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MBA Notes - Strategic HRM First Chapter
MBA Notes - Strategic HRM First Chapter
1. Strategic HRM –
Meaning, significance of strategic HRM, Evolution of SHRM,
difference between traditional HRM & strategic HRM, 5- P model of
strategic HRM, Outcome of strategic HRM .Strategic HR Tools –
Strategy map,HR Scoreboard , Digital Dashboards.
4. International HRM –
Difference between Global & Domestic HRM, Strategic Global HR -
Purpose, selection, orientation, ethnocentric, polycentric, geocentric,
Repatriation, career and personal problems, Compensation, performance
appraisal of expatriates, HRM Practices in India, China, USA, UK &
Japan.
Meaning of Strategic HRM :
Strategic HRM refers to HR that is co-ordinate and consistent with the overall business
objectives in order to improve business performance. According to Purcell (1999), SHRM
focuses on actions that differentiate the business from its competitors.
Strategic HRM gives direction on how to build the foundation for strategic advantage by
creating an effective organizational structure and design, culture, employee value proposition,
systems thinking, an appropriate communication strategy
and preparing an organization for a changing landscape,
which includes downturns and mergers & acquisitions.
The term HRM expands to Human Resource Management; it implies the implementation
of management principles for managing the workforce of an organization. It is concerned with
the process of hiring, developing and retaining the manpower, with a view to making them more
efficient. When conventional HRM is compared and contrasted with the strategic HRM or
SHRM, it becomes easier to understand.
SHRM is the process of aligning the business strategy with the company’s human
resource practices, so as to attain strategic goals of an organization. In SHRM, the workforce of
the company is managed proactively.
The 5 Ps model of strategic human resource management (SHRM) is a new model in the
area of study. This model is proposed by Randal Schuler.
This model melds five human resource activities with strategic highlight just how
significant, the strategy activity link can be.
The proposed model incorporates the 5 Ps of strategic human resource management
which stand for:
1. Philosophy: Expressed in statements defining business values and culture. It expresses how to
treat and value people.
2. Policies: Expressed as shared values and guidelines. Policies establish guidelines for action on
people related business issues and HR programs.
3. Programs: Articulated as human resource strategy. These coordinate efforts to facilitate
change to address major people related business issues.
4. Practices: For leadership managerial and operational role practices motivate needed role
behaviours.
5. Processes: For the formulation and implementation of other activities these define how
activities are carried out.
Outcomes of SHRM are manifold. Outcomes may be both satisfactory and unsatisfactory.
SHRM outcomes may be satisfactory if all activities are done properly and as per desire of the
organization. On the other hand, outcomes may not be satisfactory if various barriers are created
on the path of SHRM activities.
However, outcomes of SHRM are mentioned in the following points:
1. Increased performance: If SHRM works well staring from making and effective human
resource planning to maintain labor management relations. Thus performance at all levels may
increase.
2. Customer and employee satisfaction: The broad mission of SHRM is to ensure customer
and employee satisfaction. By ensuring successful and fair recruitment, selection, training, career
development and so on, employees may be satisfied and they will try to satisfy customers.
3. Enhance Shareholder value: On the basis of increased performance and customer as well as
employee satisfaction shareholder values are enhanced. At the sometimes, organizational image
may also be increased.
According to the outcome model of SHRM, with the achievement of three objectives,
efficient management, cost effectiveness, integrated HR programs, facilitation of change and
adaptation and lastly focus on customer needs may be obtained.
Strategic HR Tools
Strategic Human Resource Management Tools, Managers use several tools to translate
the company’s strategic goals into human resource management policies and practices. These
tools include the strategy map, the HR scorecard, and the digital dashboard.
Strategy Map:
A strategic planning tool that shows the “big picture” of how each department’s
performance contributes to achieving the company’s overall
strategic goals.
The strategy map summarizes how each department’s
performance contributes to achieving the company’s overall
strategic goals. It helps the manager and each employee
visualize and understand the role his or her department plays
in achieving the company’s strategic plan. Management
gurus sometimes say that the map clarifies employees’ “line
of sight.” It does this by visually linking their efforts with
the company’s ultimate goals.
HR Scorecard:
It is a process for assigning financial and non-financial goals or metrics to the human
resource management–related chain of activities required for achieving the company’s strategic aims and
for monitoring results.Many employers quantify and computerize the strategy map’s activities. The HR
scorecard helps them to do so. The HR scorecard is not a scorecard.It refers to a process for assigning
financial and non-financial goals or metrics to the human resource management–related strategy-map
chain of activities required for achieving the company’s strategic aims.24 (Metrics for Southwest might
include airplane turnaround time, percent of on-time flights, and ground crew productivity.) The idea is to
take the strategy map and to quantify it.
Managers use special scorecard software to facilitate this. The computerized scorecard
process helps the manager quantify the relationships between
(1) the HR activities (amount of testing, training, and so forth),
(2) the resulting employee behaviors (customer service, for instance), and
(3) the resulting firm-wide strategic outcomes and performance (such as customer satisfaction and
profitability).
The HR scorecard derives from the “balanced scorecard” planning approach, which aims to
balance hard data such as financial measures with soft data such as customer satisfaction in assessing a
company’s performance.
Digital Dashboard:
Presents the manager with desktop graphs and
charts, and so a computerized picture of where
the company stands on all those metrics from the
HR scorecard process. The saying “a picture is
worth a thousand words” explains the purpose of
the digital dashboard. A digital dashboard
presents the manager with desktop graphs and
charts, showing a computerized picture of how
the company is doing on all the metrics from the
HR scorecard process. As in the accompanying
illustration, a top Southwest Airlines manager’s
dashboard might display real-time trends for
various strategy-map activities, such as fast
turnarounds and on-time flights. This enables the
manager to take corrective action. For example, if
ground crews are turning planes around slower
today, financial results tomorrow may decline
unless the manager takes action