Introduction
Definition-
 strategic human resource management is the
integration of human resource management and
strategic management process.
In other words we can say that it is the
alignment of Human Resource Management with the
organization’s mission.

Differences in between HRM & SHRM
 Structure
 Scope
 Coordination
 functioning

HUMAN RESOURCE MANAGEMENT

STRATEGIC HUMAN RESOURCE MANAGEMENT

Objectives of SHRM: -
 Assess how well human resources management is
linked to agency mission accomplishment.
 Explore the role played by the HR staff in agency
strategic planning.
 Determine how the HR service providers work with
line managers to carry out agency strategic goals.
 Identify best practices aligning HRM with the agency
strategic plan and goals.

 1.) Resource – Based View of the Firm
 2.) Behavioral Perspective
 3.) Cybernetic Systems
 4.) Agency / Transaction Cost Theory
STRATEGIC THEORIES

Resource – Based View of the Firm
 Defines Competitive Advantage as “ When a firm
is implementing a value creating strategy not
simultaneously being implemented by any current
or potential competitors ”
 Firm Resource Heterogeneity
 Firm Resource Immobility

 Sustained Competitive Advantage exists only after
efforts to replicate that advantage have ceased
 Add positive value
 Unique or Rare
 Inimitable
 Non - Substitutable

HR as Sustained
Competitive Advantage
 Provide Value to the Firm
 Heterogeneous Demand for Labor
 Heterogeneous Supply of Labor

 Rarity
 HR with high ability levels are rare
 Valid Selection Programs
 Attractive Reward Systems

 Inimitable
 Unique Historical Conditions
 Causal Ambiguity
 Social Complexity

 No Substitutes
 Substitutable Technology
 Non substitutable HR
 This theory demonstrates that Strategies are not
universally implementable , but are contingent on
having the human resource base necessary to
implement them .

Behavioral Perspective
 Focus on Employee Behavior as the mediator
between Strategy and Firm performance .
 Assumes that the purpose of various Employment
practices is to elicit and control Employee
Attitudes & Behaviors.

INNOVATION as STRATEGY
 High Degree of Innovative Behaviour
 Long – Term Focus
 High Level of Co-operative Behaviour
 Moderate Degree of Concern for Quality
 Moderate Concern for Quantity
 Greater Degree of Risk Taking

COST REDUCTION STRATEGY
 Reprtitive Behaviors
 Short - Term Focus
 Autonomous Activity
 High concern for Quantity
 Moderate Concern for Quality
 Low Risk Taking

 This theory is tested to Demonstrate
 Different Strategies are associated with different
levels of Firm Performance
 Relationship between Strategies and Firm
Performance is either mediated or moderated by
HRM practices and Employee role Behaviors.

CYBERNETIC SYSTEMS
 Open Systems Model
 Inputs are Competencies ( Skills , Abilities) of
Employees
 Throughput Process is Behavior of Employees
in the Organization .
 Outputs consist of Performance ( Productivity )
and Affective Outcomes ( Job Satisfaction )

 SHRM consists of
 Competence Management
 Behavior Management

Competence Management
 Competence Acquisition
 Competence Utilization
 Competence Retention
 Competence Displacement

Behavior Management
 Behavioral Control
 Behavioral Coordination
 This theory has potential to examine how
SHRM Practices change or need to change over
time .

Agency / Transaction Cost Theory
 Transaction costs are the costs associated with
negotiating , monitoring , evaluating , and
enforcing exchanges between parties .
 Agency costs are the costs associated with
establishing efficient contracts between parties

 Bureaucratic costs refer to the transaction costs
associated with managing human resources in a
hierarchy ( when Authority Relationship exists )
 This theory is popular for Diversification ,
Internalization , Restructuring .

Non Strategic Models of HRM
Non strategic means determinants of HRM practices
that are not the result of rational strategic decision
making process, but rather derive from institutional
and political forces in the firm.

Non Strategic Theory of HRM
Two theories:
a) Resource dependence Model.
b) Institutionalism.

Resource dependence Model :It focus predominantly on
power relationship within and among organization. It
assumes that all organization depend on flow of valuable
resources into the organization in order to continue
functioning.
Its implications are numerous:
i) It change the focus from viewing SHRM in mechanistic
terms where all HRM practices are rationally determined
and are perfectly supportive of organizational strategies.
ii) It demonstrates the potential for the HRM function to
increase its role as a stategic partner in the firm.

Institutionalism:
It is viewed as the social process by which individuals
come to accept a shared definition of social reality –
conceptions whose validity is seen as independent of
the actor’s own view or actions but is taken for granted
as defining the way things are to be done.

Institutional influences
i. It can be imposed coercively .
ii. It can be authorized through an organization
voluntarily seeking approval of a superordinate
entity.
iii. It can be induced through outside agents providing
rewards to organization that conform with the
wishes of the agent.

iv) It can be acquired through one organizational
modeling its practices based on practices of other
organization as a means of appearing legitimate or up
to date.
v) Imprinting pocess whereby the practices adopted at
the beginning of the organization’s history remain
embedded in the organization.