1. Strategic Human Resource Management: Objectives
To indicate the importance of the business context for understanding the meaning and application of SHRM
To analyse the relationship between Strategic Management and SHRM
To analyse the different approaches to SHRM
The best-fit approach
The configurational approach
The resource-based view
The best-practice approach
To evaluate the relationship between SHRM and Performance

2. Strategic HRM: Understanding the Business Context
Any credible attempt at model building in SHRM involves taking a position on the difficult questions: (Boxall, 1996)
What is strategy? (Content)
Plan?
Mission?
Objectives?
Journey?
Other?
How is Strategy formed? (Process)
Classical, rational-planned approach
Evolutionary
Processual
Systemic
Other? (Whittington, 2001)

3. Strategic HRM Table 2.1 Whittington’s typology of strategy
Source: Adapted from Whittington (2001: 39)

4. Strategic HRM: Analysing an Organisation
Choose an organisation you are familiar with, or use one of the case studies: BMW or Jet Airlines
Conduct a SWOT analysis to identify
Strengths and Weaknesses in the internal business environment: consider finances, market, operations, resources, customer relations
Opportunities and Threats in the external environment: consider political, economic, social, technological, legal factors
What is the key focus of the organisation’s business strategy?
What strategic choices does the organisation need to make now?
What implications would this have on the management of the organisation’s human resources?

5. Strategic HRM: Intended versus Emergent Strategy
List the factors that may prevent an organisation realising its intended strategy
Changes in the external environment
E.g. Increased competition / loss of market share
Crisis e.g. September 11th
Other?
Changes in the internal environment
E.g. Product failure / Quality problems
Industrial unrest
Why do new strategies emerge?

6. Strategic HRM: Analysing your career / personal development
Review figure 2.2 (Mintzberg, 1987)
Plot your personal development / career development on a time line, identifying the peaks and troughs
Now analyse where you have not realised your intended personal development strategies i.e. changes in career, university, degree subject
Identify the factors / processes that enabled new strategies to emerge
What factors / processes do you think organisations need to take into account to successfully identify and implement emergent strategies?

7. Strategic HRM: The Best-fit Approach
Emphasises the contingent relationship or alignment between an organisation’s human resource policies and practices, and its business strategy and in turn the external context of the firm
Vertical Integration where leverage is gained through HR procedures, policies and processes is therefore acknowledged as a key element of Best-fit and SHRM
Life cycle models emphasise the alignment of appropriate HR policies and practices for the various life stages of a business.
Competitive advantage models emphasise alignment of relevant HR policies and practices with generic competitive advantage strategies
Much literature tends to emphasise tight fit, where senior management cascade strategic objectives down to functional areas. The role of HR here is restricted to effective implementation. Other writers (Torrington & Hall,1998) have noted the varying levels of integration, and the benefits of dialogue, a holistic approach or even a HR Driven approach!

8. Strategic HRM: Competitive Advantage Models
Compare and Contrast the approaches to SHRM advocated in a:
Cost Reduction focussed strategy
Fixed and explicit job descriptions
Repetitive tasks, that emphasise specialisation and efficiency
Short-term results driven appraisal / reward
Basic skills training, limited development opportunities
Quality focussed strategy
Competency-driven job descriptions
Involvement at job level
Individual and group performance targets for reward
Continuous training and development
Can you identify any difficulties in applying this approach?
Many organisations pursue hybrid strategies
Fitting HR policies and practices to strategic focus of businesses in 21st century is more complex than suggested by Schuler & Jackson,1987

9. Strategic HRM: Limitations of the Best-Fit Approach
Reliance on classical, rational-planning approach which does not recognise the inherently messy and emergent nature of strategy
Reliance on determinism and generic competitive strategies
Alignment in reality tends to focus on fit (Torrington & Hall, 1998) where HR is downstream of strategic activity
Emphasis on the external context at expense of internal context

10. Strategic HRM: The Configurational Approach
Recognises the existence of hybrid strategies
Recognises the limitations of focussing on vertical integration alone
Recommends identification of internal set of HR practices, that are horizontally integrated to ensure synergistic benefits
Which are in turn linked to the appropriate strategic configuration of the business
Thus both horizontal and vertical integration are maximised

11. Strategic HRM: The Resource-based view
Represents a paradigm shift in SHRM thinking by focussing on the internal resources of the organisation
Human resources are identified as key strategic assets
Which are capable of being a key source of sustainable competitive advantage

12. Strategic HRM: The Resource-based view
The VRIO Framework
Value
How can an organisation’s human resources add value to the business? How can they enhance customer added value?
Rarity
Adding value will at best only provide temporary competitive advantage, and may only provide competitive parity. The organisation needs to identify and exploit the rare characteristics of its human resources to gain competitive advantage.
Inimitability
Achieving value and rarity will only provide temporary competitive advantage over an organisation’s rivals. If a competitor can imitate these characteristics, CA will be lost over time.
The organisation needs to develop and nurture characteristics that cannot be easily imitated by its competitors, such as socially complex phenomena, ie. Unique history or culture and team synergies.
These are strengthened through causal ambiguity and social complexity.
Organisation
Finally to achieve SCA (Sustainable Competitive Advantage) the HR function needs to ensure they are organised or have appropriate integrated systems to capitalise on the value, rarity and inimitability of their human resources.
Barney & Wright, 2001

13. Strategic HRM: Nordstrom and South West Airlines
How did Nordstrom exploit the rare characteristics of its employees?
Operates in highly competitive retail environment which is usually characterised by low skill and high turnover yet
Nordstrom focusses on competence and attitude of individual salespeople to provide sustainable competitive advantage
Attracts high calibre graduates to career in retailing
High reward, upto twice the industry average
Encourage employees to make a heroic effort to meet customer needs
Taken a relatively homogeneous labour pool, and exploited rare characteristics to gain competitive advantage over rivals
How did South West Airlines create a culture that was difficult to copy?
Exploited inimitability of socially complex phenomena i.e. South West’s culture to gain competitive advantage
Culture of fun and trust
Employees empowered to do what it takes to meet customer needs
Extensive selection process
Empowerment reinforced by CEO

14. Strategic HRM: Resource-based View and Knowledge-based Organisation
Both approaches advocate that it is a firm’s ability to learn faster than its competitors that leads to sustainable competitive advantage
Hamel & Prahalad identify the need to create the future through its core competencies
Thus strategy goes beyond achieving ‘fit’ and resource allocation to achieving stretch and resource leverage through emphasising the importance of both tacit and explicit knowledge and the ability of employees to learn.

15. Strategic HRM: The Knowledge- based view & Core Competency
Hamel & Prahalad, 1994:
A core competency is:
A bundle of skills and technologies that enable a company to provide particular benefits to customers
Is not product specific
Represents The sum of learning across individual skill sets
Must be competitively unique
Is not an asset in the accounting sense of the word
Represents a broad opportunity arena or gateway to the future

16. Strategic HRM: The Best-practice Approach
Notion that set of HR best-practices, whether focussing on high commitment, high involvement or high performance, will contribute to enhanced organisational performance through
Improved employee attitude and behaviours
Improved morale
Higher levels of skill
Lower levels of turnover/absenteeism
Which it is assumed leads to higher productivity/ profitabilty, enhanced quality of service and product and enhanced efficiency

17. Strategic HRM: The best-practice approach and universalism
Universalists argue that all organisations will benefit and see improvements in organisational performance if they identify and gain commitment to a universal set of best HR practices
The closer an organisation can get to the ideal set of best practices, the better the organisation will perform
Pfeffer’s revised practices (1998) for building profits by putting people first
Employment security
Selective hiring
Extensive training
Sharing information
Self-managed teams / teamworking
Reduction of status differentials
High pay contingent on company performance
Role of HR = gaining senior management commitment and ensuring effective implementation

18. Strategic HRM: High performance Work Practices
Recognises the need to examine and quantify the relationship between SHRM and organisational performance
Emphasises the HRM system and the need to develop bundles of integrated HR practices that are tailored to meet an individual organisation’s specific context:
Need to be aligned and integrated with each other
To avoid deadly combinations of HR practices which work against each other
The total HRM systems needs to support business priorities
To gain full benefit from the powerful connections or synergies between practices
Huselid, 1995

19. Strategic HRM: Problems with operationalising Best-practice
Inconsistencies in defining what actually constitutes best HR practice
In analysing the empirical evidence, it is difficult to confirm whether it is HR practices that lead to enhanced organisational performance, or whether strong organisational performance enables organisations to invest in Best-practice HRM
Difficult to convince organisations operating within tight financial margins to invest in expensive HR practices
In short-termist Western economies hard HR techniques tend to be justified in terms of the greater good of the organisation and increased return on shareholder value. Therefore difficult to justify cost of best HR practices, as benefits not always easy to quantify
Tend to assume a unitarist perspective and ignore pluralist values

20. Strategic HRM and Performance: The Balanced scorecard
Kaplan & Norton, 1996, 2001
The Balanced Scorecard relates critical non-financial factors to financial outcomes, by assisting firms to map key cause-effect linkages in their desired strategies
Challenges the short-termism found in many Western traditional budgeting processes
Emphasises the significance of the implementation stage of the strategy-making process: ‘business failure is seen to stem mostly from failing to implement and not from failing to have wonderful visions’. Kaplan & Norton, 2001:1
Adopts a stakeholder perspective, and identifies the need to satisfy investors, customers and employees
Through setting objectives, measures, targets and initiatives in
Financial: to succeed financially, how should we appear to our shareholders?
Customer, to achieve our vision how should we appear to our customers?
Internal Business Processes, to satisfy our shareholders and customers, what business processes must we excel at?
Learning and Growth, to achive our vision, how will we sustain our ability to change and improve?