Strategic human resource management is the proactive management of the employees of a company or

organization. Strategic human resource management includes typical human resource components such as
hiring, discipline, and payroll, and also involves working with employees in a collaborative manner to boost
retention, improve the quality of the work experience, and maximize the mutual benefit of employment for
both the employee and the employer.

Specific HR strategies

1. Human capital management

2. Corporate social responsibility
3. Organizational Development
4. Engagement
5. Knowledge management
6. Resourcing
7. Talent management
8. Learning and development
9. Reward
10. Employee relation
11. Employee well-being

Or,

Specific HR strategies set out what the organization intends to do in areas such as:

- talent management – how the organization intends to ‘win the war for talent’;
- continuous improvement – providing for focused and continuous incremental innovation sustained over a
period of time;
- knowledge management – creating, acquiring, capturing, sharing and using knowledge to enhance learning
and performance;
- resourcing – attracting and retaining high-quality people;
- learning and developing – providing an environment in which employees are encouraged to learn and
develop;
-l reward – defining what the organization wants to do in the longer term to develop and implement reward
policies, practices and processes that will further the achievement of its business goals and meet the needs of
its stakeholders;
- employee relations – defining the intentions of the organization about what needs to be done and what
needs to be changed in the ways in which the organization manages its relationships with employees and
their trade unions.

CRITERIA FOR AN EFFECTIVE HR STRATEGY

An effective HR strategy is one that works in the sense that it achieves what it sets out to achieve. In particular,
it:

- It will satisfy business needs;

- It will be founded on detailed analysis and study, not just wishful thinking;
- It can be turned into actionable programs that anticipate implementation requirements and problems;
- It is coherent and integrated, being composed of components that fit with and support each other;
- It takes account of the needs of line managers and employees generally as well as those of the organization
and its other stakeholders.
As Boxall and Purcell (2003) emphasize: ‘HR planning should aim to meet the needs of the key stakeholder
groups involved in people management in the firm.’
The key components of the HR strategy are:

- Investing in people – improving the level of intellectual capital.

- Performance management – integrating the values contained in the HR strategy into performance
management processes and ensuring that reviews concentrate on how well people are performing those
values.
- Job design – a key component concerned with how jobs are designed and how they relate to the whole
business.
- The reward system – in developing rewards strategies, taking into account that this is a very hard driven
business.

Growing Importance of HRM

The success of organizations increasingly depends on people-embodied know-how- the knowledge, skill and
abilities imbedded in an organization's members. This knowledge base is the foundation of an organization'
core competencies (integrated knowledge sets within an organization that distinguish it from its competitors
and deliver value to customers).
HRM plays important role in creating organizations and helping them survive. Our world is an organizational
world. We are surrounded by organizations and we participate in them as members, employees, customers,
and clients. Most of our life is spent in organization, and they supply the goods and services on which we
depend to live. Organizations on the other hand depend on people, and without people, they would disappear.
Whether Global or not, one of the most important part of any company is the human resource team. They are
the backbone of the company’s sustainability. A company’s profile is mainly judged by its policies and the
working atmosphere. The main job for any human resource team is to make sure that their company has a
healthy and a welcoming working atmosphere. The responsibility for which lies on Human Resource
Professionals, with the increase in competition among recruiters as well as need for employer branding the
importance of HR has grown even more. Companies are on a look out for experienced and skilled professionals
creating a lot of job openings in the market in this field.
With the advent of globalization, organizations - big or small have ceased to be local, they have become global!
This has increased the workforce diversity and cultural sensitivities have emerged like never before. All this led
to the development of Global Human Resource Management. Even those organizations who consider
themselves immune to transactions across geographical boundaries are connected to the wider network
globally. The function of global Human Resource Management is to ensure organization carries a local appeal
in the host country despite maintaining an international feel. To exemplify, any multinational / international
company would not like to be called as local, however the same wants a domestic touch in the host country
and there lies the challenge.

Basis for
HRM SHRM
Comparison
Human resource management (HRM) SHRM is a managerial function which
implies the governance of manpower of implies framing of HR strategies in such a
Meaning
the organization in a thorough and way to direct employees efforts towards
structured manner. the goals of organization.
Nature Reactive Proactive
Responsibility
Staff specialist Line manager
lies with
Approach Fragmented Integrated
Concerned with internal and external
Scope Concerned with employee relations
relations
Time horizon Short term Long term
Basic factor Capital and products People and knowledge
Change Follows change Initiates change
Accountability Cost center Investment center
Control Stringent control over employees It exhibits leniency.
Hard vs. Soft model
HARD HRM SOFT HRM
1. Theory X 1. Links to theory Y
2. Employees are like machine 2. Employees treated as individual
3. Focus on short term 3. Long term strategy
4. Autocratic Leadership 4. Democratic leadership
5. Tall organization 5. Flat organization

Performance management definition:

Performance management is the supervision and oversight of employees, departments, and organizations with
the objective of seeing that milestones and objectives are reached in an efficient and effective manner. This
niche aspect of overall management involves defining what effective performance looks like, as well as
developing the tools and procedures necessary to measure performance.
Performance management includes the way managers evaluate employees, how employees evaluate their
managers and fellow employees, and how individual workers evaluate themselves. The ultimate goal of
performance management is to improve the quality of work in the most efficient manner possible.

Performance measurement
Performance measurement is generally defined as regular measurement of outcomes and results, which
generates reliable data on the effectiveness and efficiency of programs input resources (human resources,
employee time, funding) used to conduct activities and provide services.
Performance measurement is the process of collecting, analyzing and/or reporting information regarding the
performance of an individual, group, organization, system or component. Performance measurement is not a
new concept, some of the earliest records of human activity relate to the counting or recording of activities.
Moullin defines the term with a forward looking organizational focus - "the process of evaluating how well
organizations are managed and the value they deliver for customers and other stakeholders.”
Neely et al. use a more operational retrospective focus "the process of quantifying the efficiency and
effectiveness of past actions".

Competitive advantage:
Competitive advantage means superior performance relative to other competitors in the same industry or
superior performance relative to the industry average.
The encouraging high levels of performance, the evaluation system helps identify employees with potential,
reward performance equitably and determine employee’s need for training. Specifically performance appraisal
helps an organization gain competitive edge in the following ways:
1. Improving performance: An effective appraisal system can contribute to competitive advantage by
improving employee job performance in two ways- by directing employee behavior towards organizational
goals, and by monitoring that behavior to ensure that the goals are met.
2. Making correct Decisions: Appraisal is a critical input in making decisions on such issues as pay raise,
promotion, transfer, discharges and completion of probationary periods. Right decision on each of these can
contribute to competitive strength of a firm. If promotion for example is made on performance, the promote
feels motivated to enhance his or her performance.
3. Ensure Legal Compliance: Promotion made on factors other than performance might land up a firm in a
legal battle, thus diverting its focus on non productive areas, as it happened to Williamson Magar. Companies
can minimize costly performance- related litigation by using appraisal systems that give fair and accurate
ratings.
4. Minimizing job Dissatisfaction and Turnover : Employees tend to become emotional and frustrated if they
perceive that the rating they get are unfair and inaccurate. Such employees find that the efforts they had put
in became futile and obviously get demotivated. Dissatisfaction in the job sets in and one of the outcomes of
job dissatisfaction is increased turnover. Fair and accurate appraisal results in high motivation and increased
job satisfaction. An organization having satisfied and motivated employees will have an edge over its
competitors.
5. Consistency between organizational strategy and behavior: An organization needs a strategy consistent
with the behavior of its employees if its employees if it were to realize its goals. A truism of organizational life
is that people engage themselves in behaviors in that they perceive will be rewarded. As employees want to
be rewarded, they tend to occupy themselves more with those activities on which the organization
emphasizes. For example If the focus is on service, employees will behave in ways that will help them in
gaining rewards associated with service delivery. If the focus is on cost control, employees will seek to control
cost and thus be recognized and rewarded. If the focus is on rewarding productivity, employees will strive for
productivity. The performance appraisal becomes not only a means of knowing if the employees behavior is
consistent with the overall strategic focus, but also a way of bringing to the fore any negative consequence of
strategy-behavior fit.
6. Organizational strategy and Performance Appraisal: The performance appraisal system serves many
organizational objectives and goals. Besides encouraging high level performance, the evaluation system, is
useful in identifying employees with Potential, rewarding performance equitably, And determining employees
needs for development. These are all the activities that should support the organization’s strategic orientation.
Although these activates are clearly instrumental in achieving corporate plans and long term growth, typical
appraisal systems in most organizations have been focused on short term goals. From the strategic
management point of view, organizations can be grouped into three categories- Defenders, Prospectors,
Analyzers.