Chapter Two: Strategic Human

Resource Management

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Prepared by Dr. Assefa T.
Strategic Human Resource Management

 An important defining characteristic

of human resource management is that
it is strategic.
 This characteristic is expressed by
the concept of strategic HRM – an
integrated approach to the
development of HR strategies that
enable the organization to achieve
its goals.
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 Strategic HRM Defined
 Strategic HRM is an approach to making
decisions on the intentions and plans of the
organization in the shape of the policies and
practices concerning the employment
relationship, resourcing, learning and
development, reward, employee relations &
others.
 It takes the HRM model with its focus on
strategy, integration and coherence and adds
to that the key notions of strategy, namely,
strategic intent, resource-based strategy,
competitive advantage, strategic capability
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and strategic fit.
 Cont….d
 According to Hendry and Pettigrew (1986),
strategic HRM has four meanings:
– the use of planning;
– a coherent approach to the design and
management of personnel systems based on an
employment policy and human power strategy
and often underpinned by a ’philosophy’;
– matching HRM activities and policies to
some explicit business strategy;
– seeing the people of the organization as a
’strategic resource’ for the achievement of
’competitive advantage’. Prepared by Dr. Assefa T.
 Principles of Strategic HRM

 The basic principles of Strategic HRM are integration,

consistency and development.
– Integration of HRM refers to the involvement of HRM in the
formulation and implementation of organizational strategies and
the alignment of HRM with the strategic needs of an organization
– Internal consistency of HR practices refers to the degree to which
all HR practices of a SHRM system are consistent and
complementary
– Devolvement of HRM refers to the degree to which HRM system
involves and gives responsibility to line managers rather than HR
specialists.

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Approaches to Strategic HRM

 Strategic HRM adopts an overall

resource-based philosophy, as
described below. Within this
framework there are three possible
approaches, namely,
– high-performance management (high-
performance working),
– high-commitment management and
– high-involvement management.
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 Approaches to Strategic HRM
 The high-performance management approach
– involves the development of a number of
interrelated processes which together make an
impact on the performance of the firm through its
people in such areas as productivity, quality,
levels of customer service, growth, profits and,
ultimately, the delivery of increased shareholder
value.
– This is achieved by ’enhancing the skills and
engaging the enthusiasm of employees’.
– High-performance management practices include
rigorous recruitment and selection procedures,
extensive and relevant learning and development
activities, incentive pay systems and performance
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management processes.
Approaches to Strategic HRM

 The high-commitment management model: emphasis on

the importance of enhancing mutual commitment. It
has been described by Wood (1996) a form of
management which is aimed at eliciting a commitment
so that behavior is primarily self-regulated rather
than controlled by sanctions and relations within
the organization are based on high levels of trust.
 The approaches to creating a high-commitment
organization as defined by Beer et al (1984) and
Walton (1985b) are the development of career
ladders, a high level of functional flexibility, the
reduction of hierarchies and a heavy reliance on
team structure for disseminating information (team
briefing), structuring work (team working) and
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problem solving (quality circles).
Approaches to Strategic HRM

 High-involvement management
 This approach involves treating employees as partners
in the enterprise whose interests are respected and
who have a voice on matters that concern them.
 It is concerned with communication and involvement.
 The aim is to create a climate in which a continuing
dialogue between managers and the members of their
teams take place to define expectations and share
information on the organization’s mission, values and
objectives.
 This establishes mutual understanding of what is to
be achieved and a framework for managing and
developing people to ensure that it will be achieved.
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HR Strategies

 HR strategies set out what the

organization intends to do about the
different aspects of its human resource
management policies and practices.
 They will be integrated with the business
strategy and each other. HR strategies are
described by Dyer and Reeves (1995) as
‘internally consistent bundles of human
resource practices’, and in the words of
Boxall (1996), they provide ‘a framework
of critical ends and means’.
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Difference: Strategic HRM and HR Strategy

 The terms ‘strategic HRM’ and ‘HR strategy’ are often used
interchangeably, but a distinction can be made between them.
 Strategic HRM can be regarded as a general approach
underpinned by a philosophy to the strategic management of
HR in accordance with the intentions of the organization on
the future direction it wants to take.
 What emerges from this process is a stream of decisions over
time that form the pattern adopted by the organization for
managing its HR and define the areas in which specific HR
strategies need to be developed.
 HR strategies will focus on the intentions of the
organization on what needs to be done and what needs to be
changed.

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Types of HR Strategies

 Two basic types of HR strategies can be

identified:
– Overarching strategies; and
– Specific strategies relating to the different
aspects of human resource management.

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Types of HR Strategies

 Overarching HR strategies
 Overarching strategies describe the general
intentions of the organization about
– how people should be managed and developed,
– what steps should be taken to ensure that the
organization can attract and retain the people
it needs, and
– ensure so far as possible that employees are
committed, motivated and engaged.
 They are likely to be expressed as broad-brush
statements of aims and purpose that set the scene
for more specific strategies.
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Types of HR Strategies

 Specific HR strategies
– Talent management
– Continuous improvement
– Knowledge management
– Resourcing
– Learning and developing
– Reward
– Employee relations

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 Competency-Based HRM
 Competency-based HRM is about using the concept of
competency and the results of competency analysis to
inform and improve the processes of performance
management, recruitment and selection, employee
development and employee reward.
 Rankin (2002) describes competencies as ‘definitions
of skills and behaviors that organizations expect
their staff to practice in their work’ and explains
that competencies represent the language of
performance. They can articulate both the expected
outcomes from an individual’s efforts and the manner
in which these activities are carried out.
competencies provide a common, universally understood
means of describing expected performance in T. many
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 Types of Competencies
 Behavioral competencies: define behavioral
expectations, i.e. the type of behavior required to
deliver results under such headings as team working,
communication, leadership and decision-making. known
as ‘soft skills’.
 Technical competencies
– Technical competencies define what people have to
know and be able to do (knowledge and skills) to
carry out their roles effectively.
– They are related to either generic roles (groups
of similar jobs), or individual roles (as ‘role-
specific competencies’).
– Competent people at work are those who meet their
performance expectations.’ Competences
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Assignment

 What is the difference between

– HRM and Strategic HRM?
– Strategic HRM and HR Strategies
 Discuss the principles of Strategic HRM with
reference to Ethiopian Public Institutions
 What is Competency-based HRM and its
practices in our country?

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