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Key Topics
Requirement
Explain the role of strategic HRM in contributing to sustained competitive advantage
Solution
Literature Review
Defining SHRM
The field of strategic HRM is in an evolving phase, but there is little agreement among various scholars on a specific definition. SHRM has been linking the organization with its people and integrates the HRM strategies into well-defined corporate strategies. The essential programs and plans addressing and solving all the fundamental strategic issues associated with human resources management in any organization are termed as HR strategies (Schuler, 1992). It primarily focuses on the alignment of the HR practices, programs and policies of the organization with strategic and corporate business unit strategies (Greer, 1995). The integration of HR with its environment and business is the focal point of strategic HRM and believed to integrate the business strategy with the HRM so as to contribute towards attaining an effective management of the human resources and improving the overall organizational performance (Holbeche, 1999; Schuler and Jackson, 2005). Further, the organizations are benefitted so as to achieve competitive advantage for the creation of unique HRM systems that cannot be easily imitated (Huselid et al., 1997). The two prime aspects of SHRM include integration of corporate and business strategy and development of the HRM to their line managers rather than the personnel specialists. Integration has been defined by Brewster and Larsen (1992: 411–12) as the extent to which the issues concerning HRM are associated with the formulation of the business strategy whereas development can be considered as the extent to which the HRM practices are given responsibility to the line managers instead of the personnel specialists’.
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Models of SHRM
Hard Variant of HRM
The hard variant or the matching model of HRM aims to develop an appropriate human resource system for characterizing the HRM strategies contributing towards the successful implementation of all the business strategies. However, the model has been successful in providing an initial framework for further development of the strategic HRM. However, the model has been criticized as it fails to consider the interests of the employees and is highly prescriptive in nature due to all the assumptions being strongly unitarist in nature (Budhwar and Debrah, 2001). Therefore, this model considers HRM as reactive, passive and implementation-ist function. According to Lengnick-Hall and Lengnick-Hall, 1988, the model fails significantly while perceiving the potential for a reciprocal relationship among the organizational strategy and HR strategy. The model strives to make a tight-fit in the organization making it highly inflexible towards the required changes and thereby making the organization a misfit in the dynamic business environment. As it fails to consider the human aspect of HRM, it is termed as a hard model.
The soft variant of HRM
The Harvard or the soft model is an analytical framework which stresses on the human aspect and focuses on the employee-employer relationship. The model focuses on the interests of stakeholders and relates it to the objectives set by the management. The model focuses on the integration of the employees along with the development of the enterprise. This model inculcates the employee influence, reward systems, human resource flows and work systems. The model acknowledges the role of societal outcomes and therefore it provides a beneficial foundation for HRM analysis. But the model fails to explain the complex relationship between HRM and strategic management (Guest, 2001).
‘5-P model’ of SHRM
‘5-P model’ of SHRM was developed by Schuler (1992), which melded over five HR activities namely, policies, philosophies, practices, programs and processes which reflected the overall plan for the growth adaptability, survival, and profitability. The model was highly significant in explaining the significance of the activities mentioned in the model for achieving the objectives and goals of the organization along with interrelating the activities with the organization. This model helped in linking the organizational strategy with the functional activities. The model, however, was over-prescriptive and hypothetical in nature. Further, the melding of HR activities with business needs are highly challenging as the linkages between the business needs, and HR activities are found to be an exception in during un-agitated and non-turbulent times.
According to various researchers, Budhwar, 2000a; 2000b, Budhwar and Sparrow, 1997 etc., these models benefit the organization in integrating the corporate strategy with the HRM which includes, successful implementation of the corporate strategy, plethora of solutions in solving organizational problems that are highly complex, maintaining effective organizational performance and contributing to achieve all the perceived goals. These models also aim to ensure that all the financial, technical and human resources are provided with equal and high consideration in order to set the objectives and evaluating all the implementation capabilities. This helps the organization to limit subordination and to further neglect the issues related to strategic considerations thereby providing a long-term focus in the field of Human Resource Management and finally achieving the competitive advantage.
Conclusion
All the models have their respective pros and cons but are overall efficient in linking the organizational strategy and HR strategy. These models are beneficial in developing suitable human resource system that can also contribute to the efficient implementation of the various business strategies. These models can be sustainable in nature along with implementing the additional strategy like talent acquisition for attracting best human talent, effective resource allocation for maximizing the use of existing human resources to the right person, talent improvement for maximizing the talents of the existing employees and finally cost reduction for reducing the personnel costs to the lowest value.
Implementation of such policies will be beneficial in identifying and examining the HR strategies so as to induce paternalism, high commitment, etc. which will help in enhancing the significant performance of the firm.
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Schuler, R.S. (1992) Linking the People with the Strategic Needs of the Business. Organisational Dynamics: 18–32.
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Greer, C.R. (1995) Strategy and Human Resources. Englewood Cliffs, NJ: Prentice-Hall.
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Holbeche, L. (1999) Aligning Human Resources and Business Strategy. Oxford: Butterworth-Heinemann.
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Schuler, R.S. and Jackson, S.E. (2005) A Quarter-century Review of Human Resource Management in the U.S.: The growth in importance of the international perspective. Management Revue, 16: 11–35.
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Brewster, C. and Larsen, H.H. (1992) Human Resource Management in Europe: Evidence from ten countries. The International Journal of Human Resource Management, 3: 409–433.
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Budhwar, P. and Debrah, Y. (2001) Rethinking Comparative and Cross National Human Resource Management Research. The International Journal of Human Resource Management, 12(3): 497–515.
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Lengnick-Hall, C.A. and Lengnick-Hall, M.L. (1988) Strategic Human Resources Management: A review of the literature and a proposed typology, Academy of Management Review, 13: 454–470.
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Budhwar, P. (2000a) Strategic Integration and Devolvement of Human Resource Management in the British Manufacturing Sector. British Journal of Management, 11: 285–302.
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Budhwar, P. (2000b) A Reappraisal of HRM Models in Britain. Journal of General Management, 26(2): 72–91.
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Budhwar, P. and Sparrow, P.R. (1997) Evaluating Levels of Strategic Integration and Devolvement of Human Resource Management in India. The International Journal of Human Resource Management, 8(4): 476–494.
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Guest, D.E. (2001) Human Resource Management: When research confronts theory. International Journal of Human Resource Management, 12: 1092–1106.
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Huselid, M.A., Jackson, S.E. and Schuler, R.S. (1997) Technical and Strategic Human Resource Management Effectiveness as Determinants of Firm Performance. Academy of Management Journal, 40: 171–188.
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