The concept of SHRM is complex and somewhat amorphous. To understand SHRM it is necessary to analyse its elements, define its aims and examine its meaning.
The elements of SHRM
Three key elements of SHRM have been described by Mabey et al (1998: 24–25):
- Internal processes of organizational change are caused or necessitated by processes of external environmental change.
- Under these new environmental pressures (competition, technology, clients’ demands and so on) management must develop new and appropriate strategies to defend or advance corporate interests.
- This strategic response in turn requires organizational responses. ‘If the organization is to be capable of achieving or delivering the
new strategy it will be necessary to design and implement changes in any or all aspects of human resource structures and systems.’
This analysis was extended by Colbert (2007: 98–99) who suggested that:
SHRM is predicated on two fundamental assertions. First is the idea that an organization’s human resources are of critical strategic importance – that the skills, behaviours and interactions of employees have the potential to provide both the foundation for strategy formulation and the means for strategy implementation. Second is the belief that a firm’s HRM practices are instrumental in developing the strategic capability of its pool of human resources.
Becker and Huselid (2006: 899) commented that SHRM focuses on organizational performance rather than individual performance. It also emphasizes the role of HR management systems as solutions for businesses as a whole rather than individual HR management practices in isolation.
Aims of SHRM
SHRM supplies a perspective on the way in which critical issues or success factors related to people can be addressed and strategic decisions can be made that have a major and long-term impact on the behaviour and success of the organization. As Lengnick-Hall and Lengnick-Hall (1988: 454) argued: ‘Achieving competitive advantage through human resources requires that these activities be managed from a strategic perspective’.
The fundamental aim of strategic HRM is to generate strategic capability by ensuring that the organization has the skilled, committed and well-motivated employees it needs to achieve sustained competitive advantage. It has two main objectives. The first is to achieve fit or integration – fitting or aligning HR strategies vertically with business strategies and integrating HR strategies with one another. The second objective is to provide a sense of direction in an often turbulent environment so that the business needs of the organization, and the individual and collective needs of its employees, can be met by the development and implementation of coherent and practical HR policies
As Dyer and Holder (1998: 13) remarked, SHRM should provide ‘unifying frameworks which are at once broad, contingency based and integrative’. The rationale for SHRM is the perceived advantage of having an agreed and understood basis for developing and implementing approaches to people management that takes into account the changing context in which the firm operates and its business plans and priorities. They also advocated ‘consistency between HR goals… and the underlying business strategy and relevant environmental conditions’ (ibid: 10). It has been suggested by Lengnick-Hall and Lengnick-Hall (1990) that underlying this rationale in a business is the concept of achieving competitive advantage through HRM.
When considering the aims of SHRM, account should be taken of ethical considerations – the interests of all the stakeholders in the organization, employees in general as well as owners and management, and the responsibilities of the organization to the wider community. In Storey’s (1989) terms, soft strategic HRM will place greater emphasis on the human relations aspect of people management, stressing continuous development, communication, involvement, security of employment, the quality of working life and work–life balance. On the other hand, hard strategic HRM will emphasize the yield to be obtained by investing in human resources in the interests of the business. SHRM should attempt to achieve a proper balance between the hard and soft elements. All organizations exist to achieve a purpose and
they must ensure that they have the resources required to do so, and that they use them effectively. But they should also take into account the human factors contained in the concept of soft strategic HRM. In the words of Quinn Mills (1983) they should plan with people in mind, taking into account the needs and aspirations of all the members of the organization. The problem is that hard considerations in many businesses will come first, leaving soft ones some way behind.
Organizations must also consider their responsibilities to society in general on the grounds that because they draw resources from society, they must give something back to society. The exercise of corporate social responsibility (CSR), defined by McWilliams et al (2006: 1) as ‘actions that appear to further some social good beyond the interests of the firm and that which is required by law’, may be regarded as outside the scope of human resource management. But because CSR relates to ethical actions in the interests of people, there is a strong link, and it is therefore an aspect of organizational behaviour that can legitimately be included in the strategic portfolio of HR specialists.
The meaning of strategic HRM
It was suggested by Hendry and Pettigrew (1986) that strategic HRM has four meanings:
- The use of planning.
- A coherent approach to the design and management of HR systems based on an employment policy and manpower strategy and often underpinned by a ‘philosophy’.
- Matching HRM activities and policies to some explicit business strategy.
- Seeing the people of the organization as a ‘strategic resource’ for the achievement of ‘competitive advantage’.
Strategic HRM addresses broad organizational concerns relating to changes in structure and culture, organizational effectiveness and performance, matching resources to future requirements, the development of distinctive capabilities, knowledge management, and the management of change. It is concerned with both human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. Overall, it will address any major people issues that affect or are affected by the strategic plans of the organization. As Boxall (1996: 61) remarked: ‘The critical concerns of HRM, such as choice of executive leadership and formation of positive patterns of labour relations, are strategic in any firm’.
A defining characteristic of strategic HRM is its concern with the vertical integration of HR strategies with the business strategy, and with the horizontal integration of individual HR strategies with one another – the concept of strategic fit as discussed below.