Bangalore University, MBA 2nd Semester Subject: Human Capital Management (HCM), Module 6 Contents: Introduction, Characteristics, Scope, and Barriers of SHRM, SHRM versus conventional HRM, Linking HR Strategy with Business Strategy, Linking HR strategy with business strategy, HR strategy classification, SHRM, and business performance.

1. STRATEGIC HRM | Module 6
Bangalore University-MBA syllabus
2020
©Pratisha Swain

2. Sl. No. Topic Slide No.
1 Introduction 3
2
Characteristics of
SHRM
4
3 Scope of SHRM 5
4
SHRM versus
Conventional HRM
6
5 Barriers of SHRM 7
6
Linking HR Strategy
with Business Strategy
8
7
HR Strategy
Classification
9
8
SHRM and Business
Performance
12
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Strategic HRM
2020

3. ITRODUCTION
Strategic Human Resource Management
(SHRM) is an effort to align human
resource strategy to business strategy.
It starts with understanding the goals
of the business so that the people
decisions are aligned with the business
objectives.
SHRM balances the needs of employees
with the needs of the organisation and
proactively develops policies,
procedures and makes tailored, as
opposed to standardised decisions to
address these specific needs.
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4. Characteristics Of SHRM
1) Long-Term Focus
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2020
2) Associated with Goal-Setting
3) Interrelated with Business Strategies 4) Fosters Corporate Excellence Skills
Applicable for more than a year, as the business strategies
itself are long-term oriented.
Closely associated with goal-setting, policy formulation and
allocation of resources. It is performed at top management levels.
It provides critical inputs to the formulation of business
strategy, and specific HR strategies are in turn shaped by overall
business strategies.
Views employees as the strategic capability of the organisation
and attempts to distinguish the organisation from its competitors
in the markets on that basis. It also facilitates learning of new
age skills.

5. 1. SHRM covers the concepts and practices that
guide and align HRM philosophy, tactical
planning, with a particular focus on Human
capital. It deals with structure, quality, culture,
values, commitment, matching resources to
future needs.
2. SHRM gives direction on how to build the
foundation for strategic advantage by creating
an effective organisational structure and
design, culture, employee value proposition,
system thinking, an appropriate
communication strategy and preparing an
organisation for a changing landscape, which
includes downturns and mergers &
acquisitions.
3. SHRM emphasises organisational codes of
ethics, managing the societal impact of
business decisions, philanthropy and the role
of the human resource professional in
improving the quality of life of employees,
their families and the community at large.
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The scope of strategic HRM is for
companies to plan for the future
and be ready for anything that
comes in the way of the company.
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6. SHRM versus Conventional HRM
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Basis SHRM Conventional HRM
1) Responsibilities for
HR programs
Line Managers; all managers responsible for people are HR
managers
Staff personnel in the HR department
2) Focus of activities Partnerships with internal (employees) and external (public)
groups
Employee relations - ensuring employee motivation and
productivity, compliance with laws
3) Role of HR Proactive and transformational, change leader Reactive and transactional
4) Initiative for
change
Fast, flexible, and systemic, change initiatives implemented in
concert with other HR systems
Slow, piecemeal, and fragmented, not integrated with larger issues
5) Time Horizon Consider various time frames as necessary (short, medium, or
long-term)
Short-term
6) Control Organic control through flexibility, as few restrictions on
employee behaviour as possible
Bureaucratic control through rules procedures, and policies
7) Job Design Broad job design, flexibility, teams and groups, and cross-
training
Focus on scientific management principles - division of labour,
independence, and specialisation
8) Important
Investments
People and their knowledge, skills and abilities Capital, products, technology, and finance
9) Accountability Investment centre Cost centre

7. Barriers of SHRM
1) Absence of long-
term orientation
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2) Lack of Strategic
Reasoning
3) Lack of Adequate
Support from Top
Management
5) Fear of Failure 6) Rigidity of HR
Practices
7) Fear of Attrition
4) Resistance from Labour
Unions
8) Absence of Measurement
Techniques
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8. Bases of Classifying HR Strategies
1) Different types of Business Strategies
When an organisation selects a strategy of
becoming a 'low-cost producer', it adopts different
HR approaches to compensation as compared to an
organisation that adopts a 'product innovation'
strategy.
2) Stages in the Business or Product Cycle
According to this classification, HR practices
are related to variations in the lifecycle stages of a
business - start-up, growth, maturity, and decline.
3) Types and Number of Products
The strategy aimed at achieving variations
in product focus (the numbers and types of products),
results in structural modifications and influences HR
strategy.
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The linkage of human resource strategies is the
focus of best fit approach. Best fit approach is
based on the view that the effectiveness of HR
practices will be contingent on how closely the
practices fit the external and internal
environments of the organisation. This linkage
is also known as external fit or vertical fit.
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9. HR Strategy Classification
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Business Strategy HR Strategy
Cost Leadership
1. Suitable For repetitive and
predictable behaviour.
2. Concerned with short-term focus
and quantities (volumes).
3. Result-oriented
Utilisation HR Strategy
1. Focused on short-term performance measures, i.e., results or outcomes.
2. Efficiency is the norm, job assignments are specialised, explicit job descriptions.
3. Hierarchical pay, few incentives.
4. Narrow career paths, limited training.
5. Limited employment security.
6. Cost-cutting may involve incentives for employees to leave the firm.
7. Limited participation.
Differentiation
1. Long-term focus.
2. Creative job behaviour.
3. Moderate concern for quality
and quantity.
Facilitation HR Strategy
1. Broad career paths.
2. Extensive training.
3. Equal and fair pay, many incentives for creativity.
4. Long-term performance measures.
5. External recruitment and hiring of people who bring in new ideas.
6. High employee participation.
7. Some employment security.
Focus
1. High concern for quality.
2. Moderate concern for quantity.
3. Long/medium-term focus.
Accumulation HR Strategy
1. Equal and fair pay with many incentives.
2. Hiring employees belonging to the target market.
3. Broad career paths with extensive training.
4. High employee participation.
5. Some employee security.
Schuler and
Jackson focused
on Porter's
classification of
the three
generic
business
strategies; i.e.,
cost, leadership,
differentiation,
and focus.

10. HR Strategy Classification (Cont.)
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Dominant Culture of the Organisation
(Business Strategy)
HR Strategy
Defenders
1. Finds change threatening.
2. Favour strategies which encourage
continuity and security.
1. Bureaucratic approach.
2. Planned and regularly maintained policies to provide for lean HR.
3. Build human resources.
4. Likely to emphasise training programmes and internal promotions.
Prospectors
1. Thrive on change.
2. Favour strategies of product and/or
market development.
1. Creative and flexible management style.
2. Have high quality human resources.
3. Emphasise redeployment and flexible of HR.
4. Little opportunity for long-term HR planning.
5. Acquire human resources.
6. Likely to emphasise recruitment, selection, and performance-based
compensation.
Analysers
1. Seek to match new ventures with the
present business set-up.
2. These firms are followers-the ventures are
not new to the market, only new to the
firm.
1. Low levels of monitoring and co-ordination.
2. 'Buy' as well as 'make' key human resources.
3. Emphasise HR planning.
The most
familiar
classification is
that produced
by Miles and
Snow who
distinguishes
between
defenders,
prospectors and
analysers.

11. HR Strategy Classification (Cont.)
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Scholars Frame Work
Golden and
Ramanujam
There are four types of linkages between HRM and strategic planning process:
1. Administrative Linkage: HR department adopts the traditional personnel role, provides routine operational support,
and handles paperwork. Functional managers see HR function as relatively unimportant.
2. One Way Linkage: There is a sequential relationship between strategic planning and the HR function. The HR function
reacts to and designs HR programmes to support the strategic objectives of the firm.
3. Two Way Linkage: There is a reciprocal, interdependent relationship between strategic planning and HR function.
Business plans affect and are affected by HR activities.
4. Integrative Linkage: There is a dynamic interaction, formal as well as informal, between HR function and strategic
linkage. The senior HR executive is a strategic business partner with other senior executives of the firm.
Schuler Proposed the 5-P model that links the strategic business needs with strategic HRM activities.
The 5Ps are:
1. HR philosophy
2. HR policies
3. HR programmes
4. HR practices
5. HR processes

12. 1) Universalistic Approach
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2) Contingency Approach 3) Configurational Approach
Under a universalistic approach,
"strategic HR practices" are those that
are found to consistently lead to higher
organisational performance,
independent of an organisation's
strategy. Examples of such practices
are formal training systems, profit
sharing, voice mechanisms, and job
definition.
Contingency or best fit approach goes
beyond the simple, linear, causal
relationships explored in universal
theories and allows for interaction
effects and varying relationships,
depending on the presence of a
contingent variable - most often, firm
strategy.
This theory extends previous
contingency theory research and
conceptualisation by including
performance as the main focus behind
organisation design activities. Delery
and Doty explain that the
configurational approach incorporates
the "assumption of equifinality" -
principle that in an open system, the
given end state can be reached by
many potential means.
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13. Thank You!
Strategic HRM
2020
- Doug Conant
©Pratisha Swain