulations of strategic HRM, employee development has been regarded as a key ‘lever’ that can help, management achieve the effectiveness in operations. Beer states that ’employee development is a key strategy for organizational survival and growth’. Many others believe that investment in employee development has become a ‘litmus test’ of whether or not employers have adopted the HRM model.

In recent years, the concept of the ‘learning organization’ or ‘workplace learning’ has attracted many academicians and corporate leaders. Workplace learning is that part of the management process that attempts to facilitate work-related continuous learning at the individual, group and organizational level. For workers and managers, the assumptions about workplace learning capture the essence of the American Dream, the opportunity for progress or growth at work based on individual achievement.

Workplace learning is the main aspect in the ‘soft’ resource based SHRM model. Individual, team, and organizational learning enable organization to increase its ‘core competencies’ and thus act as the engine for sustainable competitive advantage.

An organization’s investment in workplace learning acts as a powerful signal of its intentions to develop its ‘human assets’; this can help develop commitment to the organization rather than compliance. Most advocates of Japanese or ‘lean’ production systems emphasize the importance of investing in human capital and the processes of workplace learning.

Kochan and Dyer advise those firms adopting a ‘mutual commitment’ strategy to gain competitive advantage to make the necessary investment in their workforce and adopt the concept of lifelong learning. The relationship between learning and worker commitment, flexibility, and quality has also been subject of discussion.

Some of the writers emphasize how ‘cultural control’ can be reinforced through workplace learning and how the training of ‘competencies’ can render work more ‘visible’ in order to be more manageable.

Coopey argues that workplace learning theory assumes a unitarist perspective in which goals are shared. However, he ignores conflict occurring from inherent tensions in the employment relationship, and that political activity by organizational members is likely to impede learning. He argues that likely effect of workplace learning is to strengthen the power of senior management, those at the ‘apex of the organization’.

‘High quality’, ‘flexible specialization’ and ‘functional flexibility’, is the assumption of a well-trained ‘high quality workforce’. However, empirical data shows that in most Anglo-North American companies there is a growing trend in ‘non-standard’ forms of employment (for example- part time and contractors). The validity of this data and the plausible insight that ‘peripheral’ workers tend to receive the lowest level of training, would create a gap between the theory and practice of strategic HRM models.

4. Trade Unions and Strategic HRM:

The new HRM model depicted as ‘unitary’; assumes that management and workers share common goals, and differences are treated and resolved rationally. According to the theory, if all workers are fully involved into the business they will identify themselves with their company’s goals and management’s problems. The result will be that they would consider themselves as an inseparable part of the company. What is good for the company and management will be perceived by workers as also being good for them.

Critical to achieving this goal is the concept of worker ‘commitment’ to the organization. This HRM goal has led writers to argue that there is a contradiction between the normative HRM model and trade unions. In the prescriptive management literature, the argument is that the collectivist culture, emphasizing group orientation, fits uncomfortably with the HRM goal of high employee commitment and the individualization of the employment relationship including individual contracts, communications, appraisal and rewards.

Critics argue that new HRM model is inconsistent with traditional industrial relations and collective bargaining, albeit for very different reasons. HRM policies and practices are designed to provide workers with a false sense of job security and obscure underlying sources of conflict inherent in employment relations.

According to Godard, historically a major reason for managers adopting ‘progressive’ HRM practices has been to avoid or weaken unions. However, he does concede that ‘it would also be a mistake to view progressive practices as motivated solely or even primarily by this objective’.

Yet many other industrial relations scholars, have argued that independent trade unions and variants of the HRM model cannot only coexist but are even necessary to its successful implementation and development.

They argue that trade unions should play a proactive role promoting the more positive elements of the ‘soft’ HRM model. Such a union strategy would create a ‘partnership’ between management and organized labor resulting in mutual gains for both the organization and workers. It is clear from the above discussion that HRM discourse has been strongly influenced by political-legal developments and the decline in trade union membership and power in the organizations over the last few years.

5. HRM and Organizational Performance:

Although most HRM models provide no evidence for any HRM- performance link, the models tend to assume that an alignment between business strategy and HRM strategy will improve organizational performance and effectiveness. The resource-based SHRM model assumes a chain of ‘soft’ HRM policies of empowerment, team working and workplace learning, employee commitment, synergy and improved organizational performance. A core assumption of this approach is that committed workers are more productive.

The importance of commitment to organizational efficiency and competitiveness is emphasized by Beer in following words – ‘Increased commitment can result not only in more loyalty and better performance for the organization, but also in self-worth, dignity, psychological involvement, and identity for the individual’. In the late 1990s, demonstrating that there is indeed a positive link between HRM and performance has become ‘the dominant research issue’ in the HRM field.

The major empirical questions on this topic asked are- What types of performance data are available to measure the HRM- performance link? Do ‘commitment-type’ HRM systems produce above-average results than ‘control-type’ systems? Do work organizations with a better ‘fit’ between HRM practices and business strategy have superior performance?

Measuring the links between workforce issues and economic performance is well defined in the field of industrial relations. Although the 1960s and 70s saw research on the effects of such management initiatives as employee involvement schemes on various outcomes (attitudes, job satisfaction and productivity), Purcell wrote that if it were possible to prove that ‘enlightened or progressive’ HRM was invariably associated with higher productivity and lower costs ‘life for the… HRM executive would be easier’.

As it is, there is little conclusive evidence. A similar point is made by Legge when she comments on the absence of ‘few, if any, systematic evaluations’ of ‘high commitment’ management practices on organizational performance. Guest (1997) examines the weaknesses in the current theoretical HRM models with regard to the HRM—performance link. Knowledge in this area is still incomplete, but North American scholars, have recently provided important information on these empirical questions.

American academics Ichniowski gave a comprehensive review of some of the methodological challenges researchers face in identifying the connection between HRM practices and performance and review the findings from a body of US research using different research designs. Betcherman provide evidence or/the HRM-organizational performance relationship using Canadian data. Both Betcherman and Ichniowski research suggests that innovative HRM practices can increase organization performance.

Strategic Human Resource Management (SHRM) – Importance

HR management can play a role in environmental scanning i.e., identifying and analyzing external opportunities and threats that may be crucial to the company’s success. Similarly, HR management is in a unique position to supply competitive intelligence that may be useful in the strategic planning process.

HR also participates in the strategy formulation process by supplying information regarding the company’s internal strengths and weaknesses. The strengths and weaknesses of a company’s human resources can have a determining effect on the viability of the firm’s strategic options.

By design, the perspective demands HR managers become strategic partners in business operations playing prospective roles rather than being passive administrators reacting to the requirements of other business functions. Strategic HR managers need a change in their mindset from seeing themselves as relationship managers to resource managers knowing how to utilize the full potential of their human resources.

The new breed of HR managers need to understand and know how to measure the monetary impact of their actions, so as to be able to demonstrate the value-added contributions of their functions.

HR professionals become strategic partners when they participate in the process of defining business strategy, when they ask questions that move strategy to action and when they design HR practices that align with the business strategy. By fulfilling this role, HR professionals increase the capacity of a business to execute its strategies.

The primary actions of the strategic human resource manager translate business strategies into HR priorities. In any business setting, whether corporate, functional, business unit or product line a strategy exists either explicitly in the formal process or document or implicitly through a shared agenda on priorities.

As strategic partners, HR professionals should be to identify the HR practices that make the strategy happen. The process of identifying these HR priorities is called organizational diagnosis, a process through which an organization is audited to determine its strengths and weaknesses.

Translating business strategies into HR practices helps a business in three ways. First, the business can adapt to change because the time from the conception to the execution of a strategy is shortened. Second, the business can better meet customer demands because its customer service strategies have been translated into specific policies and practices. Third, the business can achieve financial performance through its more effective execution of strategies.

In brief, a strategic perspective of HRM that requires simultaneous consideration of both external (business strategy) and internal (consistency) requirement leads to superior performance of the firm.

This performance advantage is achieved by:

i. Marshaling resources that support the business strategy and implementing the chosen strategy, efficiently and effectively.

ii. Utilizing the full potential of the human resources to the firm’s advantage.

iii. Leveraging other resources such as physical assets and capital to complement and augment the human resources-based advantage.

Strategic Human Resource Management (SHRM) Approaches

There are two approaches to strategic human resource management:

1. Attempts to link Human Resource activities with competency based performance measures.

2. Attempts to link Human Resource activities with business surpluses or profit.

These two approaches indicate two factors in an organisational setting. The first one is the human factor, their performance and competency and the later is the business surplus. An approach of people concern is based on the belief that human resources are uniquely important in sustained business success.

An organization gains competitive advantage by using its people effectively, drawing on their expertise and ingenuity to meet clearly defined objectives.

Integration of the business surplus to the human competency and performance required adequate strategies. Here the role of strategy comes into picture. The way in which people are managed, motivated and deployed, and the availability of skills and knowledge utilized will all shape the business tomorrow’s strategy.

The strategic orientation of the business then requires the effective orientation of human resources to competency and performance excellence.

Benefits of a Strategic Approach to HR:

1. Identifying and analyzing 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,

11. Facilitates development of high-quality workforce through focus on types of people and skills needed,

12. Facilitates cost-effective utilization of labour, particularly in service industries where labour is generally greatest cost,

13. Facilitates planning and assessment of environmental uncertainty, and adaptation of organization to external forces,

14. Successful SHRM efforts begin with identification of strategic needs,

15. Employee participation is critical to linking strategy and HR practices,

16. Strategic HR depends on systematic and analytical mindset,

17. Corporate HR departments can have impact on organization’s efforts to launch strategic initiatives.

Strategic Human Resource Management (SHRM) and Business Strategy

The need to integrate business strategy and HRM strategy has received much attention from the HR academic community, and it is to this discourse that we now turn.

i. It is a common experience that a strategy turns out to be ‘good’ if it is the one suggested by its people.

ii. One of the driving factors behind the evaluation and reporting of human capital data is the need for better information to feed into the business strategy formulation process.

iii. In majority of organizations people are now the biggest asset. The knowledge, skills and abilities have to be deployed effectively if the organization is to create value.

iv. The intangible value of an organization which lies in the people it employs is gaining recognition by the stakeholders, and, today, it has been generally accepted that human resource helps the organization have the advantage of long term sustained performance.

v. It is therefore too simplistic to say that strategic human resource management stems from the business strategy.

Integration of HR Strategy with Corporate Planning

Human resource strategy examines its integration with corporate planning, and the development of human resource policies. Many theorists consider a strong link with strategy to be the key difference between human resource management and earlier philosophies of people management.

The integration of HR strategy with corporate strategy addresses a number of fundamental questions:

1. Is strategic human resource management a reality? Are people managers involved in high- level decision-making?

2. Are human resource concerns valued as much as financial, production or marketing issues?

3. How can human resource strategies and practices be adapted to meet perceived threats and opportunities in a changing business environment?

4. If people are truly an organization’s greatest assets, then their careful selection, development and deployment can lead to a competitive advantage.

Strategic human resource management requires formulation of HR objectives, strategies and policies. These enable the provision of the skills and abilities needed to meet the requirements of an organisation’s overall objectives. In other words, they provide the framework which ensures that an organisation’s people needs are met.

In modern organisations HR strategy is supported by information technology in the form of human resource information systems and workforce management systems.

Strategic Human Resource Management (SHRM) Levels

Another aspect of strategic management in the multidivisional business organization concerns the level to which strategic issues apply.

Conventionally there are three different levels of strategy:

1. Corporate Level Strategies

2. Business Level Strategies

3. Functional Level Strategies

Level # 1. Corporate-Level Strategy:

Corporate-level strategies address the entire strategic scope of the enterprise. Corporate-level strategy describes a corporation’s overall direction in terms of its general philosophy towards the growth and the management of its various business units. This is the “big picture” view of the organization and includes deciding in which product or service markets to compete as well as in which geographic regions to operate.

For multi-business firms, because market definition is the domain of corporate-level strategists, the responsibility for diversification, or the addition of new products or services to the existing product/service line-up, also falls within the realm of corporate-level strategy. Similarly, decisions like whether to compete directly with other firms or to selectively establish cooperative relationship strategic alliances falls within the purview corporate-level strategy. However, corporate level managers requires ongoing inputs from business-level managers.

Critical questions answered by corporate—level strategists thus include:

1. What businesses should the firm be in?

2. How should the resources be allocated among existing businesses?

3. What level of diversification should the firm pursue; i.e., which businesses should the company enter and which businesses should be targeted for termination or divestment?

4. How diversified should the corporation’s business be, i.e., should it opt for related diversification; i.e., similar products and service markets, or unrelated diversification; i.e., dissimilar product and service markets. If related diversification is chosen, how will the firm leverage potential cross-business synergies, i.e., how will adding new product or service businesses benefit the existing product/service line­up?

5. How should the firm be structured? Where should the boundaries of the firm be drawn? Do the organizational components such as research and development, finance, marketing, etc. fit together? Are the responsibilities and accountability for each business unit clearly identified?

Thus, corporate strategies deal with plans for the entire organization and they initiate change as industry and specific market conditions warrant. Top management has primary decision-making responsibility in developing corporate strategies and these managers are directly responsible to shareholders. The role of the board of directors is to ensure that top managers actually represent these shareholders’ interests. However, corporate strategists are paralyzed without accurate and up-to-date information from managers at the business-level.

Level # 2. Business-Level Strategies:

Business-level strategy deals with decisions and actions pertaining to each business unit, the main objective of a business-level strategy being to make the unit more competitive in its marketplace. They are similar to corporate-strategies. But corporate strategies focus on overall performance, while, business level strategies focus on only one rather than a portfolio of businesses.

Business-level strategies are thus primarily concerned with:

1. Coordinating and integrating unit activities so they conform to organizational strategies.

2. Developing distinctive competencies in each unit.

3. Identifying product or service-market niches and developing strategies for competing in each.

4. Monitoring product or service markets so that strategies conform to the needs of the markets.

In a single-product company, corporate-level and business-level strategies are the same. Thus, in single-business organizations, corporate and business-level strategies overlap to the point that they should be treated as one united strategy. However, the product made by a unit of a diversified company would face many challenges and opportunities faced by a one-product company. As for most organizations, business- unit strategies are designed to support corporate strategies, the focus for business-level strategies is on the product or service and not on the corporate portfolio.

Business-level strategies thus support corporate-level strategies as these strategies are concerned with aligning their activities with the overall goals of corporate-level strategy while simultaneously, navigating the markets in which they compete in such a way that they have a financial or market edge—a competitive advantage-relative to the other businesses in their industry.

Although business-level strategy is guided by ‘upstream’ corporate-level strategy, business unit management must craft a strategy that is appropriate for its own operating situation.

In the 1980s, Harvard Business School’s Michael Porter developed a framework of generic strategies that can be applied to strategies for various products and services, or the individual business-level strategies within a corporate portfolio. Porter made a significant contribution to our understanding of business strategy by formulating three competitive strategies- cost leadership, differentiation; and focus on a particular market niche.

Cost- leadership strategies require firms to develop policies aimed at becoming and remaining the lowest cost producer and/or distributor in the industry. Note here that the focus is on cost leadership, not price leadership. Differentiation strategies require a firm to create something about its product that is perceived as unique within its market. Focus, the third generic strategy, involves concentrating on a particular customer, product line, geographical area, channel of distribution, or market niche.

Miles and Snow (1984) have identified four modes of strategic orientation – defenders, prospectors, analyzers and reactors. Defenders are companies with a limited product line and where the management focus is on improving the efficiency of their existing operations. Prospectors are companies with fairly broad product lines and where the management focus is on product innovation and market opportunities. This orientation makes senior managers emphasize ‘creativity over efficiency’.

Analyzers are companies that operate in at least two different product market areas, one stable and one variable and, as such in this situation, senior managers emphasize efficiency in the stable areas whereas innovation in the variable areas. Reactors are companies that lack a consistent strategy—structure—culture relationship. In this reactive orientation, senior management’s responses to environmental changes thus tend to be piecemeal strategic adjustments.

Level # 3. Functional-Level Strategies:

Functional-level strategies are concerned with coordinating the functional areas of the organization (marketing, finance, human resources, production, research and development, etc.) so that each functional area contributes to individual business-level strategies and the overall corporate-level strategy. This involves coordinating the various functions needed to design, manufacturer, deliver, and support the product or service of each business.

Functional strategies are primarily concerned with:

i. Efficiently utilizing specialists within the functional area.

ii. Integrating activities within the functional area (e.g., coordinating advertising, promotion, and marketing research in marketing; or purchasing, inventory control, etc. in production/operations).

iii. Assuring that functional strategies fit with business-level strategies and the overall corporate-level strategy.

Strategies for an organization may be categorized by the level of the organization addressed by the strategy. Corporate-level strategies involve top management and address issues of concern to the entire organization. Business-level strategies are generally developed by upper and middle-level managers and are intended to help the organization achieve its corporate strategies.

Functional strategies address problems commonly faced by lower-level managers and deal with strategies for the major organizational functions (e.g., marketing, finance, and production) considered relevant for achieving the business strategies.

Strategic Human Resource Management (SHRM) – Application

Strategic human resource management often is viewed as a set of decisions regarding the acquisition, allocation, utilization, and development of human resources that affect organizational performance. It has been found that training and development proves to be the most important strategic HRM practice by managers to enable employees to fit in cross cultural diversities existing within the organization. Organizations have started spending huge amount after cross-cultural training of employees.

Training is also imparted to employees as it is seen as a critical and effective tool to ensure product and service quality and standards.

In multinational corporations, training is the keystone for localization of top and senior managers. Trained, throughout the globe, have successfully replaced expatriate managers at the corporate and department levels. In Ericsson China Ltd., for example- out of 12 senior managers at the corporate level, nine are local Chinese. Also, out of 25 department directors, 21 are Chinese managers.

In an environment where almost all welfare benefits come with full-time employment and where the newly established social security system provides only minimal protection, job security has become very important for all employees.

It has now become a popular practice in many firms to have clearly defined duties, roles and responsibilities of all employees which are evaluated regularly to determine his/her level of compensation. Job analyses with the detailed job descriptions and job specifications have become crucial these days.

A strict performance appraisal system is adopted in many organizations. Job responsibilities, professional skills and qualifications, the ability to innovate and to accomplish goals form the basis for performance appraisal. The recent studies highlight the fact that appraisal has positive impacts on employee performance ranging from moderately effective to very effective.

While recruiting and retaining qualified professionals, such as technical, marketing, and managerial staff, (especially the young staff) it is necessary to provide adequate opportunities for career and personal development. More and more companies provide opportunities for development and continuous learning in return for high performance and productivity during an employee’s stay.

An important part of the ownership reform seen in many organizations today is employee ownership (i.e., some stock of the company is sold to employees), thus linking the benefits of the employees with company performance. Ownership reform helps to increase the overall organizational efficiency and reduce financial debt.

Strategic Human Resource Management (SHRM) – Issues

The strategic human resource choices involved in low cost of production strategy include:

i. Train some of the employees in the area of time management, materials handling at work, etc.

ii. Retrenchment of surplus employees caused due to superior speed

iii. Pay for performance

iv. Promotions based on efficiency

v. High quality work environment at the production place.

These human resource issues are also known as functional strategies of HRM.

Now, we discuss strategic human resource choices. The strategic team at the corporate level, SBU level and the functional level should consider the following strategic human resource issues while formulating and implementing strategies.

i. Employment:

The strategic human resource choices in employment include- internal sources or external sources or outsourcing some employees or certain functions like canteen, accounting, security, office maintenance and housekeeping. HCL Technologies preferred broad banding to narrow banding in job design and also flat organisation structure to tall structure. The broad jobs at HCL technologies forced the HR Manager to plan for the employees with multi-skills rather than a few skills.

Another strategic issues involved are long range human resource plan or short range human resource plan, employee selection based on skills or aptitude and extensive socialisation or limited socialisation.

ii. Development:

Employee training and executive development choices include – in-house training or external training, competency building training or ad-hoc training, etc.

iii. Performance Appraisal:

Polaris Software Lab appraises the employees based on behaviour, whereas Bajaj Auto appraises based on results. The other choices include group criteria or individual criteria, developmental oriented or remedial oriented, use the results for pay or for promotion based on performance, etc.

iv. Compensation:

Reliance prefers high base salaries, whereas Infosys prefers low base salaries and high perks. Other choices are: fixed package or flexible package, long term incentives or short term incentives, equal pay or discriminated pay, etc.

v. Industrial Relations:

Infosys technologies prefer individual negotiation whereas L&T follows collective negotiations. Other choices are: broad employee participation or limited employee participation, partial employee ownership or no employee ownership, employee compliance or employee empowerment, etc.

vi. Work Systems:

Zee Telefilms prefers job enrichment, whereas Bharat Petroleum Corporation prefers simplified jobs. Wipro follows implicit job analysis, while Nirma follows explicit job analysis. Team work is practiced in Satyam Computer Services, whereas individual orientation is preferred in Punjab Tractors. The other choices are – specialised jobs or rotation among jobs, self/peer supervision or close supervision.

vii. Organisational Culture:

Organisational cultural choices include creation and maintenance of multi-culture or single culture. Creation of multi-culture includes: employing the candidates with various social, regional and ethnic backgrounds, tolerance for the differences, managing the diversities, etc., organisational cultural choices are significant today in view of globalisation of business.

Strategic Human Resource Management (SHRM) – Barriers

1. Inducing the vision and mission of the change effort.

2. High resistance due to lack of cooperation from the bottom line.

3. Interdepartmental conflict.

4. The commitment of the entire senior management team.

5. Plans that integrate internal resource with external requirements.

6. Limited time, money and the resources.

7. The status-quo approach of employees.

8. Fear of in-competency of senior level managers to take up strategic steps.

9. Diverse work-force with competitive skill sets.

10. Fear towards victimization in the wake of failures.

11. Improper strategic assignments and leadership conflict over authority.

12. Ramifications for power relations.

13. Vulnerability to legislative changes.

14. Resistance that comes through the legitimate labour institutions.

15. Presence of an active labour union.

16. Rapid structural changes.

17. Economic and market pressures influenced the adoption of strategic HRM.

18. More diverse, outward looking approach.

Strategic Human Resource Management (SHRM) – Current Scenario

Over the years, the personnel function has undergone tremendous amount of change. The clerical and administrative roles of a personnel man have been put on the back burner. The firefighting, mediating, legal, appraising and advisory roles have also been pushed to a corner. Due to rapid changes in the environment, personnel people are compelled to switch gears and change hats quickly.

Without a proactive stance and a developmental role, the personnel function looks quite jaded and redundant. As change agents, integrators, trainers and educators, personnel people are expected to play more developmental roles in sync with the expectations of employees as well as the environment.

They have to assume additional roles in the form of a coach, a counselor or even a mentor on a continuous basis. Most organisations have also realised the importance of the personnel function in the overall scheme of things and have started accepting personnel people as capable of bringing about strategic change.

Hence, the emergence of a growing body of literature emphasising the emerging nature of a growing discipline called, Strategic Human Resource Management (SHRM).

SHRM is built around three important propositions:

i. The human resources of a firm are a major source of competitive advantage; in a way, people can make or break an organisation.

ii. Successful organisational performance depends on a close fit between business and human resource strategy (vertical fit).

iii. Individual HR strategic should cohere by being linked to each other to offer mutual support (horizontal fit).

In short, it involves the development of a consistent, aligned collection of practices, programmes and policies to facilitate the achievement of the organisation’s strategic goals.

1. SHRM tries to develop a consistent, aligned collection of practices, programmes and policies to facilitate the achievement of the organisation’s strategic objectives.

2. Strategic HR shifts attention, as against the traditional HR’s focus on employee relations, to partnerships with internal and external groups. The focus on managing people is more systemic with an understanding of the myriad factors that impact employees and the organisation and how to manage multiple relationships to ensure satisfaction at all levels of the organisation.

3. Strategic HR is transformational in nature, in that it helps the people and the organisation to adapt, learn and act quickly. “It will make sure that change initiatives that are focused on creating high performance teams, reducing cycle time for innovation, or implementing new technology are defined, developed and delivered in a timely way.”

4. Strategic HR is proactive and considers various timeframes in a flexible manner. Likewise, it permits employees to process work and carry out job responsibilities in a free-flowing way. Rather than being enveloped by tight controls and excessive regulations, operations are controlled by whatever is necessary to succeed, and control systems are modified as needed to meet changing conditions.

Job design is organic, specialization is replaced by cross training and independent tasks are replaced by teams, encouraging autonomy at various levels.

5. Above all, strategic HR believes that the organisation’s key assets are its people. It realises that an organisation can have competitive edge over its rivals if it is able to attract and retain knowledge workers who can optimally utilise and manage the organisation’s critical resources.

In the final analysis, people are the organisation’s only sustainable competitive advantage. While running the show, strategic HR, of course, argues that any individual in an organisation that has responsibility for people is an HR manager, regardless of the technical area in which he or she works.

6. Strategic HR offers three critical outcomes- increased performance, enhanced customer and employee satisfaction and increased shareholder value. These outcomes are accomplished through effective management of staffing, retention and turnover processes, selection of employees that fit with both the organisational strategy and culture, cost-effective utilisation of employees through investment in identified human capital with the potential for higher return; integrated HR programmes and policies that clearly follow from corporate strategy; facilitation of change and adaptation through a flexible, more dynamic organisation; and tighter focus on customer needs, emerging markets and quality.

The subject matter of Personnel Management, therefore, has been presented in a broad and comprehensive manner in this text — keeping all these emerging trends in the mind. For the sake of clarity, Personnel Management could be defined as a process of bringing people and organisations together so that the goals of each are met.

The Personnel Manager’s job is to secure the best out of people by utilising resources in an effective and efficient manner. When the resources are put to best use by winning the wholehearted co-operation of all employees, Personnel Management could be a source of competitive advantage as well!