Strategic Human Resource Management

Since the introduction of Strategic Human Resource Management in the mid-1980s, strategic human resource management (SHRM) has gained recognition as a pertinent area of study and application in the field of business administration (Kaufman, 2015). SHRM can be defined as the alignment of various HRM processes with the organizational strategy on the horizontal plane and as the vertical relationship between HRM practices and organizational strategy. According to Schuler (1992), it can also be interpreted as HRM that is incorporated into organizational strategies, compliant with HRM regulations that match various HRM units and levels of hierarchy, and supported and utilized by both management and staff.

Figure 1 - Seven themes in SHRM literature across time (Castro 2020, p. 232)

Human Resource Management and Business strategy's relationship

Strategy and human resources management is possibly justified by the fact that companies using cost-cutting measures had their staff work longer hours. Employees had to work more intelligently, though, in companies that used quality enhancement strategies. Finally, firms using innovation strategies needed their employees to perform their jobs in a different way than they do now. According to Abdersan et al. (2007), performance within the organization is improved in Australia when HRM is in line with business strategy. Muduli (2012) suggests the same fact that, a well-planned strategic human resource management plan must include company strategy. In the Greek environment, organizational performance is greatly impacted by human resource management that is derived from business strategy. Additionally, business strategy impacts the drive and aptitude of human resource management (Katuo and Budhwar, 2010).

Figure 2 – Relationship between Business Strategy and HRM 

The nature of Strategy in HRM

The components of a strategic approach to HR would typically include things like a longer-term outlook and a concern for big issues that go beyond operational detail. Further an approach that looks for and incorporates pertinent information about changes in the environment, the creation of policies that aim to align HR practices with the needs of the business and often expressed as mission, vision, strategy or goals and the creation of HR policies that bring all the components of HR into mutually reinforcing alignment. Therefore, choices about the order of importance for hiring and selection should align with the order of importance for goal-setting, reward systems, performance management, training, development and promotions and terminations. 

"External fit" refers to the alignment of HR with business strategy and the larger business environment, whereas "internal fit" refers to the alignment of HR components. Both kinds of fit should be the goal of strategic HRM (Miles and Snow 1994).

 Executive groups are in charge of making important integrated business decisions, such as those pertaining to marketing, finance, and human resources. These groups' members are adept at multitasking and well performed when they take a business-oriented approach rather than a functional one. "Strategic decision makers are more comfortable handling issues outside of their business function" when they have a business perspective (Kelly and Gennard 2007).

 

Figure 3 – Nature of HRM

1.1)      Importance of SHRM

"People make the difference" is a common argument used to support the significance of SHRM. In other words, while there are various things that can be bought and sold on a comparatively free market, gaining an advantage over the competition really comes down to how well people use these resources and ideas, both separately and in combination. It implies that intangible assets, such as labor knowledge and abilities, can be placed up so that customs remain in the way of adapting to quickly changing surroundings. Alternatively, organizations can be made more capable of responding to factors that are naturally unpredictable by developing more adaptable, meta-routines. Chances are lost and more resources are used when the proper quantity and quality of individuals are not drawn to, kept and motivated (Teece et al. 1997).

Further importance of Strategic Human Resource managemen:
·         All of the HR initiatives used by businesses to find, attract, and train the best candidates who will help them achieve the organizations strategic objectives.
·         To accurately and effectively convey the HR initiatives to the staff.
·         In an effort to expand the function of human resources within the company, SHRM emerged as the connection that connects HRM to the aims and objectives of the company (Delery, 1998).
·         SHRM places a strong emphasis on how individuals can boost an organization's performance and encourage creativity and adaptability.

Figure 4 – Benefits of HRM

1.1)   Human Resource Outcomes and Organizational Performance

Organizations across several industries have experienced increased productivity and financial performance improvement with a reduced turnover rate by implementing high-performance work systems. Employee performance as a whole was significantly impacted by the innovative HR system (Huselid, 1995). The attitude and behaviour of employees are positively impacted by human resource management systems. This improved both the overall performance and productivity efficiency (Fey at al. 2009).

Figure 5 – Performance of HRM

References

Bassem M., Badawy T.A. and Magdy M. (2019), HR Managers Views on SHRM and Its Role in Influencing Organizational Performance, International Journal of Human Resource Studies, 9(4), 221-228. Available at: https://www.researchgate.net/publication/337170314_ HR_Managers'_Views_on_SHRM_and_Its_Role_in_Influencing_Organizational_Performance (Accessed 4th April, 2024)

Castro M. V. et al. (2020), ‘Implementation of strategic human resource management practices: a review of the national scientific production and new research paths’, SHRM national scientific production, 27 (3), 229-243. Available at: https://www.emerald.com /insight/content/doi/10.1108/REGE-10-2018-0102/full/html (Accessed 4th April, 2024)

Phanwattana P. and U-on V. (2017), A Literature review of strategic human resource management, Silpakorn University Journal of Social Sciences, Humanities and arts, 17(1), 24-33. Available at: https://www.thaiscience.info/Journals/Article/SUIJ/10984824.pdf (Accessed 4th April, 2024)

Storey J., Ulrich D. and Wright P. (2019), Strategic Human Resource Management, A Research Overview, 1-14. Available at: https://www.researchgate.net/publication/331541673_ Strategic_Human_Resource_Management_A_Research_Overview (Accessed 4th April, 2024)

Yu J. et al., (2022), A study of the impact of strategic human resource management on organizational resilience, Behavioural Science, 12(12). Available at: https://www.ncbi.nlm.nih.gov/pmc/articles /PMC9774348/ (Accessed 4th April, 2024)