Strategic Human

Resource Management
(SHRM)
Strategic Human Resource Management (SHRM) refers to the alignment of HRM practices and
policies with the strategic goals and objectives of an organization. SHRM is a more proactive
approach that involves HR professionals in the long-term planning and decision-making
processes to ensure that the organization’s human capital supports its strategic vision.

Importance of SHRM
1. Aligns HR with Organizational Goals: SHRM helps align the HR function with the overall
business strategy. By doing so, HR professionals ensure that the right talent is recruited,
developed, and retained to help the organization achieve its objectives.
2. Enhances Organizational Performance: A well-implemented SHRM system leads to
improved employee performance, motivation, and productivity. When employees' skills,
behaviors, and attitudes align with the company’s goals, organizational performance
improves.
3. Competitive Advantage: SHRM enables an organization to gain a competitive edge by
effectively leveraging its workforce. This includes talent acquisition, employee
development, and creating a positive organizational culture that attracts top talent.
4. Supports Change Management: In today’s dynamic business environment,
organizations often need to adapt to changes. SHRM plays a key role in helping manage
transitions, whether it’s through restructuring, mergers, or adopting new technologies,
by ensuring employees are engaged and well-prepared for the changes.
 Difference Between Traditional and Strategic Human Resource
Management
Aspect Traditional HRM Strategic HRM (SHRM)
Focus Primarily on administrative Focuses on aligning HR practices with
functions like payroll, compliance, the overall strategic goals of the
and benefits. organization.
Role of HR HR is seen as a support function HR is a strategic partner in decision-
with minimal involvement in making, playing an active role in
strategic planning. organizational planning and growth.
Time Frame Short-term focus on day-to-day Long-term focus, with a strategic
operations and problem-solving. outlook on workforce needs and
growth.
Scope of HR Narrow focus on hiring, training, Broad scope, integrating workforce
Activities compensation, and benefits. planning, talent management,
leadership development, and
organizational culture into strategy.

Best Fit Approach

The "Best Fit" approach emphasizes the idea that HR strategies should be tailored to fit the
specific context of the organization.

This includes aligning HR practices with the organization’s unique culture, structure, business
strategy, and external environment.

Key Characteristics:
• Context-Specific: The "Best Fit" approach suggests that there is no one-size-fits-all
solution for managing people. HR practices should be customized based on the
organization's unique situation, goals, and challenges.
• Flexibility: The approach values flexibility and adaptability, allowing HR practices to
evolve as the organization grows and changes over time.
• Internal and External Consistency: HR practices are designed to ensure that there is a
match between the internal structure of the organization (e.g., management style,
culture, employee needs) and the external environment (e.g., competition, regulations).
 Challenges:
• Complexity: Customizing HR practices for each organization can be complex and time-
consuming.
• Hard to Generalize: This approach may not work well for organizations operating in
diverse industries or regions, as what works for one organization may not work for
another.
• Requires Deep Organizational Understanding: HR professionals must have an in-depth
understanding of the organization’s strategy, culture, and external environment.

Best Practices Approach

The "Best Practices" approach argues that there are certain universal HR practices that can
enhance organizational performance, regardless of the specific context. This approach
advocates the use of a set of proven, research-backed HR practices that lead to high
performance and organizational success.

Key Characteristics:
• Universal Practices: The approach assumes that certain HR practices are universally
applicable and lead to high performance in any organization. Examples include
employee empowerment, extensive training and development programs, high
involvement work systems, and competitive compensation.
• Standardized Approach: Best practices are seen as standardized methods that can be
adopted by any organization to improve outcomes.
• Evidence-Based: The best practices are based on research and case studies that show
these practices lead to higher organizational performance.

Advantages:
• Proven Results: Best practices are based on research that shows they can lead to
increased employee engagement, productivity, and organizational success.
• Widely Applicable: Best practices can be applied to any organization, regardless of its
industry, size, or culture.
• Consistency: The approach provides a consistent and standardized way of managing
people, which can be helpful in large or global organizations.
 Challenges:
• Lack of Flexibility: The "Best Practices" approach may not work for every organization,
as it does not account for the uniqueness of each organization’s culture or external
environment.

The Investment Perspective of Strategic Human Resource Management (SHRM) views

employees as valuable assets that can provide long-term returns on investment (ROI). This
approach emphasizes that human capital (knowledge, skills, and personal characteristics) is a
critical resource that, when nurtured and developed effectively, can drive organizational
success and sustainability. SHRM encourages organizations to invest in their workforce through
various HR practices, such as recruitment, training, development, and retention strategies, with
the goal of maximizing employee performance, innovation, and engagement.

Key Elements of the Investment Perspective of SHRM:

1. Long-Term Value Creation:
a. Viewing employees as long-term assets rather than costs leads to sustainable
growth. Investment in training, development, and well-being enhances
employee skills and job satisfaction, which in turn boosts productivity and
loyalty.
2. Strategic Talent Management:
a. HR investments in talent acquisition and management ensure that the
organization attracts, develops, and retains high-performing employees who
align with the company’s goals.
3. Training and Development:
a. Investing in continuous learning and development programs equips employees
with the skills and knowledge needed to adapt to changes in technology, market
demands, and industry trends, leading to a more competitive organization.
4. Employee Engagement and Retention:
a. Investments in engagement strategies (e.g., competitive compensation, benefits,
and career growth opportunities) improve retention rates, reducing turnover
costs and ensuring a stable workforce.
5. Organizational Culture and Innovation:
a. SHRM supports creating a positive organizational culture that fosters creativity,
collaboration, and innovation. Investment in cultural development enhances
employee morale and productivity, driving long-term business success.
 HRM MODELS
An HR model is a framework for articulating HR’s role and positioning within the business.

The Harvard Model (The 4 Cs Model)

• It starts on the left, with stakeholder interest. These stakeholders include shareholders,
management, employee groups, government, and more. These interests define the
HRM policies.
• At the same time, situational factors influence these interests. Situational factors
include internal and external.
• Situational factors and stakeholder interests influence HRM policies. These include the
core HR activities, such as recruitment, training, and reward systems.
• When done well, HRM policies lead to positive HRM outcomes. COMMITEMENT,
COMPETENCE, CONGRUENCE, COST EFFECTIVENESS.
• These positive HRM outcomes lead to long-term consequences. These can be individual,
organizational, and societal well-being.

HR outcomes
• Commitment: Building employee commitment through motivation and engagement.
• Competence: Ensuring that employees have the necessary skills to contribute to
organizational success.
• Congruence: Aligning employee goals with organizational goals.
• Cost-effectiveness: Managing HR in a way that adds value and is cost-effective.
•

The Guest Model (you can talk about this)

• Developed by David Guest, this model highlights the importance of integration between
HR strategies and practices, (1) The premise is that HRM starts with particular strategies
that align with business intent; (2) which in turn informs the practices and policies of
HRM, (3) that result in specific HRM outcomes, that lead to (4) desired employee
behaviors such as commitment and motivation, that collectively (5) drives performance
outcomes, (6) which results in financial outcomes.
 The Warwick Model
The Warwick Model emphasizes the role of context in shaping HRM practices. Developed by the
University of Warwick, it suggests that the internal and external environment, such as
organizational culture, societal factors, and economic conditions, should be considered when
designing HR strategies.

Key Components:
• Organizational Context: Organizational culture, leadership, structure, and strategy.
• External Context: Economic, political, and social factors influencing the organization.
• HR Practices: Recruitment, development, rewards, and performance management.

The Ulrich Model of HR

was developed by Dave Ulrich and is designed to transform HR into a strategic partner that
adds value to the organization. It outlines four key roles for HR professionals:

1. Administrative Expert: Handles the internal operations by overseeing HR processes and

strategies for managing people.
2. Employee Champion: Manages workforce competencies and employee engagement
levels to improve productivity. Focuses on maintaining a healthy employer-employee
relationship.
3. Change Agent: Works with managers and employees to launch initiatives that enhance
company culture and advance the business.
 4. Strategic Partner: Aligns HR strategies with the company’s business goals. Creates the
best methods for developing and managing the workforce to best support success.
The model emphasizes that HR should balance these roles to not only manage operations but
also drive organizational growth and transformation. By aligning HR with business objectives
and focusing on value creation, the Ulrich Model helps HR contribute meaningfully to both day-
to-day operations and long-term strategy.

role of HR in sustainable business models

is crucial for integrating sustainability practices into an organization’s culture, operations, and
strategy. HR plays a key role in ensuring that sustainability becomes part of the organization’s
long-term success and value creation. Here’s how HR contributes to sustainable business
models:

1. Talent Acquisition and Development

• Recruitment for Sustainability: HR helps attract and hire individuals who are committed
to sustainability and align with the company’s values. This includes focusing on
candidates with skills related to sustainable practices.
• Training and Development: HR designs training programs to build sustainability
knowledge across the organization, ensuring employees understand the importance of
sustainability and can contribute to its goals.

2. Employee Engagement and Well-being

• Promoting a Sustainable Culture: HR fosters a culture that encourages employees to
embrace sustainability in their everyday work. This can include sustainable practices like
reducing waste, conserving energy, and promoting diversity.
• Work-life Balance: By promoting a healthy work-life balance and employee well-being,
HR ensures that employees are motivated and engaged, leading to a more productive
and sustainable workforce.

3. Leadership Development
• Sustainable Leadership: HR develops leaders who are committed to sustainability,
guiding them to make decisions that balance profitability with environmental and social
responsibility.
 • Succession Planning: HR ensures that future leaders are equipped to handle
sustainability challenges and continue the organization’s commitment to responsible
growth.

4. Performance Management and Rewards

• Sustainability Goals in Performance Metrics: HR integrates sustainability into
performance management by setting measurable sustainability goals, such as energy
reduction or waste management, and linking these goals to employee performance.
• Rewarding Sustainability: HR develops reward systems that recognize employees who
contribute to the organization’s sustainability efforts, thus reinforcing the importance of
sustainable practices.

6. Diversity and Inclusion

• Sustainability through Diversity: By promoting diversity and inclusion, HR ensures that
the organization benefits from diverse perspectives, which can lead to more innovative
and sustainable solutions.

7. Corporate Social Responsibility (CSR) Initiatives

• Embedding CSR: HR helps integrate CSR initiatives into the company's overall strategy,
ensuring employees are involved in sustainability efforts through volunteering,
donations, and community outreach programs.

Sustainable Human Resource Management (Sustainable HRM) refers to the integration of

sustainability principles into HR practices, with the goal of creating long-term value for both
the organization and its stakeholders while considering the impact on the environment,
society, and the well-being of employees. It emphasizes managing human resources in a way
that balances economic, social, and environmental concerns, ensuring that the workforce
remains productive, healthy, and engaged, while also contributing to the organization's overall
sustainability goals.

Key Concepts of Sustainable HRM:

1. Triple Bottom Line (TBL) Approach:
a. Economic Sustainability: HR practices should help the organization thrive
financially while ensuring long-term stability.
 b. Environmental Sustainability: HR encourages and supports practices that reduce
environmental impact, such as promoting green workplace initiatives and
encouraging sustainable commuting options.
c. Social Sustainability: HR focuses on creating a fair, inclusive, and supportive
work environment that promotes the well-being and development of employees,
while also considering the broader community.
2. Employee Well-being and Development:
a. Health and Safety: Sustainable HRM emphasizes the health and safety of
employees, not only in physical terms but also their mental and emotional well-
being. Programs that focus on work-life balance, mental health support, and
stress management are part of this approach.
b. Training and Growth: Providing employees with continuous learning
opportunities, skills development, and career progression that align with both
personal and organizational goals, helping individuals adapt to evolving market
needs while ensuring their long-term growth.
3. Inclusive and Fair Work Practices:
a. Diversity and Inclusion: Sustainable HRM supports inclusive practices that
embrace diverse workforces. It ensures equal opportunities for all employees,
fostering a culture where everyone feels valued and has equal access to growth
opportunities.
b. Fair Compensation: Ensuring that employees are paid fairly and equitably based
on their roles, responsibilities, and performance, while also offering benefits that
promote work-life balance and job satisfaction.
4. Ethical Leadership and Corporate Responsibility:
a. Ethical Decision-making: Leaders in sustainable HRM make ethical decisions that
promote fairness, transparency, and integrity in all HR activities, from
recruitment to performance management.
b. CSR Integration: HR aligns with corporate social responsibility (CSR) goals by
encouraging employees to participate in community development, sustainability
initiatives, and volunteer work.
5. Green HRM:
a. Eco-friendly HR Practices: This involves reducing the carbon footprint of HR
activities by implementing paperless processes, promoting remote working,
encouraging the use of sustainable products, and supporting green initiatives in
the workplace.
 Benefits of Sustainable HRM:
• Enhanced Organizational Reputation: Organizations that embrace sustainability in HR
practices often have a better public image, attracting talent and customers who value
ethical and responsible business practices.
• Improved Employee Engagement: Employees who perceive their organization as
socially responsible are more likely to feel engaged, motivated, and committed to the
company’s goals.
• Reduced Turnover: By focusing on employee well-being, fair treatment, and career
development, sustainable HRM can reduce employee turnover and build a more loyal
workforce.
• Innovation and Competitiveness: Sustainable HRM encourages innovation by fostering
diverse teams, promoting continuous learning, and adapting to changing environmental
and social expectations.

HR ADDS VALUE TO THE FIRM:

by aligning its people strategies with business objectives, ensuring that the right
talent is hired, developed, and retained. It drives employee engagement, fosters a
positive work culture, and promotes leadership development. HR also enhances
operational efficiency through effective performance management, learning, and
compensation systems. By focusing on employee well-being and diversity, HR
contributes to long-term organizational success and competitiveness, while
ensuring compliance with legal and ethical standards.

HR as a Scarce and Non-Substitutable Resource

• HR as a Scarce Resource: Human resources are often considered scarce because talent
is limited, and organizations depend on skilled individuals to drive innovation, achieve
objectives, and maintain a competitive advantage. The scarcity is further amplified in
sectors with skill shortages.
• HR as a Non-Substitutable Resource: HR is non-substitutable because human capital is
unique and cannot be easily replaced by technology or other resources. Employees'
creativity, decision-making abilities, and interpersonal skills contribute significantly to
the organization’s success, making them irreplaceable.
 Auditing HR Practices and Department

HR audits are used to evaluate the effectiveness and efficiency of HR practices within an
organization. It involves a thorough review of HR functions to ensure compliance with legal
standards and alignment with organizational strategies.

• Key Audit Areas:

o Recruitment & Selection: Analyzing hiring processes to ensure they are fair and
align with organizational needs.
o Training & Development: Assessing whether training programs are enhancing
employee skills and performance.
o Compensation & Benefits: Ensuring that pay structures are competitive and
equitable.
o Employee Relations: Evaluating communication and conflict resolution
processes.

Linking Strategy to HRM Practices

• Corporate HR Philosophy and Companywide HR Standards: Aligning the HR strategy

with the organization's overarching goals and corporate culture ensures that HR
practices drive business success. It includes formulating a consistent approach to
performance management, training, and recruitment that reflects the organizational
values.
• HRM Leading Strategy Formulation: HRM practices play a critical role in shaping
business strategy by ensuring that the right talent is in place to execute strategic
initiatives. HR professionals contribute to strategic planning by offering insights into
workforce capabilities and future talent needs.

Alternative HR Systems

These frameworks offer different approaches for aligning HR practices with organizational
strategies.

1. Universalistic Approach: This approach assumes that there is a "best" set of HR

practices that leads to optimal organizational performance across all contexts. Practices
like recruitment, training, and reward systems are standardized to fit the universal
approach. / BEST PRACTICES
 2. Contingency Approach: Suggests that HR practices should be tailored to fit the specific
context or situation of the organization. It emphasizes that what works for one
organization or situation may not work for another. / BEST FIT
3. Configuration Approach: Focuses on aligning a set of HR practices in a way that they
complement each other and create a system that fits the organization’s goals, culture,
and environment.
4. Congruence Approach: Stresses the importance of ensuring alignment between
different elements of HR practices, such as compensation, training, and performance
management, with the organization's culture and strategy.
5. Integrated HR Systems: Focuses on ensuring that all HR practices (e.g., recruitment,
training, performance management, and rewards) are linked and integrated to support
the overall business strategy and organizational goals.

Evaluation of the HR Function

Evaluating HR functions is essential for ensuring that HR practices are contributing effectively to
organizational goals and are cost-effective. Several approaches help in assessing HR
performance:

1. HR Scorecard: It involves evaluating key HR metrics such as employee performance,

engagement, turnover, and cost efficiency. It measures leading HR indicators that
forecast business growth, including human capital ROI, employee turnover, recruitment
effectiveness, and more.
2. Benchmarking: Compares HR practices and performance with industry standards or
competitors to identify areas of improvement. This helps organizations adopt best
practices and improve performance.
3. HR Accounting: Involves quantifying the value of human capital and assessing its
contribution to the organization’s bottom line. It includes calculating the costs of hiring,
training, and retaining employees, as well as evaluating the return on investment (ROI)
for HR-related activities.

HR KPI 1 : Employee Turnover Rate:

The employee turnover rate is a KPI metric used to measure the number or percentage of
employees who leave an organization over a specific period of time.
 HR KPI 2: Time to Hire

Time to hire is a KPI metric used to measure the amount of time it takes an organization to fill a
job opening from the time it was posted to the time a candidate accepts an offer. Measuring
time to hire is important for organizations because it helps them evaluate the efficiency of their
recruitment process, identify bottlenecks, and make improvements to the process.

HR KPI 3: Cost per Hire

Cost per hire is a KPI metric used to measure the total cost incurred by an organization to fill a
job opening. Measuring cost per hire is important for organizations because it helps them
evaluate the effectiveness of their recruitment strategies and determine the budget required to
attract and retain top talent.

HR KPI 4: Absenteeism Rate

Absenteeism rate is a KPI metric used to measure the number of days an employee is absent
from work as a percentage of their total working days. evaluate the impact of absenteeism on
productivity, identify trends, and develop strategies to reduce absenteeism.

HR KPI 5: Training and Development

Training and development is a KPI metric used to measure the effectiveness of an

organization’s training and development programs. Measuring this metric is important for
organizations because it helps them evaluate the impact of their investment in employee
training and development on employee performance, retention, and overall business success.

HR KPI 6: Time to Productivity

Time to productivity is a KPI metric that measures the time it takes for a new hire to become
fully productive and contribute to the organization’s goals and objectives. It is an important
metric for organizations to understand how quickly new employees are able to start generating
value and contributing to the overall productivity of the organization.

HR KPI 7: Employee Satisfaction

Employee satisfaction is a measure of the extent to which employees are content and fulfilled
with their job, work environment, and overall experience in the organization. It is an important
HR KPI metric as it reflects the level of engagement, motivation, and happiness of employees,
which can directly impact their performance, productivity, and retention. can be done through
surveys, questionnaires, or other qualitative methods that capture employees’ perceptions,
opinions, and feedback.

HR KPI 8: Time to Promotion

Time to Promotion is a key HR KPI that measures the average time it takes for employees to
receive a promotion within the organization. It is an important metric as it indicates the
effectiveness of the organization’s talent management and career development strategies.