Chapter 2

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Strategic Human Resource
Management—A Framework

Human Resource Management, 2e Author: Pravin Durai

 After reading this chapter,
you should be able to

Copyright © 2016 Pearson India Education Services Pvt. Ltd

1. Understand the concept of strategic human
resource management
2. Understand the models of strategic human
resource management
3. Enumerate the benefits of strategic human
resource management

Human Resource Management, 2e Author: Pravin Durai

 Strategic Human Resource
Management- Meaning

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Strategic human resource management is a process of
aligning HR strategies with the business strategy to
accomplish the performance goals through the
employees’ competency and commitment

Human Resource Management, 2e Author: Pravin Durai

 Steps in Strategic Management
Process

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Human Resource Management, 2e Author: Pravin Durai
 Steps in Strategic Management
Process

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 Determination of Vision and Mission
 Analyzing the Environment
 Strategy Formulation
 Strategy Implementation
 Performance Evaluation

Human Resource Management, 2e Author: Pravin Durai

 Models of Strategic Human
Resource Management

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Models Of
SHRM

Business-oriented Strategic fit Strategic labour

model model allocation model

Human Resource Management, 2e Author: Pravin Durai

 Models of Strategic Human Resource
Management

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 Business-oriented Model
 Strategic Fit Model
 Strategic Labour Allocation Model (SLAP) Model

Human Resource Management, 2e Author: Pravin Durai

 Business-oriented Model

Copyright © 2016 Pearson India Education Services Pvt. Ltd

This model aims at value creation by developing a
HR system that creates and sustains the competitive
advantage through human resources

Human Resource Management, 2e Author: Pravin Durai

 Strategic Fit Model

This model focuses on matching the HR capabilities and

Copyright © 2016 Pearson India Education Services Pvt. Ltd

resources with the external opportunities.

It also focuses on developing HR practices in such a way

that they complement one another.

Two types of strategic fits are

• Vertical fit (deals with the extent of alignment
between the HR strategies & business strategy)
• Horizontal fit (deals with the extent of alignment
among the components of the HR strategy)

Human Resource Management, 2e Author: Pravin Durai

 SLAP Model

Copyright © 2016 Pearson India Education Services Pvt. Ltd

This method focuses on the interdependences among
HR strategies, business strategies and organizational
changes.

This model acknowledges HRM as a continuous process

of balancing the demand for and the supply of labour.

Human Resource Management, 2e Author: Pravin Durai

 Levels of Strategy

Copyright © 2016 Pearson India Education Services Pvt. Ltd

LEVELS
OF STRATEGY

Corporate Level Business Level Functional Level

Growth Portfolio Parenting

Strategy Strategy Strategy

Human Resource Management, 2e Author: Pravin Durai

 Corporate Level strategy

Corporate Level strategy -topmost level of strategy-making-

Copyright © 2016 Pearson India Education Services Pvt. Ltd

it focuses on the value creation for the entire organization.
Its three components are
i. growth strategy focuses on the development and
accomplishment of growth objectives
ii. portfolio strategy focuses on the determination of the
portfolio of business units for the organization
iii. parenting strategy focuses on the allocation of
resources and development of organizational capabilities
across the business units

Human Resource Management, 2e Author: Pravin Durai

 Business Level Strategy

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Business level strategy focuses mostly on creating and
sustaining competitive advantage for products through
one or more of distinguishing factors like price/cost
leadership and product differentiation

Human Resource Management, 2e Author: Pravin Durai

 Functional Level Strategy

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 At the functional level, specific strategies are made
for the functional activities of the organization.
 This strategy may encompass production,
marketing, purchase, finance, HR, research and
development, and other similar activities of the firm

Human Resource Management, 2e Author: Pravin Durai

 Models of strategic formulation

Copyright © 2016 Pearson India Education Services Pvt. Ltd

High Involvement Management Model
High Commitment Management Model
High Performance Management Model

Human Resource Management, 2e Author: Pravin Durai

 High Involvement Management
Model

Copyright © 2016 Pearson India Education Services Pvt. Ltd

This Model aims at creating an environment that
facilitates the continuous exchange of information
between the superiors and the subordinates

Human Resource Management, 2e Author: Pravin Durai

 High Commitment Management
Model

Copyright © 2016 Pearson India Education Services Pvt. Ltd

This Model aims at obtaining voluntary commitment
from employees by adopting mutually beneficial HR
practices

Human Resource Management, 2e Author: Pravin Durai

 High Performance Management
Model

Copyright © 2016 Pearson India Education Services Pvt. Ltd

This model aims at improving the performance of
individuals and the organization constantly.
A high-performance management is achieved by
continuously educating the employees and improving
their skills.

Human Resource Management, 2e Author: Pravin Durai

 Benefits of a Strategic HRM

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 Achieves cost-effective engagement of labour
 Meets the changing needs and expectations of the
customers effectively
 Necessities the development of clear-cut goals,
direction, and future focus to the entire organization
 Facilitates the planning and execution of
organizational changes in a timely and effective
manner

Human Resource Management, 2e Author: Pravin Durai

 Benefits of a Strategic HRM

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 Ensure the optimum utilization of organizational
resources
 Helps in developing, managing and sustaining the
skills and knowledge of its human resources
 Enhances the coordination among the various
functional centres and the top management
 Facilitates the continuous scanning of external
environment

Human Resource Management, 2e Author: Pravin Durai

 Barriers to an Effective SHRM

Copyright © 2016 Pearson India Education Services Pvt. Ltd

 Absence of long-term orientation,
 Lack of strategic reasoning,
 Lack of adequate support from top management,
 Resistance from labour unions,
 Fear of failure,
 Rigidity of HR practices,
 Fear of attrition and
 Absence of measurement techniques

Human Resource Management, 2e Author: Pravin Durai