UNIT - I

Introduction to SHRM
By
Manish Bhalla

Definition of SHRM
Wright and McMahan (1992) defined SHRM, as the pattern of planned human
resource deployment and activities intended to enable the firm to achieve its goals.
This definition implies the following four components of SHRM:
It focuses on an organizations human resources (people) as the primary source of competitive
advantage of the organization.
The activities highlight the HR programmes, policies, and practices as the means through which the
people of the organization can be deployed to gain competitive advantage.
The pattern and plan imply that there is a fit between HR strategy and the organizations business
strategy (vertical fit) and between all of the HR activities (horizontal fit).
The people, practices, and planned pattern are all purposeful, that is, directed towards the
achievement of the goals of the organization.

Need and Importance of SHRM

Since the 1990s, there has been an increased focus on the strategic role of human
resource management.

With the increasing recognition of the potential of human resources in providing

competitive advantage, organizations have begun to consider employees as valuable
assets or investments

This view has become more significant in todays knowledge economy that depends on
the skill and knowledge of the workforce.

From being a routine, administrative, and reactive function, the HR function today has
evolved to being proactive and strategic.

Given the increasingly significant role of human resources in an organization, HRM has
become strategic in nature. SHRM is concerned with the relationship between HRM and
strategic management in an organization.

Contd.
SHRM is an approach which relates to decisions about the nature of
employment
relationship,
recruitment,
training,
development,
performance management, reward, and employee relations.
SHRM is concerned with people issues and practices that affect or are
affected by the strategic plan of the organization.
The critical issues facing an organization in the contemporary
environment are mainly human issues, such as ensuring the availability
of people, retaining, motivating, and developing these resources.
Today, an organization competes less on products or markets, and more
on people.
In 21st century, potential of human resources in providing competitive
advantage differs i.e. two organizations using the same technology may
show different levels of performance.

Evolution of SHRM

The HR function has evolved over time.

The history of the function pre-dates Taylors theory of scientific

management and Fayols administrative theory.

However, it was only during the 1930s and 1940s that the function grew in
significance, largely due to the war-time imperatives.

At this time, the HR function matured and focused largely on labour

relations and staffing.

In India, the Tata Iron and Steel Company (TISCO) was one of the first
organizations to set up a personnel department in the year 1947.

Evolution of the HR Function

Theoretical Perspectives of SHRM

(Human Resources As Assets)

Theoretical Perspectives of SHRM

SHRM

Fit Perspective
(Human resources
should be
integrated with the
strategic planning
process of the firm)

Functional Perspective
(An organization
performs best when
each departmental unit
maximizes its
contributions limited to
its unique area of
expertise)

Economic Perspective
(Human resources are
a unique and
distinguishable source
of competitive
advantage

Typological
Perspective
(There are three
distinct types of
HR strategies
- Inducement
- Investment.
- Involvement

Distinctive Human Resource Practices

In virtually every industry, there are firms that follow very distinctive HR practices.

According to the management thinkers, the chief executive officers (CEOs) of

multidivisional and international firms need to identify the underlying clusters of
expertise in their companies that cut across all the SBUs.

The distinctive human resource practices shape the core competencies that
determine how firms compete with each other.

What is unique in this approach is the view that HR practices are the drivers that
lead to core competencies, and, in turn, to business strategies.

Cappelli and Crocker-Hefter (1999) examined pairs of successful organizations

competing in same industry e.g. BCG and McKinsey & Company in strategic
consulting, etc..

It is easier for firms to find a new business strategy to go with the existing HR
practices and competencies than to develop new HR practices and competencies.

Distinctive Human Resource Practices

(Business Strategies and HR Competencies)
HR Competencies
Outside
Development

Flexibility

Prospectors,
e.g., BCG,
Pepsi

Inside
Selection

Business
Strategies

Outside
Development
Established
markets/niches
Inside
Selection

Defenders,
e.g. IBM,
McKinsey,
Coca-Cola

Strategic Fit: A Conceptual Framework

Fit as gestalt

Fit as contingency

Cont
Guest (1989) emphasized that it is important to ensure that HRM is fully integrated
into strategic planning. In 1997, Guest identified the following five types of fit.
1. Fit as strategic interaction (best fit approach) HR practices linkage with the
external concept.
2. Fit as contingency HR approaches to ensure that internal practices of the
organization respond to external factors such as the nature of the market, skill,
availability, etc.
3. Fit as an ideal set of practices (best practice approach) there are best
practices which all firm can adopt.
4. Fit as gestalt emphasizes the importance of finding an appropriate
combination of practices.
5. Fit as bundles (the configuration approach) suggests a search for distinct
configuration or bundles of HR practices that complement each other, in order to
determine which bundle is likely to be most effective.

SHRM: The Indian Context

Cont

The Integrated Systems Model

This model has development at its core, which suggest that the development of
motivated, dynamic, and committed employees is a means to achieve better
organizational performance.

This perspective views HRM as a process, and not merely as a set of practices,
mechanism, or techniques.

HR practices such as performance appraisal, training, rewards, etc. are used to initiate,
facilitate, and promote this process in a continuous way.

The HRD Framework

The ultimate aim of HRD is full participation of the individual in his/her job and life.

The starting point for moving towards fuller employee participation is the reaffirmation of
the HR philosophy.

An integrated HRD system has many potential benefits, such as moving from alienation
to participation, enhancing individual effectiveness, improving organizational climate and
organizational effectiveness.

Cont

HRD as an approach
This perspective has been put forward by Dayal(1993), who advocates that HRD
is an approach, and not a function.

This perspective highlights that the underlying belief of all HR programmes of an

organization is individual growth and development, which lead to improved
organizational performance.

Dayal propounds that HR programmes are need-based, and may vary

significantly in their approach and emphasis in the following ways:
(a.) Emphasis on philosophy
(b.) Emphasis on programmes
(c.) Emphasis on leader behaviour

HR Strategy and HR Planning

The twenty-first century is unique in the pace at which change occurs.

The business environment of organizations is more complex and dynamic when

compared to the environment 15 years ago.

This is the age of contradictions------

economic growth as well as recession

shortage of skilled workforce as well as increase in the percentage of skilled unemployment
Massive layoffs as well as large-scale recruitments

A question emerges: is planning meaningful in this age of discontinuous change & is

it feasible or even possible for organizations to develop future business plans and
forecast human resource requirements.

When the meaning of job itself has undergone transformation and when the world of
work has altered beyond what could be imagined just a decade earlier, is it possible
to describe jobs precisely.

As there is a limited pool of skilled workers, firms compete for them.

Strategic Role of HRP

Business

Technological

Economic

Social
Legal

Objectives of HRP

To ensure effective labour supply to different

industries through activities such as interacting
with educational institutions

To ensure that the firm is responsive to the

environment

To ensure more effective utilization of HR

To provide direction to all HR activities

To make labour supply projections for the

future

To build line and staff partnerships

Growth of services
economy

Technological
advancements
Labour market
changes

Knowledge economy
and knowledge
workers

The HRP Process

Long-range corporate plans
and objectives
Short-range plans of the firm

Human resource objectives

Human resource
inventory

Environmental
scanning
Forecast

Demand forecast

Supply forecast
Compare demand-supply to
determine gaps, if any
Evaluation

Action plans

Behavioral issues in strategy implementation

It is vital to bear in mind that organizational change is not an intellectual process

concerned with the design of ever-more-complex and elegant organization structures.

It is to do with the human side of enterprise and is essentially about changing peoples
attitudes, feelings and above all else their behavior.

The behavior of the employees affects the success of the organization. Strategic
implementation requires support, discipline, motivation, and hard work from all
managers and employees. It also requires influence, power and empowerment from all
managers.

Influence Tactics: The organizational leaders have to successfully implement the

strategies and achieve the objectives. Therefore the leader has to change the behavior
of superiors, peers or subordinates by developing and communicating the vision and
motivate organizational members to move into that direction.

Power: it is the potential ability to influence the behavior of others. Leaders often use
their power to influence others and implement strategy. Formal authority cannot be used
as the power to influence officials therefore leaders have to exercise their expertise,
charisma, reward power, information power, legitimate power, coercive power.

Cont.

Empowerment as a way of Influencing Behavior: The top executives have to empower

lower level employees.
- Training
- Self managed work groups eliminating whole levels of management in organization
- Aggressive use of automation are some of the ways to empower people at various places.

Political Implications of Power: Organization must try to manage political behavior while
implementing strategies. They should
- Define job duties clearly
- Design job properly
- Demonstrate proper behaviors.
- Promote understanding
- Allocate resources judiciously

Cont.

The competitive environment is getting increasingly complex and

unpredictable, demanding both flexibility and quick response to its challenges.

As firms simultaneously downsize and face the need for increased

coordination across organizational boundaries, a control system based
primarily on rigid strategies and rules and regulations is dysfunctional.

Thus, the use of rewards and culture to align individual and organizational
goals becomes increasingly important.

Organizational culture is a system of shared values and beliefs that

shape companys people, organizational structures and control systems
to produce behavioral norms.

Culture wears many different hats, each woven from the fabric of those
values that sustain the organizations primary source of competitive
advantage.

Matching Culture with Strategy

Culture sets implicit boundaries, that is, unwritten standards of acceptable behavior: in dress,
ethical matters, and the way an organization conducts its business.

By creating a framework of shared values, culture encourages individual identification with

the organization and its objectives.

Leadership Style and Culture Change: Culture is the set of values, beliefs, behaviors that
help its members understand what the organization stands for, how it does things and what it
considers important.

Firms culture must be appropriate and support their firm. The culture should have some
value in it.

To change the corporate culture involves persuading people to abandon many of their
existing beliefs and values, and the behaviors that stem from them, and to adopt new ones.
The first difficulty that arises in practice is to identify the principal characteristics of the
existing culture.

Values and Culture: Value is something that has worth and importance to an individual.
People should have shared values. This value keeps everyone from the top management
down to factory persons on the factory floor pulling in the same direction.

Cont.

Ethics and Strategy: Ethics are contemporary standards and a principle or conducts
that govern the action and behavior of individuals within the organization. In order that
the business system function successfully the organization has to avoid certain
unethical practices and the organization has to bound by legal laws and government
rules and regulations.

Managing Resistance to Change: To change is almost always unavoidable, but its strength
can be minimized by careful advance Top management tends to see change in its strategic
context.

Some resistance planning, which involves thinking about such issues as:
- Who will be affected by the proposed changes, both directly and indirectly?
- From their point of view, what aspects of their working lives will be affected?
- Who should communicate information about change, when and by what means? What
management style is to be used?

Managing Conflict: Conflict is a process in which an effort is purposefully made by one

person or unit to block another that results in frustrating the attainment of the others goals or
the furthering of his interests. The organization has to resolve the conflicts.

Thank u !!!