STRATEGIC

HUMAN RESOURCE MANAGEMENT

By : Prof. V.P.KAKKAR
 TRADITIONAL HR Vs STRATEGIC HR
TRADIONAL HR STRATEGIC HR

RESPONSIBILITY HR STAFF LINE MANAGERS

FOCUS EMPLOYMENT RELATIONSHIP PARTNERSHIP WITH INTERNAL

& COMPLIANCE WITH LAW & EXTERNAL CUSTOMERS

ROLE OF HR REACTIVE & TRANSACTIONAL PROACTIVE & TRANSFORMATIONAL

INITIATIVES SLOW & FRAGMENTED FAST,FLEXIBLE & INTEGRATED

TIME HORIZON SHORT TERM SHORT, MEDIUM & LONG TERM

CONTROL BUREAUCRATIC ORGANIC

( RULES,POLICIES, PROCEDURES) ( FLEXIBILITY,FEW RESTRICTIONS)

JOB DESIGN FOCUS ON SCIENTIFIC MGMT BROAD JOB DESIGN,GROUPS

DIVISION OF LABOUR & TEAMS, CROSS FUNCTIONAL TR

KEY INVESTMENTS PRODUCTS, TECHNOLOGY PEOPLE

(KNOWLEDGE, SKILLS, ABILITIES
ACCOUNTABILITY COST CENTRE INVESTMENT CENTRE
 EVOLUTION OF SHRM

PERSONNEL HRM SHRM

MGMT

. PART OF ORGANIC ORG . CONVERGENCE BETWEEN

. MECHANISTIC . CROSS HIERARICAL &
. BUREAUCRATIC HRM & BUSINESS STRATEGY
CROSS FUNCTIONAL TEAMS
. HIGH CENTRALISATION
. HIGH FORMALISATION
. DECENTRALISATION . PROACTIVE HRM
. LOW FORMALISATION . CONCERNED WITH
. LOW FLEXIBILITY . FLEXIBLE. ORGANISATIONAL
EFFECTIVENESS &
PERFORMANCE
 INVESTMENT PERSPECTIVE OF HR
(How best to invest in its people )
• RESOURCE BASED VIEW ( VRIO FRAMEWORK )
value , rareness , limitability & organization
• ENHANCING HUMAN CAPITAL
collective skills, knowledge & capabilities
• TRADITIONAL COST VIEW : HR related budget ( salaries, training etc.. )
STATEGIC VIEW : Employees as valuable investments
In knowledge economy : Knowledge is important (not goods, services or
technology ) for all economic activities.
• INVESTMENT IN HUMAN RESOURCES IMPORTANT for getting
competitive advantage to keep pace with changing technologies & processes
• COST OF TRG & OTHER INVESTMENTS TO BE CONSTANTLY REVIEWED
AGAINST BENEFITS.
• RISKS INVOLVED : Enhanced employability of employees that makes them more
desirables to competitors.
 BARRIERS TO STRATEGIC HR
• SHORT TEM MENTALITY/ FOCUS ON CURRENT PERFORMANCE
Reason: No Long term view of investments. More focus on performance evaluation
and compensation based on sort term.
• INABILITY OF HR TO THINK STRATEGICALLY
Reason: insufficient management training and segmented understanding of entire business
• LACK OF APPRECIATION OF WHAT HR CAN CONTRIBUTE FROM STRATEGIC
PERSPECTIVE
Reason : Seeing HR function as providing unnecessary bureaucracy
• FUNCTIONAL MANAGERS SEEING THEMSELVES AS HR MANAGERS
Reason : Concerned more with technical aspects of their areas than huma aspects.
• DIFFICULTY IN QUANTIFYING MANY HR OUTCOMES
REASON: Tendency towards programs that are quantifiable rather than
developmental programs.
• PERCEPTION OF HR ASSETS AS HIGH RISK INVESTMENTS THAN CAPITAL ASSETS.
REASON: HR assets not owned by organizations. More investment in technology & information
• DISINCENTIVES FOR CHANGE
REASON: Strategic approach may call for drastic changes in system. Natural resistance is there
to change initiatives. So Risk is involved as these changes might fail

MOST OF ABOVE BARRIERS ARE ROOTED IN CULTURE OF AN ORGANISATION

( Organizations history, values and management practices act as act as barriers to change
initiatives. Overcoming these barriers is the real challenge of STRATEGIC HRM )
 RELATIONSHIP BETWEEN BUSINESS
AND HR STRATEGIES
• THREE TYPES OF BUSINESS STRATEGIES ARE ADOPTED BY
ORGANISATIONS: COST LEADERSHIP & DIFFERENTIATION
• HR STRATEGIES ARE OUTCOME OF GENERAL SHRM APPROACH
• FOR WINNING A SUSTAINABLE GLOBAL COMPETITIVE ADVANTAGE, A
PERFECT STRATEGIC FIT IS REQUIRED TO BE CREATED BETWEEN
BUSINESS STRATEGIES AND HR STRATEGIES
Following 5 types of strategic fits are generally adopted:
BEST FIT APPROACH: Also called external fit or vertical integration with business
strategies. HR strategies should match stages of development of firm ie need for
different types of people as well as diverse approaches towards investment in
HUMAN CAPITAL.
FIT AS CONTIGENCY : HR approaches to ensure that internal practices of
organization respond to external factors : market, skill availability etc.
FIT AS AN IDEAL SET OF PRACTICES( BEST PRACTICE APPROACH)
Identifying any organization as benchmark which has reputation for excellence and
copying its practices.
FIT AS GESTALT : Emphasizes the importance of finding an appropriate combination
of HR practices wrt business strategies.
FIT AS BUNDLES (Configuration Approach) : Development and implementation of
several HR practices together so that they are interrelated and internally
consistent. Each HR practice reinforces and complements the other. Also termed
as internal fit oe Horizontal integration.
 COMPETING APPROACHES AND MODELS

SHRM

FIT ECONOMIC TYPOLOGICAL

FUNCTIONAL
PERSPECTIVE PERSPECTIVE PERSPECTIVE PERSPECTIVE

Human Each functional To use Human

area optimize Resources Use of 3 distinct
resources to be
performance wrt as distinguishable HR Strategies
Integrated with
Business Strategy Source of . Inducement
Strategic plg
competitive . Investment
advantage . Involvement
MACKENZIE’S 7S MODEL

STRUCTURE

STRATEGY SYSTEMS

SHARED
VISION

SKILLS STYLE

STAFF