The Strategic Human Resource Management Business Essay

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Strategy human resource management is a reactive management field.where human resource management is a tool to implement strategy ,a more proactive function in which hr activities can actually create and shape the business strategy .it focus on developing hr for sustainable competitive advantages .strategic human resource management requires formulation of hr objective ,strategies and policies .these enable the provision of the skills and abilities needed to meet the requirement of an orgnaisation's overall objectives.

The strategic human resource management focus on align HR strategies and practice with business strategy. In strategic human resource management HR professional works to be a strategic partner, helping to ensure the success of business strategies. By fulfilling this role, HR professionals increase the capacity of a business to execute its strategies. Translating business strategies into HR practices helps a business in three ways. First, the business can adapt- to change becausethe 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. The deliverable from the management of strategic human resources is strategy execution. HR practices help accomplish business objectives. There are many examples. As Sears worked to reduce costs, HR managers implemented compensation, job rotation, and downsizing practices that reduced labor cost per store. As Whirlpool sought to gain more global market share in appliances, HR strategies modified hiring practices and career paths to ensure multinational competence. When Colgate-Palmolive wanted to in-crease its global revenue, the compensation system was changed to reward sales growth. When Motorola wanted to gain access to Russian markets, itoffered training and development opportunities to Soviet customers. Each of these HR practices helped execute business strategy. The HR executives who designed these new practices were strategic partners: They mastered the skill of organizational diagnosis and aligned HR practices with business strategies.

The metaphor for this role is the "strategic partner." 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 business strategy.

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

In the past decade, increasing attention has been paid to the importance of moving HR professionals into the strategic role. But in answering the call to become "more strategic" and "more involved in the business many - HR professionals have inappropriately identified this as the only HR role. The implications of this are discussed below under "Paradoxes Inherent in Multiple HR Roles.

The matching model

Early interest in the 'matching' model was evident in Devanna et al.'s (1984)33 work: 'HR systems and organizational structure should be managed in a way that is congruent with organizational strategy' (p. 37). This is close to Chandler's (1962)34 distinction between strategy and structure and his often-quoted maxim that 'structure follows strategy'. In the Devanna et al. model, HRM-strategy-structure follow and feed upon one another and are influenced by environmental forces

Political forces

Mission & Strategy

Economic forces

Cultural forces

Organization structure

Human Resource Management

Source: Devanna et al. (1984) Strategic Human Resource Management New York: John Wiley.

Similarly, the notion of 'fit' between an external competitive strategy and the internal HR strategy is a central tenet of the HRM model advanced by Beer et al. (1984,). The authors emphasize the analysis of the linkages between thetwo strategies and how each strategy provides goals and constraints for the other. There must be a 'fit between competitive strategy and internal HRM strategy and a fit among the elements of the HRM strategy' (Beer et al., 1984, p. 13). The relationship between business strategy and HR strategy is said to be 'reactive' in the sense that HR strategy is subservient to 'product market logic' and the corporate strategy. The latter is assumed to be the independent variable (Boxall, 1992; Purcell & Ahlstrand, 1994). As Miller (1987, cited in Boxall, 1992, p. 66) emphasizes, 'HRM cannot be conceptualized as a stand-alone corporate issue. Strategically speaking it must flow from and be dependent upon the organization's (market oriented) corporate strategy'. There is some theorization of the link between product markets and organizational design, and approaches to people management. Thus, for example, each Porterian competitive strategy involves a unique set of responses from workers, or 'needed role behaviours', and a particular HR strategy that might generate and reinforce a unique pattern of behaviour (Cappelli & Singh, 1992)25. HRM is therefore seen to be 'strategic by virtue of its alignment with business strategy and its internal consistency (Boxall, 1996).

Human Resource Strategy Models

We now examine the link between organization/business strategy and HR strategy. 'Human resource strategies' are here taken to mean the patterns of decisions regarding HR policies and practices used by management to design work and select, train and develop, appraise, motivate and control workers. Studying HR strategies in terms of typologies is appealing to academics because conceptual frameworks or models give HR researchers the ability to compare and contrast the different configurations or clusters of HR practices and further develop and test theory (Bamberger & Meshoulam, 2000).

To appreciate the significance of 'typologies', it is useful to recall the work of Max Weber. This sociologist built his theory through the use of abstractions he called 'ideal types', such as 'bureaucracy'. 'Weber warned, however, that these abstractions or ideal types never actually exists in the real world; they are simply useful fictions to help us understand the more complex and messy realities found in work organizations. The same is true of HR typologies - they are abstractions that do not necessarily exist in the workplace, but they help the student of management to understand the nature of HR strategies.

Since the early 1990s, academics have proposed at least three models to differentiate between 'ideal types' of HR strategies. The first model examined here, the control-based model, is grounded in the way in which management attempts to monitor and control employee role performance. The second model, the resource based mode:, is grounded in the nature of the employer-employee exchange and, more specifically, in the set of employee attitudes, in behaviours and in the quality of the manager-subordinate relationship. A third approach creates an integrative model that combines resource-based and control-based typologies.

Importance of Human Resource Management

The concept of human resource management (HRM) has attracted a lot of attention from academics and practitioners alike since it first emerged in the mid-1980s. The former often suspect both the practicality and morality of HRM. The latter have often absorbed some if not all of the HRM philosophy and attempted to put it into effect with varying degrees of success for various good and bad reasons.

The overall purpose of HRM is to ensure that the organization is able to achieve success through people. As Ulrich and Lake (1990)1 has remarked: 'HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities'.

Specifically, HRM aims to:

enable the organization to obtain and retain the skilled, committed and well-motivated workforce it needs;

enhance and develop the inherent capacities of people - their contribu-tions, potential and employability - by providing learning and contin-uous development opportunities;

develop high-performance work systems that include 'rigorous recruitment and selection procedures, performance-contingent incentive compensation systems, and management development and training activities linked to the needs of the business' (Becker et al, 1997) 2;

develop high-commitment management practices that recognize that employees are valued stakeholders in the organization and help to develop a climate of cooperation and mutual trust;

create a climate in which productive and harmonious relationships can be maintained through partnerships between management and employees;

develop an environment in which teamwork and flexibility can flourish;

help the organization to balance and adapt to the needs of its stake holders (owners, government bodies or trustees, management, employees, customers, suppliers and the public at large);

ensure that people are valued and rewarded for what they do and achieve;

manage a diverse workforce, taking into account individual and group differences in employment needs, work style and aspirations;

ensure that equal opportunities are available to all;

adopt an ethical approach to managing employees that is based on concern for people, fairness and transparency;

maintain and improve the physical and mental well-being of employees.


The formulation of coherent HR strategies is more likely if the overall approaches the organization intends to adopt to managing its human resources are understood. These can then serve as the framework within which specific strategies can evolve. The most common approaches are:

 the development of resource capability;

 high-commitment management;

 high-performance management;

 best practice.

Resource capability

The resource capability approach regards the firm as a bundle of tangible and intangible resources and capabilities required for product/market competition (Kamoche, 1996)63. Human resources are seen as a major source of competitive advantage.

As expressed by Kamoche, the basis of this approach to HR strategy is the acknowledgement of the 'stock of know-how' in the firm. The capability-based framework is concerned with the actions, processes and related behavioural efforts required to attain a competitive position.

Within this framework, firms attempt to gain competitive advantage using human resources through developing distinctive capabilities (competencies) that arise from the nature of the firm's relationships with its suppliers, customers and employees.

Kamoche describes the resource capability view of the firm as one that 'builds on and provides a unifying framework for the field of strategic human resource management'.

A resource capability approach is concerned with the acquisition, develop-ment and retention of human or intellectual capital. It will focus on how addedvalue can be obtained by treating people as strategic assets in the sense that they perform activities that create advantage in particular markets. This is in accord with the fundamental principle of economics that wealth is created when assets are moved from lower-value to higher-value uses.

The high-commitment management approach

The high-commitment management as originally described by Walton (1985) is based on the assumption that higher levels of performance from people, and a belief that the organization is worth working for, are more likely when employees are not tightly controlled. Instead, they should be given broader responsibilities, encouraged to contribute and helped to achieve satisfaction in their work.

This approach involves treating employees as partners in the enterprise, whose interests are respected, who have a voice on matters that concern them and whose opinions are sought and listened to. It is concerned with communication and involvement. It creates a climate in which a continuing dialogue between managers and the members of their teams takes place to define expectations and share information on the organization's mission, values and objectives. This establishes mutual understanding of what is to be achieved and a framework for managing and developing people to ensure that it will be achieved.

The high-performance management approach

The high-performance management aims to raise the performance of the organization through its people. High-performance management practices involve the development of resourcing, employee development, performance management and reward processes that focus on the delivery of added value.

The best practice approach

This approach is based on the questionable assumption that there is a set of best HRM practices and that adopting them will inevitably lead to superior organizational performance. Most commentators agree that best fit is more important than best practice.


When considering approaches to the formulation of HR strategy it is necessary to underline the interactive (not unilinear) relationship between business strategy and HRM, as have Hendry and Pettigrew (1990)60. They emphasize the limits of excessively rationalistic models of strategic and HR planning. The point that HR strategies are not necessarily developed formally and systematically but may instead evolve and emerge has been made by Tyson (1997)61: The process by which strategies come to be realized is not only through formal HR policies or written directions: strategy realization can also come from actions by managers and others. Since actions provoke reactions(acceptance, confrontation, negotiation, etc) these reactions are also part of the strategy process.

The Strategy human resource management process

The process of developing HR strategies involves generating strategic HRM options and then making appropriate strategic choices. These choices should, so far as possible:

 relate to but also anticipate the needs of the business;

 be congruent with the present or desired culture of the organization;

 have the capacity to change the character and direction of the business;

 equip the organization to deal effectively with the external pressures and demands affecting it

 focus on areas of critical need;

 answer fundamental questions such as: 'What is constraining us?', 'What is stopping us from delivering business results?';'

 be founded on detailed analysis and study, not just wishful thinking;

 incorporate the experienced and collective judgment of top manage-ment;

 take account of the needs of line managers and employees generally as well as those of the organization and its other stakeholders;

 anticipate the problems of implementation that may arise if line managers are not committed to the strategy and/or lack the skills and time to play their part;

 anticipate any problems that may arise because of the hostility or indif-ference of employees or trade unions;

 ensure that the organization has the resources required to implement the strategy;

 provide for the acquisition and development of people with the skills needed to manage and sustain the organization in the future to meet organizational objectives;

 consist of components that fit with and support each other;

 be capable of being turned into actionable programmes.


As HR managers do assume more strategic planning responsibilities, they will have to acquire new HR skills. This does not just mean technical skills relating to activities like selection and training. HR managers will need "an in-depth understanding of the value creating proposition of the firm." How does the company make money? What activities and processes are most critical for wealth creation as defined by customers and capital markets? Who in the firm executes these activities successfully?

HR's Strategy Execution Role

Today's HR managers fulfill two basic strategic planning roles: strategy execution and strategy formulation. Strategy execution is traditionally the heart of the HR manager's strategic planning job. Top management formulates the company's corporate and competitive strategies. Then, it formulates broad functional strategies and policies. Like the riverbanks for a boat steaming up a waterway, the firm's functional strategies and policies set the broad limits that determine what the functional manager can and cannot do, and provide a set of signposts that the (HR or other) functional managers can use to decide the precise form the department's specific policies and activities should take. The company's HR (or other functional) strategies should thus derive directly from its company wide and competitive strategies.

Here, the basic rule is this: The HR department's strategies, policies, and activities must make sense in terms of the company's corporate and competitive strategies, and they must support those strategies. Dell's human resource strategies-the Web-based help desk, its centralized intranet HR service bureau-help the firm better execute Dell's low-cost strategy. FedEx's HR strategies-supporting communication and employee development, for instance--help FedEx differentiate itself from its competitors by offering superior customer service.

HR management supports strategic implementation in other ways. For example, HR guides the execution of most firms' downsizing and restructuring strategies, throughout placing employees, instituting pay-for-performance plans, reducing health care costs, and retraining employees. When Wells Fargo acquired First Interstate Bancorp a few years ago, HR played a strategic role in implementing the merger-in merging two "wildly divergent" cultures and in dealing with the uncertainty and initial shock that rippled through the organizations when the merger was announced.

HR's Strategy Formulation Role

While execution is important, HR increasingly plays an expanded strategic planning role today. In recent years, HR's traditional role in executing strategy has expanded to include working with top management to formulate the company's strategic plans. (HR has "a seat at the strategy planning table" is how some HR writers put this.) This expanded strategy formulation role reflects the reality most firms face today', Globalization means more competition, more competition means more performance, and most firms are gaining that improved performance in whole or part by boosting the competence and commitment levels of their employees. That makes HR's input crucial. HR helps top management formulate strategy in a variety of ways. For example, formulating a company's strategic plan requires identifying, analyzing, and balancing the company's external opportunities and threats, on the one hand, and its internal strengths and weaknesses, on the other. Hopefully, the resulting strategic plans capitalize on the firm's strengths and opportunities, and minimize or neutralize its threats and weaknesses. Externally, HR management is in a unique position to supply competitive intel-ligence that may be useful in the strategic planning process. Details regarding competitors' incentive plans, opinion survey data from employees that elicit information about customer complaints and information about pending legislation such as labor laws and mandatory health insurance are some examples.

As another example, HR participates in the strategy formulation process by supplying information regarding the company's internal human strengths and weaknesses. For example, IBM's decision in the 1990s to buy Lotus Software was prompted in part by the conclusion that its own human resources were insufficient to enable the firm to reposition itself as an industry leader in networking systems, or at least to do so fast enough. Some firms, thanks to HR's input, build new strategies around human resource strengths. For example, in the process of automating its factories, farm equipment manufacturer John Deere developed a workforce that was exceptionally talented and expert in factory automation. This in turn prompted the firms establish a new-technology division to offer automation services to other companies.

But, for a growing number of employers, HR is even more extensively involved in the strategy formulation process. By working closely with top management, HR is able to build a persuasive case that shows how-in specific and measurable terms-the firm's HR activities can and do contribute to creating value for the company, for instance in terms of higher profits and market value. A big part building that case is to create a strategy - oriented HR system.