Chapter Two

Strategic Human
Resource
Management

Chapter Outline

Why is Managing Human Resources So Important?

What is Strategic Human Resource Management (SHRM)?
Transforming HR Staff and Structure
Enhancing Administrative Efficiency
Integrating HR into Strategic Planning
Fitting HR Practices to Business Strategy and One Another
Partnership
Measuring HRM
Is Strategic HRM Really Worth All the Trouble?

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Why Is Managing Human Resources

So Important?
Rapid Change
Uncertainty About Basic Business Conditions
Rising Costs
Rapid Technological Change
More Limited Supplies of Highly Trained Labor
Rapidly Changing Government Legislation and
Regulations
Increased Globalization of Industries
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HRM - The Traditional View

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HRM -- The Strategic View

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Theoretical Perspectives on SHRM

Universalistic approach
Best-fit perspective
Configurational approach
Resource-based model

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Transforming HR People Requires:

HR transformation linked to
organizations strategic orientation
Active participation by HR staff,
supported by HR champion
Line managers involved in defining
skills HR needs
HR transformation = major change
effort by firm
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Transforming HR Structure

Centralized Centers of
Expertise

Business Partner Teams

Central Administrative
Service Units

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Enhancing Administrative Efficiency

Increase Efficiency of Current HR
Practices
Centralized HR Services -- One-Stop
Shop
Outsourcing

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The Strategic Planning Process

Mission, Goals, and Values Statements
Environmental Threats & Opportunities
Organizational Strengths &
Weaknesses
Goals and Objectives
Formulation of Strategies

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210

Fitting HR Practices to Business

Strategy and One Another
Vertical Fit = the match between HR
practices and overall business strategy
Horizontal fit = the consistency and
interrelationship among HR activities
External fit = how well HR activities
match the demands of the external
environment

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HR Fit Requires Right HR Choices

Staffing
Appraising
Compensating
Training and Development
Employee Influence
Work Systems

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Strategic Fit Versus Strategic

Flexibility
Resource Flexibility
Using resources for a variety of purposes
The cost and difficulty of switching
resources from one use to another

Coordination Flexibility
The extent to which the organization has
decision making and other systems that
allow it to move resources from one use to
another
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213

Developing Partnership
Learn about the firms business
Respond to and be aware of the firms needs
and direction
Shift away from traditional HRM functions
Move toward supportive, collaborative
relationships with line managers
Demonstrate how HR is critical to business
success
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Measuring HRM
Inward HR Function Measures
Operational measures
Service quality measures

Outward Focused HR Measures

Results measures
Business impact measures

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HR Balanced Scorecard
Financial
Customer
Internal operational
Strategic & organizational learning

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Is SHRM Worth All The Trouble?

Huselid 1997 study
Sears study
A study in Germany, Italy, Japan and
the USA
New Zealand Study

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217

Review

Why is Managing Human Resources So Important

What is Strategic Human Resource Management (SHRM)?
Transforming HR Staff and Structure
Enhancing Administrative Efficiency
Integrating HR into Strategic Planning
Fitting HR Practices to Business Strategy and One
Another
Partnership
Measuring HRM
Is Strategic HRM Really Worth All the Trouble?

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218