Strategic Human Resource Management Practices Business Essay

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The researcher visited 15 HRM practitioners from various MNC groups and collected the information regarding the trends they faced in their profession in dealing with various HRM tasks. Participants described the roles that they occupy in organizations, and described the required competencies for effective HRM practice. Results indicated that major trends affecting HRM practice include shifting demographics, an orientation to an increasingly strategic role for HRM, and changing technology. Key roles identified by participants were internal consultant and strategic partner. Important competencies were described as technical, strategic, organizational/management, interpersonal, and personal. Implications of these findings for HRM practitioners are discussed. Extant theories of strategic human resource management (SHRM) practices and cultures have generally adopted on the one hand the assumption that organizations develop a culture of their own that is distinct from the national and industry contexts in which the organization is embedded, thus ignoring the potential impact of external environmental factors on organizational culture.

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 that HR managers become strategic partners in business operations playing prospective roles rather than are 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.


In today's intensely competitive and global marketplace, maintaining a competitive advantage by becoming a low cost leader or a differentiator puts a heavy premium on having a highly committed or competent workforce. Competitive advantage lies not just in differentiating a product or service or in becoming the low cost leader but in also being able to tap the company's special skills or core competencies and rapidly respond to customer's needs and competitor's moves. In other words competitive advantage lies in management's ability to consolidate corporate-wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities.

Organizations of today continue to operate in fast-changing and often unpredictable environments.Globalization (Kleinsorge, 2010), changing demographics (Busine and Watt, 2005), and changing customer relationships are frequently cited Frequently caught in the midst of these changes is the human resource management (HRM) function which has evolved from a narrow personnel view, to a broader HRM perspective, and then to one that emphasizes a strategic orientation (Strauss, 2001). This strategic human resource management (SHRM) orientation is evidenced in a variety of HRM areas, for example, recruitment and selection (Das, 2007), training and development (Saks and Haccoun, 2010), and compensation (Milkovich, Newman and Cole, 2010). Further, during these shifts many have been critical of the role of HRM and suggested among other things that it does not add value to the firm (Hammonds,2005). However, others have shown that HRM does indeed add value (Liu, Combs, Ketchen, and Ireland,2007). Clearly, the field of HRM is changing and growing, new knowledge is being created, and the standards of performance will increase in level and type (Losey, Meisinger, and Ulrich, 2005).

In a growing number of organizations human resources are now viewed as a source of competitive advantage. There is greater recognition that distinctive competencies are obtained through highly developed employee skills, distinctive organizational cultures, management processes and systems. This is in contrast to the traditional emphasis on transferable resources such as equipment. Increasingly it is being recognized that competitive advantage can be obtained with a high quality workforce that enables organizations to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation.

Initially this paper reviews the literature relevant to trends facing the HRM profession and resulting changing roles and competencies. It then provides a description of the study's methodology, presents findings and discussion, and concludes with implications for the profession and directions for future research.



Strategic human resource management involves the development of a consistent, aligned collection of practices, programs (strategies), and policies to facilitate the achievement of the organization's strategic objectives (Mello, 2002).


Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. In an organisation SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding personnel.


In the last two decades there has been an increasing awareness that HR functions were like an island unto itself with softer people-centred values far away from the hard world of real business. In order to justify its own existence HR functions had to be seen as more intimately connected with the strategy and day to day running of the business side of the enterprise. Many writers in the late 1980s, started clamoring for a more strategic approach to the management of people than the standard practices of traditional management of people or industrial relations models. Strategic human resource management focuses on human resource programs with long-term objectives. Instead of focusing on internal human resource issues, the focus is on addressing and solving problems that effect people management programs in the long run and often globally. Therefore the primary goal of strategic human resources is to increase employee productivity by focusing on business obstacles that occur outside of human resources. The primary actions of a strategic human resource manager are to identify key HR areas where strategies can be implemented in the long run to improve the overall employee motivation and productivity. Communication between HR and top management of the company is vital as without active participation no cooperation is possible.


There is an explicit linkage between HR policy and practices and overall organizational strategic aims and the organizational environment

There is some organizing schema linking individual HR interventions so that they are mutually supportive

Much of the responsibility for the management of human resources is devolved down the line


With the advent of new economy industries like IT and the mushrooming of the service sector, organizations all over the world realized that human resources must be viewed as a source of competitive advantage as opposed to treating it much the same way in access to technology or capital is concerned. What this means is that the practice of HRM is being viewed as something that promotes the business objectives of the firms and not merely another factor in the way the firm is manage


HRM has been affected by a number of trends including globalization, changes in technology, demographics of the workforce, ethical issues and pressures to show that its practitioners add value to the organization.Globalization has resulted in specific challenges to HRM including how to enhance global business strategy, how to align HRM with business strategy, how to design and lead change, how to build global corporate culture (Mendenhall, Black, Jensen, and Gregersen, 2003) and how to develop leaders (Mendenhall, et al., 2003; Prince, 2008). Further, organizations must compete for talent globally (Losey, Meisinger, and Ulrich, 2005).

Strategic human resource management has been defined as ' the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility '. Strategic HR means accepting the HR function as a strategic partner in the formulation of the company's strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Whereas strategic HR recognizes HR's partnership role in the strategizing process, the term HR Strategies refers to specific HR courses of action the company plans to pursue to achieve it's aims.

Changes in technology have affected how traditional HRM activities are managed Talent management is thus a very important process (Frank and Taylor, 2004). For example, various generational groups in the workforce have different preferences for benefits, and tailored benefit plans can be used to attract and retain talent (Clark, 2007). Further, succession management has become a crucial issue because proper succession management can help to develop and retain good people (Busine and Watt, 2005). This is particularly so for organizational leaders; however, only about 55% of organizations have a succession plan in

Trends in Strategic Human Resource Management

Human Resource Management professionals are increasingly faced with the issues of employee participation, human resource flow, performance management, reward systems and high commitment work systems in the context of globalization. Older solutions and recipes that worked in a local context do not work in an international context. Cross-cultural issues play a major role here. These are some of the major issues that HR professionals and top management involved in SHRM are grappling with in the first decade of the 21st century:

Internationalization of market integration.

Increased competition, which may not be local or even national through free market ideology

Rapid technological change.

New concepts of line and general management.

Constantly changing ownership and resultant corporate climates.

Cross-cultural issues

The economic gravity shifting from 'developed' to 'developing' countries


SHRM practices are those decisions and actions which concern the management of employees at all levels in the business, and which are related to the implementation of strategies directed towards sustaining competitive advantage (Miller 1987). Therefore organizations develop a culture of work practices. Examples of SHRM practices are recruitment practices, staff appraisal systems, remuneration systems, and work flexibility arrangements.


These are values, beliefs, and assumptions learned in early childhood that distinguishes people in one society from those in another (Beck and Moore, 1995; Hofstede, 1991).


Empirically determined main criteria by which the national cultures differ. There are four such criteria,which are labeled by Hofstede (1980) as dimensions; these are Power Distance, Uncertainty Avoidance,Individualism-Collectivism, and Masculinity-Femininity.


Of all the factors affecting strategic human resource management (SHRM) perhaps none is more potent than the national culture. This is because the values underlying human resource management (HRM) are not based on individual country's values. As Kanungo (1995, p. 11)pointed out: because many of our human resource management tools have been developed primarily within a context of economically developed nations, most have never been appropriate for use in developing countries. Traditional US-based HRM theories, in particular,with their lack of contextual embeddedness, their strong individualistic orientation, and their emphasis on freewill… mismatch what is most salient about the nature of work and human systems in developing countries".Aycan et al (2000) contend that because of the increasing demands of the globalized and liberalized business environment, both researchers and practitioners have started paying more attention to the study of culture as an explanatory variable. The researchers have also come to realize that the uncritical adaptation of SHRM practices and techniques evolved in the context of

Western cultural values may not be effective in other socio-cultural environments.

Extant literature (Gelfand, 2000) reckons that managers in organizations are recognizing that it is impossible to maintain parochial views while doing business across cultures. Cultural knowledge and a global focus are crucial to survive, and to thrive, within today's business environment. However, the same literature does not give a global focus that is commensurate with the global reality of business. Discussion and empirical assessment of culture and human resource management practices (Aycan, et al, 2000) has been focused on specific developed countries and developing countries have been given little attention (Nyambegera et al, 2000). The current paper intends to analyze the employee cultural values in Kenyan multinational companies (MNCs) and the influence of culture on SHRM practices. Hofstede's (1980) cultural dimensions of collectivism/individualism, power distance, uncertainty avoidance, and femininity/masculinity will be applied.

Strategic Human Resource Management is the practice of aligning business strategy with that of HR practices to achieve the strategic goals of the organization. The aim of SHRM (Strategic Human Resource Management) is to ensure that HR strategy is not a means but an end in itself as far as business objectives are concerned. The idea behind SHRM is that companies must "fit" their HR strategy within the framework of overall Business objectives and hence ensure that there is alignment between the HR practices and the strategic objectives of the organization.


With the advent of today's economy where services account for a major share of the GDP and the fact that the service sector is essentially people centric, it is imperative that the people first approach be embraced by the organizations for sustainable business strategy. The practice of SHRM demands a proactive and hands on approach by the management as well as the HR department with regards to the entire gamut of activities ranging from staffing and training and development to mentoring and pay and performance management.


If we take real world examples, many organizations in recent times have dedicated "people managers" whose sole function is to look after the enabling and fulfilling needs of the resources. This is a marked change from treating people as just resources to treating people as assets. For instance, Infosys states that people are its assets and the famous statement by Mr. Narayana Murthy, one of the founders of the company that the capital of Infosys walks in every morning and walks out every evening has to be taken in this context.

Elaborating on this point, one finds that organizations tend to leverage upon the capabilities of the people employed there and ensuring that the "human capital" is nourished and nurtured as a source of competitive advantage. This translates into a dedicated HR department and people managers in every group dealing exclusively with employee issues as opposed to treating this as a line management function.


In Human Resource (HR) and management circles nowadays there is much talk about Strategic Human Resource Management and many expensive books can be seen on the shelves of bookshops. But what exactly is SHRM (Strategic Human Resource Development), what are its key features and how does it differ from traditional human resource management?

SHRM or Strategic human resource management is a branch of Human resource management or HRM. It is a fairly new field, which has emerged out of the parent discipline of human resource management. Much of the early or so called traditional HRM literature treated the notion of strategy superficially, rather as a purely operational matter, the results of which cascade down throughout the organisation. There was a kind of unsaid division of territory between people-centred values of HR and harder business values where corporate strategies really belonged. HR practitioners felt uncomfortable in the war cabinet like atmosphere where corporate strategies were formulated.


The times when management could arbitrarily dictate terms to the employees and tread upon their rights is something that is not relevant anymore. With the ballooning of the white collar workforce, it becomes necessary for organizations to pay more attention to the needs of the employees more than ever. Finally, the fact that organizations derive their strategy from employees instead of imposing strategy upon them is the essence of SHRM.

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 strategy.

n 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:

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

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


Human resource planning is an activity that an organisation must go into when it has shaped its business strategy. for example, it may want to increase production by 10 percent by the end of a year. Managers should then plan for the right quantity and quality of human resources that will enable the organisation to realise its objective.

Depending on circumstances and factors prevailing in the organisation, that may lead to expansion or reduction of workforce, redeployment or enrichment of certain jobs. Human resource planning does not always translate into hiring of new employees.

Strategic human resource management is obviously directed at achieving organisational objectives. Whilst it is directed by organisational strategy (which may change depending on whether the organisation is expanding activities, developing a new product or reorganizing its activities), strategic human resource management must be an ongoing activity.

Management must continuously scan the human resource environment in order to identify developments that can either enhance or threaten its survival. Managers must be proactive and cannot wait for things to happen first. Strategic human resource managers, for example, study workers' habits, needs, tastes and so on in order to predict their (workers) possible actions and movements and the impact these will have on the organization.