Strategic Human Resource Management: Worku Mekonnen (PHD) Lect. 1

Strategic human resource
management
Worku Mekonnen (PhD)
Lect. 1
Definition and distinction
• HRM: consists of various practices used to
manage people in organizations.
• These practices reflect functions of the HR
department in organizations.
• These functions have evolved in isolated
manner.
• This represents the micro-perspective that
focuses on particular function.
Definition (cont)
• Thus, it is the sum of the technical knowledge
within each of these functions that we refer to
the “HRM”.
• As the concept of strategic management
become more popular, researchers attempted
to link functions with the firm strategy.
• Latter on, the perspective was shifted to a
more macro- orientation.
Definition (cont)
• SHRM “ all those activities affecting the
behavior of individuals in their efforts to
formulate and implement the strategic needs
of the business” (Schule, 1992)
• “the pattern of planned human resource
deployments and activities intended to enable
an organization to achieve its goals” (Wright &
McMahan, 1992).
SHRM Vs HRM
• SHRM , entails the linking of human resource
management practices with the strategic
management process of the org. (vertical)
• SHRM, emphasizes the coordination or
congruence among the various HRM practices
(horizontal).
.
The core
• SHRM is used broadly to signal the view that
HRM activities should contribute to the
business effectiveness and attainment of
competitive advantage. This linkage between
HRM activities, the need of business, and
organizational effectiveness is the core of
SHRM.
• Two guiding assumptions of SHRM:
The core (cont)
• First: effective HRM requires an understanding
and integration with org’s objectives.
• Second: effective HRM leads to improved orgal
performance.
• When HRM policies and practices are aligned
with an org’s strategic objective, the system
can be described as “ vertically integrated”
whereas “horizontal integration” refers to a
coherent system of HR policies & practices.
Traditional HR versus Strategic HR
What it is about
• SHRM is about:
- Vertical integration: understanding org. and its
context
- horizontal integration: creating coherent HR system
- demonstrating effectiveness: showing how HRM
system affect organizational performance.
- partnership: HR professional cooperation with line
managers.
Linking HRM to strategy
• Schuler and Jackson; utilized Porter framwork
of competitive strategy to provide a look at
how to link HR practices to strategy.
- Three competitive strategies to gain
competitive advantage:
- innovation, quality enhancement, and
cost reduction.
Fitting HR characteristics to competitive strategies
Innovation Strategy Quality Strategy Cost Leadership Strategy

Jobs that require close Relatively fixed and Jobs that allow employees to
interaction and coordination explicit job develop skills that can be used
among groups of individuals descriptions in other positions in the firm.
Performance appraisals that A mix of group and Short-term and results-oriented

are more likely to reflect individual criteria for appraisals.
longer-term and group-based Appraisal-result oriented
achievements
Compensation systems that Pay rates that tend to be low Close monitoring of market pay
emphasize internal equity but allow employees to be levels for use in making
rather than external or market based stockholders compensation decisions
equity
High levels of Relative egalitarian . Practices that maximize

employee treatment of employees and efficiency by providing means for
participation some guarantees of employee management to monitor and
security control closely the activities of
employees
Minimal levels of employee Extensive and .
training and development continuous training
and development of
employees.
Broad career paths to reinforce Narrowly designed jobs and

•
Miles and Snow (1984) types of marketers
Defenders
Prospectors
Analyzers
• Defenders: have narrow and relatively stable

product-market domain. Top mgt are expert in
their org’s limited area of operation.
• This org. seldom need to make adjustment
• Focus on efficiency
• Characteristics: limited product line, single capital
intensive-technology, functional structure, skills
in production efficiency and cost control.
Miles and Snow
• Prospectors: Continually search for product
and market opportunities. And regularly
experiment with potential response to
emerging environmental trends.
• Are creator of change and uncertainty to
which their competitors must respond
• Not completely efficient
• Charac: divers product lines, multiple
technologies, divisional structure, skill in R&D
Miles and Snow
• Analyzers: operate in two types of product-
market domain (stable and changing). In stable
area they operate routinely and efficiently
through use of formalized structure and process.
In the other area managers watch closely for new
ideas.
• Charct: limited basic product lines, search for
small number of related product or market
opportunities, cost efficient technology for stable
product and project technology for new product.
Miles-HR practices
• Defender: HR strategy characterized by building
HR (HR building); selection, placement, appraisal,
long-term training, and employees are expected
to be with the company for most of their career
life.
• Prospectors: Acquiring; is concerned more with
organization design and development
(developing flexible and enriching structures).
• Analyzers: Help to identify and quickly develop
crucial HR through rapid movement and
alteration of assignment.
Evolution of HRM
Pre-World War II (Before 1945)
 record keeping of employee information
 scientific management
 Very few government influence
 Employee abuses such as child labor and unsafe
working conditions
 welfare and administration
Post–World War II (1945–
1960)
 personnel functions were developed
 social & psychological factors as motivators
 job description was the central aspect of worker
classification
 employees started forming trade unions
 significant number of employment laws
 personnel departments established specialist
divisions
Social Issues Era (1963–
1980)
 An increase in labor legislation such as
o prohibition of discriminatory practices
o occupational health and safety
o retirement benefits
 personnel departments were beginning to be called HR Departments
 the field of HRM was born
 emphasis on employee participation and empowerment
 shift the focus away from maintenance to development of employees
Cost-Effectiveness Era
(1980 to the Early 1990s)
 cost reduction through automation & other productivity improvement
measures
 shifted from employee administration to employee development &
involvement
 computer-based HR systems were used to be cost-effective
 computers in HR shifted from the transactional record keeping to
more transformational activitie
The Emergence of SHRM
(1990 to Present)
 innovative & creative employees provide a
sustainable comp. adv.
 the people management function has become
strategic
 emphasis on the return on investment of the
HR function
 treating human capital as a strategic asset and
a competitive advantage
 emphasis on the “best-fit” approach

Strategic Human Resource Management: Worku Mekonnen (PHD) Lect. 1

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Strategic Human Resource Management: Worku Mekonnen (PHD) Lect. 1

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Strategic human resource

Innovation Strategy Quality Strategy Cost Leadership Strategy

Performance appraisals that A mix of group and Short-term and results-oriented

High levels of Relative egalitarian . Practices that maximize

Broad career paths to reinforce Narrowly designed jobs and

• Defenders: have narrow and relatively stable

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